functions, characteristics, advantages, disadvantages &

8/13/2019 Functions, Characteristics, Advantages, Disadvantages &

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Submitted to: Presented by:

Ms. Shaveta Chugh Divya GulatiM.Com-I

Roll No.5040


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After increasing the complexity in business process , ERP hasbecome famous among business community . If we have todefine it in simple way .Then we can say that ERP is the newinvention of Information technology in which experts make thesystem for integration of all business processes . For this , theyutilize different software and hardware , with this all process ofbusiness like , accounting , human resource , production andnow marketing are managed . So , ERP has obtained reputationin market .Before using of ERP different business process was

done by different software and businessmen felt tensionregarding co-ordination of all processes .Now , ERP is very scientific technique of Controlling wholebusiness by co-ordination of all information on shared data base


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Function of ERP Better control: With ERP, business can better control over its billing

to customers and receivables. With the ability to automate processes. Itprovides better operational, financial and accounting control over itsbilling operations and receivables.

Integrate information: ERP system can be used for accomplishingevery task by integrating the information system, seamless flow of

information across every department. It is helpful to make automationof every business process.

Effective Planning: ERP is a cross functional enterprise system whichdeals with planning. ERP helps to execute strategies, plans, decisionsand actions within given timeframe as information of all activities are

easily accessible thus helps management to make plans quickly andeffectively.

Provides information to all departments of organisation: ERPtreats the organisation as single entity and caters to the informationneeds of the whole organisation because information is the key

resource of every organisation to win the competition. ERP systemprovides accurate, relevant and timeliness information to all
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Provides updated information in time: Main function of ERPsystem and software is to provide information updated and on real

time. People in different departments all see the same information andcan update it. When one department finishes with the order it isautomatically routed via the ERP system to the next department.

Query and filtering facility: In ERP, you can get answer of any queryby its powerful query and filtering facility.

Other facilities: Now advance ERP software packages are providingthe facility to manage import, export, tax and fulfilling other legalrequirements .

Provides needed information: Computer aided design can alsointegrate with ERP software for showing design of products on real

time and according to the need of customers. Provide all financial analysis:ERP provides also all financial analysis

under finance modules and comply with India's and otherinternational accounting standards.
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Speedily work: To find out where the needed information is atany point, you need only log in to the ERP system and track itdown. The information process moves like a bolt of lightningthrough the organization, and users get their information faster

and with fewer errors than before. It is the end to end approach in order to manage the

consumer needs and requests. Optimum utilisation of resources: Earlier, the inability to

accurately forecast the resource utilisation was a major problemfor managers but now ERP provides an access to accurate andtimely information about current and forecast utilisation ondemand thus reducing wastage and leading to optimumutilisation of resources.

It helps in eliminating the redundant information andunnecessary process.


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ERP Characteristic

It is a comprehensive and integrated set of IS applicationscovering the key business transactions of an enterprise.

Information and data are held in a common integrateddatabase.

Data is updated in real-time, that is, as events triggertransactions.

Information updated is flexible i.e. it can be changedaccording to the need of customers.

Security of data, files and information is assured.

It gives authority thus establishes responsibility.


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Advantages of ERP

Saves time: The fundamental advantage of ERP is thatintegrating businesses processes saves time. It reduces burden ofpaperwork.

Helps in quick decision making: Management can make

decisions faster and with fewer errors. Data becomes visible across the

organization: Complete visibility into all the importantprocesses across various departments of an organizationespecially for senior management personnel

Improves efficiency of business and production can beincreased : ERP can greatly improve the quality and efficiencyof a business. By keeping a company's internal business processrunning smoothly, ERP can lead to better outputs that benefitthe company such as customer service, and manufacturing.


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Support to upper level management: ERP provides support to upperlevel management to provide them with critical decision making

information. This decision support allows the upper level managementto make managerial choices that enhance the business down the road.

Allows adaptation of change: ERP also creates a more agile companythat better adapts to change. ERP makes a company more flexible andless rigidly structured so organization components operate more

cohesively, enhancing the business

internally and externally. ERP can improve data security: A common control system, such as

the kind offered by ERP systems, allows organizations the ability tomore easily ensure key company data is not compromised.

ERP provides increased opportunities for collaboration: Data

takes many forms in the modern enterprise. Documents, files, forms,audio and video, emails. Often times each data medium has its ownmechanism for allowing collaboration. ERP provides a collaborativeplatform allowing employees to spend more time collaborating oncontent, rather than mastering the learning curve of communicating in

various formats and across distributed systems.


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Disadvantages of ERP

Costly: The cost of ERP Software, planning, customization,configuration, testing, implementation, etc is too high.

Increase vendors negotiation power:High ERP switching costs canincrease the ERP vendor's negotiating power, which can increase

support, maintenance, and upgrade expenses. Needs careful attention so that information does not leak out:

Overcoming resistance to sharing sensitive information betweendepartments can divert management attention.

Unnecessary dependencies:Integration of truly independentbusinesses can create unnecessary dependencies.

Users should be trained: The participation of users is very importantfor successful implementation of ERP projects So, exhaustive usertraining and simple user interface might be critical.

Not effective in decentralized organisations:ERP implementationsare difficult to achieve in decentralized organizationswith disparatebusiness processes and systems.


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Models of Enterprise Resource Planning

Business system

Central Data Base (CDB)EMPLOYEES MANAGEMENT

FIXED ASSETS MANAGEMENT

BUDGETORY SYSTEM, INVENTORY

MANAGEMENT

COST ACCOUNTING

PRODUCTIONMAINTENANCE

QUALITY

CONTROL

MARKETINGFINANCE

PERSONNEL

CONSOLIDATION OF BUSINESS

OPERATIONS


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The generic ERP package represents the commonly operated

business model of the organisation. It is built with the functionmodels like Finance, Materials, Marketing, Sales, and Personneland their sub-modules. These modules are then integrated toperform ensuring data and information consistency andconcurrency. The seamless integration of the modules allows theuser at any level to take a micro and a macro view of the function

and process view of the transaction across the function. A typicalERP solution has the following modules: Business forecasting, planning and control (Business) Sales, distribution, invoicing (Sales) Production planning and control (Production)

Material management (Material) Finance and accounting (Finance) Personnel management (Personnel)


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Following table shows the sub-module details of

each module.BUSINESS SALES PRODUCTION MATERIALS FINANCE PERSONNEL

Forecasting Forecasting Planning Purchase Accounting Human

Resource

Planning Planning Order Control Inventory Funds

management

Payroll

Goals SalesBudget

Work inProgress

Stores Balance

SheetProcessing

Accounting

Objectives Order

Processing

Quality Valuation Schedules Skill

attendanceInventory

Targets OrderExecution

Scheduling Analysis Analysis Analysis

Strategycontrol

DeliveryInvoicing

Despatch Control Control Control