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Enterprise Resource Planning (ERP) is a computerized inventory control and production planning system that was born from Material Requirements Planning (MRP) systems. ERP is a system that organizes functions of an institution; supporting, for example, accounting, finance, human resources and e-commerce applications through the creation of relational databases and graphical user interfaces that unify the tasks of institutions like corporations, government agencies, non-profit organizations, powerful institutions and industries and businesses establishments.
ERP INITIATION
It was introduced by research and analysis firm Gartner in 1990. ERP systems now attempt to cover all core functions of an enterprise, regardless of the organization's business or charter. These systems can now be found in non-manufacturing businesses, non-profit organizations and governments. To be considered an ERP system, a software package must provide the function of at least two systems. For example, a software package that provides both payroll and accounting functions could technically be considered an ERP software package.
Some organizations, typically those with sufficient in-house IT skills to integrate multiple software products, choose to implement only portions of an ERP system and develop an external interface to other ERP or stand-alone systems for their other application needs. For example, one may choose to use human resource management system from one vendor, and the financial systems from another, and perform the integration between the systems themselves.
ERP TODAY
Today ERP systems will have many components including hardware and software, in order to achieve integration, most ERP systems use a unified database to store data for various functions found throughout the organization. Enterprise resource planning (ERP) is a company-wide computer software system used to manage and coordinate all the resources, information, and functions of a business from shared data stores.
An ERP system has a service-oriented architecture with modular hardware and software units or "services" that communicate on a local area network. The modular design allows a business to add or reconfigure modules (perhaps from different vendors) while preserving data integrity in one shared database that may be centralized or distributed.
The term ERP originally referred to how a large organization planned to use organizational wide resources. In the past, ERP systems were used in larger more industrial types of companies. However, the use of ERP has changed and is extremely comprehensive, today the term can refer to any type of company, no matter what industry it falls in. In fact, ERP systems are used in almost any type of organization - large or small.
In order for a software system to be considered ERP, it must provide an organization with functionality for two or more systems. While some ERP packages exist that only cover two functions for an organization (QuickBooks: Payroll & Accounting), most ERP systems cover several functions.
Today's ERP systems can cover a wide range of functions and integrate them into one unified database. For instance, functions such as Human Resources, Supply Chain Management, Customer Relations Management, Financials, Manufacturing functions and Warehouse Management functions were all once stand alone software applications, usually housed with their own database and network, today, they can all fit under one umbrella - the ERP system.
ERP MYTHS OR REALITY
Many industry leaders have believed on the evasive nature of ERP benefits. But how real is the issue of ERP benefits realization? To find out, it helps to look into some key statistics from our ongoing ERP benchmark study. The study, which focuses on companies across the globe that have implemented or are in the process of implementing various ERP packages, reveals some interesting points:
- 30% of those surveyed did not realize any sort of staff reductions after go-live.
- 18% did not measure benefits after go-live.
- 28% had some type of problem or operational stoppage after go-live.
Surprisingly, only 18% of companies did not measure post-go-live benefits (in other words, 82% did indeed measure). Besides almost 100% of the companies that have implemented ERP, does not measure post-implementation benefits. Second, the fact that 28% experienced stoppages seems somewhat alarming. It does highlight that at least 1 in 4 companies have operational problems and/or stoppages because of the disruptions caused by ERP. So what does this all mean? First, the results show that ERP benefits are by no means guaranteed. Second, the risk of ERP disrupting an organization's core operations is a significant business risk. These factors are clearly areas that will affect the ROI of the investment in ERP and should be carefully managed as part of an overall ERP Benefits Realization plan.
SUCCESS OF ERP
The success of ERP system is fully dependent on how the workers utilize it. This means they must be properly trained, and a number of companies have attempted to save money by reducing the cost of training. Even if a company has enough money to implement ERP, they may not be able to successfully use it if they do not have enough money to train their workers on the process of using it. One of the biggest problems with ERP is that it is hard to customize. Very few companies can effectively use ERP right out of the box. It must be modified to suit their needs, and this process can be both expensive and tedious. Even when a company does begin changing the system, they are limited in what they can do.
ERP USAGE IN MULTILPLE FIELDS
ERP covers a multitude of topics, all integral parts of a very expensive and comprehensive process. In learning what it’s about and how it works, there are some central features one must understand.
- BUSINESS PROCESS REENGINEERING
ERP is about leveraging a company’s information, as well as the information resources of partner companies, in the pursuit of more efficient ways of doing business. In general, a company’s business processes already leverage existing resources and information availability optimally in order to achieve the most efficient operation possible. But by reconfiguring information resources, combining and extending applications, and partnering with other companies in the sharing of information, new possibilities emerge in terms of how business processes (such as manufacturing, order processing, and inventory control) may be implemented. Making business systems better is a central ERP objective. - DATABASE INTEGRATION
Most traditional businesses store information by business function. Financial information is in an accounting database, customer data is in a customer database, and so on. ERP calls for the integration of databases into a super-database that enables logical links between records that traditional applications would not require but that process-oriented ERP applications do require. Often, ERP platform software simply creates convenient and easily maintained bridges between existing databases rather than requiring the awkward generation of new databases from old.
- ENHANCED USER INTERFACES
ERP applications, in general, cease to be stand-alone and become steps in a process. Often, a user interface will initiate down-line processes, in addition to its primary function, in highly efficient ways (such as the triggering of updates in down-line databases when a record is changed in the database the user interface is using). It is also often the case that ERP-integrated databases offer wider reporting options via application interfaces than conventional systems do. It is important to learn what options are useful and how this extended reporting may be enabled.
- DATA TRANSPORT BETWEEN COMPANIES
As the Internet continues to blossom, the sharing of strategic information between partner companies and logistical data between companies partnered in supply chains is increasingly important. The enhanced databases and interfaces of an ERP-based company are made all the more valuable if partner companies are invited to the party. So a broad and detailed knowledge of the various data communication options is essential to an ERP designer (...)
1. ERP Initiation
1.1 ERP Today
1.2 ERP Myths or Reality
1.3 Success of ERP
1.4 ERP Usage in Multiple Fields
1.4.1 Business Process Reengineering
1.4.2 Database Integration
1.4.3 Enhanced User Interfaces
1.4.4 Data Transport between Companies
2. ERP Implementation Cost
2.1 One-Time Costs
2.1.1 Software
2.1.2 Hardware
2.1.3 External Assistance
2.1.4 Internal Personnel
2.2 Ongoing Annual Costs
2.2.1 Software
2.2.3 Hardware
2.2.4 External Assistance
2.2.5 Internal Personnel:
2.2.6 Replacing or Re-implementing an ERP System:
2.3 Present Scenario of an Industry after Implementing ERP
2.3.1 Before ERP
2.3.2 After ERP
3. Systems, Applications and Products
3.1 Why SAP?
3.2 SAP for Business Process Reengineering (BPR)
3.3 Workflow Perspective
3.4 Software for SAP
3.5 SAP Software Complexity
3.6 SAP R/3 Adoptions
3.7 Best Business Practices Using SAP
3.8 Event Driven Transaction Processing
3.9 How to Combine ERP with SAP
3.10 How ERP and SAP Are Making Business Complete
3.11 ERP Along With SAP in Small and Midsize Business
3.12 How to Extend the Capabilities of ERP and SAP
3.13 Increase Profits with ERP and SAP
3.13.1 Gain Visibility into All Aspects of the Supply Chain
3.13.2 Get New Products to Market Faster
3.13.3 Streamline Manufacturing Processes
3.13.3 Increase Collaboration and Customer Satisfaction
3.13.4 Ensure Compliance with Regulations
3.13.5 Implement Integrated Information Systems - From Making Do To Moving On
4. ERP Case Study of Ambuja Cements
4.1 Trend-Setter
4.2 Challenges
4.3 ERP Case Study of Pickle / Masala Manufacturing Industry
4.3.1 Issues & Challenges
4.3.2 How ERP Can Address These Issues?
4.3.3 Key Benefits of Using ERP
5. ERP Case Study of Oregon Freeze Dry (USA)
5.1 Operating Procedures
5.2 Implementation of ERP
5.3 Just In Time (JIT)
5.4 Features
5.5 History of JIT
5.6 Requirements for JIT
5.6.1 Standardization
5.6.2 Software
5.6.3 Multi-Functionality
5.6.4 Cleanliness
5.6.5 Schedules
5.6.6 Quality
5.7 Just-In-Time Total Quality Management
5.8 Pros and Cons of Just-In-Time
5.8.1 Pros of Just-In-Time
5.8.2 Cons of Just-In-Time
5.9 Case in Which JIT Has Failed
5.10 CASE-STUDY OF JIT
5.10.1 Define the Problem
5.10.2 Analysis of the Problem
5.10.3 Generating Ideas through JIT
5.10.4 Testing the Idea
5.10.5 Implementing the Ideas
5.10.6 Follow-Up
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