A company's strategy consists of several key elements:
- Growing the business through activities like satisfying customers, outcompeting rivals, and adapting to market changes.
- Managing each functional area of the business and developing needed capabilities to achieve strategic and financial goals.
2. What does a company’s strategy consist of ?
Company strategies concern,
• How to grow the business
• How to satisfy customers
• How to out compete rivals
• How to respond to changing in market conditions
• How to manage each functional piece of the business and develop
needed organizational capabilities
• How to achieve strategic and financial objectives
3. Introduction
Manufacturing Organizations are complex `Systems'
where the interactions between the various functions
Sales, Distribution, Manufacturing, Materials, Finance,
Human Resources, Maintenance have to be managed
towards a common purpose of delivering the customers
maximum value at the optimum price.
However, since most of these organizations have a
`Functional Structure', each function/department works
towards their own goals and objectives, rather than the
organizational goals.
These are the issues addressed by `Enterprise Resource
Planning' software solutions providing a common,
consistent system to capture data organization wide, with
minimum redundancy.
4. What is ERP?
ERP integrates the information across functions, and
provides a set of tools for planning and monitoring the
various functions and processes and ensuring progress
towards a common purpose
A business management system that integrates all facets
of the business, including planning, manufacturing, sales,
and marketing.
ERP helps business managers to implement ERP in
business activities such as inventory control, order
tracking, customer service, finance and human resources
5.
6.
7. MRP – the predecessor to and backbone of
MRP II
And
ERP
a joint effort between J.I. Case, a manufacturer
of tractors and other construction machinery, in
partnership with IBM.
Initial MRP solutions were big,
clumsy and expensive.(1960-1970)
8.
9. How WIP could be improved by implementation of ERP (Work in
Process )
Without using of any integrated system
using of integrated system
10. Some Questions
What are the major types of systems in a business? What
role do they play?
How do information systems support the major business
functions?
Why should managers pay attention to business processes?
11. Major Types of
Systems
• Executive Support Systems (Executive Support Systems (ESSESS))
• Decision Support Systems (Decision Support Systems (DSSDSS))
• Management Information Systems (Management Information Systems (MISMIS))
• Knowledge Work Systems (Knowledge Work Systems (KWSKWS))
• Office SystemsOffice Systems
• Transaction Processing Systems (Transaction Processing Systems (TPSTPS))
12.
13. Transaction Processing Systems (TPS):Transaction Processing Systems (TPS):
• Basic business systems that serve the operationalBasic business systems that serve the operational
levellevel
• A computerized system that performs and recordsA computerized system that performs and records
the daily routine transactions necessary to thethe daily routine transactions necessary to the
conduct of the businessconduct of the business
16. Executive Support System (ESS):
Strategic level
Inputs: Aggregate data
Processing: Interactive
Outputs: Projections
Users: Senior managers
Example: 5-year operating plan
17. Management Information System (MIS):
Management level
Inputs: High volume data
Processing: Simple models
Outputs: Summary reports
Users: Middle managers
Example: Annual budgeting
18. Decision Support System (DSS):
Management level
Inputs: Low volume data
Processing: Interactive
Outputs: Decision analysis
Users: Professionals, staff
Example: Contract cost analysis
19. Knowledge Work Systems (KWS):
Knowledge level
Inputs: Design specs
Processing: Modeling
Outputs: Designs, graphics
Users: Technical staff and professionals
Example: Engineering work station
25. Supply
Chain management
6 level of sys.(ESS,MIS,TPS,…) +MRPII
Best Practice :
Comparing your process with similar processes
In higher companies
Enterprise resources planning software
ERP elements
27. Business Functions Potentially Supported by ERP
Financial Human Resources
Operations and
Logistics
Sales and
Marketing
Accounts receivable and
payable
Time accounting Inventory management Order
management
Asset accounting Payroll Materials Requirement
Planning (MRP)
Pricing
Cash forecasting Personnel planning Plant maintenance Sales
management
Cost accounting Travel expenses Production planning Sales planning
Executive information
systems
Project management
Financial consolidation Purchasing
General ledger Quality management
Profitability analysis Shipping
Standard costing Vendor evaluation
28. Modules Offered by Leading Vendors
Functional
Description
SAP Oracle People Soft JD Eswards
Records sales orders and
scheduled deliveries
,customer information
SD( Sales and Distribution) Marketing Sales Supply
Chain
Supply chain management Order management
Purchasing and raw
materials inventory,
work- in-process.
customer information
MM (Materials
Management
Procurement Supplier Relationship
Management
Inventory Management
Procurement
Production Planning
and scheduling actual
production
PP (production planning ) Manufacturing Manufacturing
Management
Product inspections
,material certifications
,quality control
QM (quality Management) Enterprise Performance
Management
Technical Foundation
Preventive maintenance,
resource management
PM (plant Maintenance) Service Enterprise Service
Automation
Recruiting, hiring
training ,payroll
,benefits
HR (Human Resources Human Resources Human Capital
Management
Workforce Management
29. Reasons for Implementing ERP-Rating 1(Not Important) to 5(very Important)
Reason United States Sweden
Replace legacy systems 4.06 4.11
Simplify and standardize systems 3.85 3.67
Improve interactions with suppliers & customers 3.55 3.16
Gain strategic advantage 3.46 3.18
Link to global activities 3.17 2.85
Pressure to keep up with competitors 2.99 2.48
Ease of upgrading systems 2.91 2.96
Restructure organization 2.58 2.70
30. Functional Description SAP Oracle People Soft JD Eswards
Internal management,
cost analysis by cost
center
CO (Controlling) Time and Expense
Management
Fixed-asset purchase
and depreciation
AM (Asset
Management)
Asset Management Enterprise Asset
Management
R&D ,construction,
marketing projects
PS (Asset
Management)
Projects Project Management
Contracts Subcontract
Management Real
Estate Management
Automate system, task –
flow analysis, Prompt
actions
WF (Workflow)
Best practices IS (Industry
Solutions)
Modules Offered by Leading Vendors
31. Relative ERP Module Use
Module Midwestern ERP Users Swedish ERP Users
Financial and Accounting 91.5% 87.3%
Materials management 89.2 91.8
Production planning 88.5 90.5
Order entry 87.7 92.4
Purchasing 86.9 93.0
Financial control 81.5 82.3
Distribution/logistics 75.4 84.8
Asset management 57.7 63.3
Quality management 44.6 47.5
Personnel/human resources 44.6 57.6
Maintenance 40.8 44.3
R&D management 30.8 34.2
32. Advantages and Disadvantages of Alternative ERP Development Methods
Method Advantages Disadvantages
Develop in-house Best fit with organizational needs Most difficult to develop
Most expensive
Slowest
In-house system
With vendor supplements
Gain commercial advantages
Combined with organizational fit
Difficult to develop
Expensive
slow
Best-of-breed
Customized vendor system
Theoretically while keeping
Retain flexibility while keeping
Vendor expertise
Difficult to link modules
Slow
Slower
Usually more expensive
Selected vendor modules Less risk
Relatively fast
Least expensive
If expand, long run time and cost higher
Full vendor system Fast
Less expensive
Efficient
Inflexible
Application device provider Least risk
Least cost
Fastest
Least subject to vendor change
At the mercy of ASP provider
No control
Subject to price increases
33. Expected ERP Project Installation Time Requirements
Installation Time United States Sweden
12 months or less 34% 38%
13 to 24 months 45 49
25 to 36 months 11 8
35 to 48 months 6 4
Over 48 months 2 1
34. ERP Installation Project Cost Proportions
Installation Cost Proportion
Project
Installation Cost
Proportion in United States
Cost Proportion
in Sweden
Software 30% 24%
Consulting 24 30
Hardware 18 19
Implementation team 14 12
Training 11 14
Other 3 1
35.
36. A supply chain is characterized by the flow of materials and
information both within and between business entities including
suppliers, manufacturers and customers. The ultimate goal of
supply chain management is to meet customer’s demand more
efficiently. For a manufacturing company, it is to make the right
product, for the right customer, in the right amount, at the right
time.
37.
38.
39.
40.
41. ERP Implementation And Maintenance
ERP Systems Are Adopted In The Hopes That They Will Improve The
Performance Of An Organization On A Number Of Key Performance
Indicators , Such As Profitability , Efficiency , And Accuracy In
Information System Data And Reports . ERP Vendors Typically
Promise Gains Of 10 To 15 Percent In Revenue , Customer
Satisfaction , And Other Measures Of Value . The Effort Required To
Build These Systems Is Significant . Meta Group found that the
average ERP implementation takes 23 months with total Ownership
cost of $15 million .
42. Business Intelligence Systems And ERP
Enterprise Resource Planning Systems Offer Powerful Tools To Better Measure
And Control Organizational Operations . Many Organizations Have Found That
This Valuable Tool Can Be Enhanced To Provide Even Greater Value Though The
Addition Of Powerful Business Intelligence Systems . Business Intelligence In
This Context Is Supported By Sorting Data (Data Warehouse And Related
Systems) And Conducting Studies Using This Data To Solve Business Problems
( One Means To Do This Though Data Mining ) . One Of The Most Popular Forms
Of Data Mining In ERP Systems Is Support Of Customer Relationship
Management (CRM). Data Warehouses Are One Of The Most Popular Extensions
To ERP Systems , With Over Two-Thirds Of U.S. Manufacturers Adopting Or
Planning Such Systems ( And Slightly Less Than Two – Thirds of Swedish
Manufacturers doing the same ).
There Has Been Tremendous Progress In Computer Storage Of Data . Many
Applications Are Being Found For This new capacity . one major user of massive
storage capacity is ERP systems, witch have large storage requirements due to
their comprehensive nature .
43. Data Mining Overview
Data Mining Overview Refers To The Analysis Of The Large Quantities Of Data
Stored In Computers . For Example , Grocery Stores Have Large Amounts Of Data
Generated By Purchases . Bar Coding Has Made Grocery Checkout Very
Convenient . Grocery Stores And Other Retail Stores Are Able To Quickly Process
Purchases , And Use Computers To Accurately Determine Product Prices . These
Same Computers Help The Stores With Inventory Management By
Instantaneously Determining The Quantity Of Items Of Each Product On Hand .
Stores Can Also Apply Computer Technology To Contact Their Vendors So That
They Do Not Run Out Of Items . Computers Allow The Store’s Accounting System
To More Accurately Measure Costs And Determine The Profit That Store
Stockholders Are Concerned About . All Of This Information Is Available Based
Upon The Bar Coding Information Attached To Each Product . The Benefits Of
Bar Coding Encompass For More Than Faster Checkout Service . The Entire
Business Management Process Can Use The Information Generated .
44. ERP And Supply Chains
Supply Chain Are Collections Of Organizations That Work Together To
Provide Raw Materials That Are Converted Into Products And Delivered
To Retail Outlets Where Customers Can Obtain Them . In The Past ,
Monopolies Would Sometimes Seek Vertical Integration So That They
Could Control The Entire Supply Chain ( Standard Oil Went A Long Way
Toward Total Vertical Integration ; Steel Companies Also Attained At
Lest Something Approaching It ) . The Dutch East India Companies Are
An Early Example Of A Global Supply Chain . Military Logistics Systems
Are The Epitome Of Supply Chain Is Control And Efficiency . Today‘S
Companies Gain Efficiency Through A Higher Degree Of Specialization .
This Appears In Various Forms , Including Outsourcing . The Idea
Behind Outsourcing Is That There Are Specialists Throughout The
Supply Chain Who Can Do A Better Job Of The Specific Function They
Perform .
46. •The growing information needs of an enterprise make it imperative
to improve or replace old systems.
•Especially under the present business environment, where the
globalization has been initiated, full convertibility is coined.
•Infrastructure Projects are nearing completion, and it is expected
that the whole business system will undergo a major shift.
Conclusion
•Implementation of ERP solutions is one of the largest
drivers of growth in the consultancy business.
•The introduction of such a large and complex software like
ERP, enables an organization to integrate their
manufacturing, finance and marketing operations at all
levels, is in itself a challenge, since it calls for technical and
functional skills and a change in user mindsets.
51. ERP – General Concepts
What is ERP?
The Current Scenario
Why ERP?
Definition
Evolution
Expectations
BPR & ERP
BPR – The Steps
EnterpriseResourcePlanning
52. What is ERP?
facilitates company-wide integrated
information systems, covering all
functional areas
performs core Corporate activities and
increases customer service augmenting
Corporate Image
ERP is a solution, which
EnterpriseResourcePlanning
53. The Current Scenario
Islands of Information
Difficult to get timely & accurate information
Heterogeneous Hardware & Software
platforms & practices
Poor connectivity between different
organizational locations
Sticking with obsolete technology
Resist to change
Lack of proven man-power to develop
integrated software
EnterpriseResourcePlanning
55. Why ERP?
For Management – to know what is happening
in the company
One solution for better Management
For cycle time reduction
To achieve cost control & low working capital
To marry latest technologies
To shun the geographical gaps
To satisfy the customers with high expectations
To be Competitive & for survival
EnterpriseResourcePlanning
56. ERP - Definition
“Software solution that addresses the
Enterprise needs, taking a process view of
the overall organization to meet the goals,
by tightly integrating all functions and
under a common software platform”
EnterpriseResourcePlanning
57. Evolution of ERP
1960’s - Systems Just for Inventory Control
1970’s - MRP – Material Requirement Planning
(Inventory with material planning & procurement)
1980’s - MRP II – Manufacturing Resources Planning
(Extended MRP to shop floor & distribution Mgnt.)
Mid 1990’s - ERP – Enterprise Resource Planning
(Covering all the activities of an Enterprise)
2000 onwards – ERP II – Collaborative Commerce
(Extending ERP to external business entities)
EnterpriseResourcePlanning
58. ERP – Expectations
Integrating all the functions
Integrating the systems running in all the locations
Transparency of information using a single
data source across the organization
Software must be responsive
Modular
Flexible
Easy to add functionalities
Provide growth path
EnterpriseResourcePlanning
59. BPR & ERP
Just automating the existing business practices
will not help ERP to achieve the anticipated results
because, OO + NT = EOO
Business Process Re-engineering [BPR] brings out the
deficiencies of the existing setup
BPR and ERP will give way to implement new
systems and the long pending improvements in the
existing systems
BPR may be time consuming but the scope can be
restricted & controlled by the Management
BusinessProcessRe-engineering
60. BPR - Steps
Step 1 Step 2 Step 3
Understand Simplify/Improve Automate
Understand the
existing
systems
associated with
all the
functionalities
Draft & frame the
possibilities & ways
to simplify or
Improve or eliminate
the processes
Implement
with the help
of ERP
BusinessProcessRe-engineering
61. ERP – Options
OPTION 1 – MAKE [Using Internal resources]
Developing a custom-built ERP package, specific to the
requirements of the organization, with the help of the
in-house IT department
OPTION 2 - BUY
Going for Tailor-made ERP packages available in the market like
SAP, Oracle applications, Baan, PeopleSoft etc.
OPTION 3 – MAKE [using External resources]
Developing a custom-built ERP package, specific to the
requirements of the organization, with the help of a
software solution provider
EnterpriseResourcePlanning
63. ERP – Building using Internal
resources – The Facts
Lack of adequate & qualified manpower
Not driven with clear focus on expectations,
time & cost
Poor software project management
Lack of seriousness with the Management & the
IT Team
High employee turnover
Lot of schedule gaps during Project execution
Normally project life is more
Frequent change in the scope with the approval
of the Management
66. About
Generalized off the shelf application s/w packages
Modules based on rich functionalities for all business
functions
User tested with lot of installations
No lead time requirement for software development
Tuned for more users/networks with adequate & in-
built security
Parameterized for flexibility
Can sit on latest hardware & software platforms
Upgradation of functionalities with version control
Tailor-madeERPsolutions
68. ERP Product selection Phase
ERP Team formation for selection
Appointment of Consultants [if needed]
Scoping study
Product selection
Implementation partners selection
Hardware/Communication cost estimation
Tailor-madeERPsolutions
69. Product Selection - Parameters
Reputation of the ERP product
No.of installations in the geographical vicinity
% of the overall functional availability
Customization possibilities
After sales support
Your investment plan & budget
Implementation partner’s track record
Tailor-madeERPsolutions
71. Preparation Phase
Framing ERP Implementation Strategies
Formation of Apex & Steering committees
Functional & IT team formation
Training on ERP functions & features
Scope finalization
GAP analysis
Action plan to resolve the gaps
Tailor-madeERPsolutions
72. ERP product acceptance -
options
1. Adapting directly, all the functions available in
the ERP Product [Applicable for startup companies]
2. Change the way the firm does the business to fit
the product [Compromising]
3. Customize the ERP product to suit the business
Processes. [Customization]
Tailor-madeERPsolutions
73. GAP Analysis
This is the process to identity the gaps by mapping
the expectations of the company with the
capabilities of the ERP product
Results of Gap Analysis
Directly Supported
Workaround suggested
Extension required
Change in business process – suggested
Not full supported
Manual – not under the scope of ERP
Tailor-madeERPsolutions
74. Production Phase
Installing the software & hardware
Tuning the software to meet the
customization needs
Master & Control data arrival as per
the Product data structures
Location & people specific roles & rights
allocation for module access & security
Tailor-madeERPsolutions
75. Implementation Phase
Conference Room Pilot [Parallel run]
Resolving the Parallel run issues
Training the end users
Live run
Tailor-madeERPsolutions
76. Post-Implementation Phase
Regular monitoring
Tuning [hardware/software] for patching
the performance issues
Maintenance
Tailor-madeERPsolutions
77. Pitfalls & Points of concern
Costly comparing to custom-built options
Lot of hidden costs
Chances of cost & time overrun are high
The Level of customization/Indianization
Compulsion to pay for redundant modules/features
Vigorous involvement of all during implementation
Non-availability of special practices like Customer
Complaint, Logistics
Linking historical data – offline & painful
The requirement of Change Management is a must
Dependency on outsiders is high
IT department – Poor grip on the Implemented systems
Tailor-madeERPsolutions
78. Critical Success Factors
Tailor-madeERPsolutions
The firm & optimistic approach of the Management
- on adapting the ERP product driven methodologies
- on customization
- on monetary commitments
The dedicated Team
Good Training
Strict adherence to the Project schedules
Right technical infra-structure
Change Management
?
80. Building ERP using Ext.sources
About this option
The Principle!
The Steps
Why?
Points of Concern
Software Vendor selection
Critical Success factors
81. About
Here the whole package is designed & built
by keeping a specific enterprise & its business
Practices in mind
by incorporating the improvements/additions
with due integration
without compromising or changing the current way
of doing the business and
providing flexibility to accommodate your business
fluctuations
Custom-BuiltERPsolutions
83. Custom-BuiltERPsolutions
The Steps
1. Software vendor selection
2. Detailed study by the vendor
3. Scope & platform finalization
4. Freezing the commercials
5. Development
6. Hardware addition/upgradation
7. Old master/transaction data migration
8. Parallel run with Integration & connectivity check
9. Implementation
10. Maintenance
84. Custom-BuiltERPsolutions
Why?
Very economical while comparing the cost of implementing
tailor-made ERP solutions
Less prone for hidden-cost hits
The company can opt for its choice of Hardware, Software &
communication platforms based on the skill availability
The company and the software vendor have the direct
relationship during the project execution. The proximity
would be high & convenient.
IT department has good control over the Project
What is required only would be considered under the scope –
No redundancy
85. Why? - Cont.
The requisite flavor of E-Biz & work-flow components
can be embraced towards value edition
The existing practices & applications can be tuned and
linked with the proposed package
Maintenance & improvements are easy & less costlier.
Even IT team can maintain the setup after getting the
source code
86. Points of Concern
Software development vendor selection
Requirement/scope finalization [high chances of
retaining the islands as it is]
Less chances of Value addition
Not time tested
Chances of Prolonged project duration
87. The following traits should be considered while selecting the software
vendor for building the ERP application
Technical expertise
Domain knowledge
Adequate manpower
Project management skills
Long existence in the field
Extra skills [e-biz & workflow]
Software Vendor Selection
88. Custom-BuiltERPsolutions
The Critical Success Factors
• Clear Vision & support of the Management
• Capabilities of the software development vendor
• Scope & Expectations finalization towards
meeting the ERP concepts
• Strict implementation schedules & periodical
monitoring
• The involvement of the IT & functional teams
89. Key Process
Integration
via ERP
Key Process
Integration
via ERP
Product
Lifecycle
Management
Product
Lifecycle
Management
Supply Chain
Management
Supply Chain
Management
Customer
Management
Customer
Management
Supplier
Collaboration
Supplier
Collaboration
Design
Partners
Design
Partners
Consumers
and Channels
Consumers
and Channels
Beyond ERP