ERP Concepts

Enterprise Resource Planning An Overview
D Bhattacharyya 15th November 2010

15-01-2012 Presentation 1
Information Technology today . . .

Introduction Challenges today Enterprise & needs What ERP is Q&A Conclusion
Pervades all aspects of our lives From shopping, to healthcare, to office work, to ticketing, to shipbuilding . . . . . . . . . . . .all are supported by Information Technology
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The number of IT Applications in operations are far and many

IRCTC / Air India / Kingfisher / Red Bus / Makemytrip / Cleartrip / Expedia / Travelocity: Travel, ticketing, stay, conveyance, tour planning E-Chaupal: Online Mandi, Best practice exchange, Technical support, Commodity prices tracking Ebay / Infibeam / Amazon and many more: Online purchases CAD / CAM / Textile Design / Production Planning / Financial Accounting E-Tendering, e-Banking, e-Trading, e-Mail, e-Police: the list goes on an on
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Is used by organisations of various types, sizes and businesses Harnessing and Management of information is so critical Due to the fast changing business environment And the global nature of business That one has to constantly be on ones toes to be ahead of the pack and keep creating competitive advantage Appropriate use of Information Technology helps is harnessing of the information that an organisation needs to be competitive
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Has evolved over a period of time In resonance to the changing business environment, and hence changing needs of users And now offers solutions of every kind focussing on complete organisations or specific interest areas Which has also been enabled by the telecom revolution and improvement in database applications As a result of which, integration of all aspects of an organisation has been possible Enterprise Resource Planning addresses the integration needs of an organisation
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Technological advances are a recent phenomenon That occurred mostly during the last century Since the Wright Brothers showed man how to fly And driven by two world wars!!
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Impact on business . . .
Death of distance Increase of reach Erosion of Geographic boundaries As a result

Business has changed from local to global Customer choice has increased Competition has increased Brand loyalty is gone
Each customer, therefore, has become important!

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The changing business environment..

Yesterday's business
Was limited by distance Was driven by demand Had manageable volumes Assumed abundance of resources Had definite pattern of growth
Today's business
Has unlimited reach Driven by customer's choice Low product life cycle Access to resources constrained by acts of government
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Has generated a lot of stress . . .

Downward pressure on prices Reduction in product life Reduction in time-to-market Tremendous increase in speed of conducting business And pressure on improvement in operational and cost efficiencies
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The changing business scenario . . .

3 forces influence today's business

Customer Competition Change
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Customer
Needs have changed, and are continuously changing Individuality - a very potent force Aware and information rich Demands highest levels of quality and transparency, with most competitive pricing
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Competition
Globalisation barriers gone Transnational open bounadaries Economic Liberalisation new driver Continuously evolving business rules Survival of the fittest Marketplace consolidation
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Change
The only constant Keeping up with change mandatory for survival
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Challenges today . . .
Customer retention
The customer has access to information The customer has no brand loyalty The customer demands better products and services at lower and lower costs
Product / Service Innovation and Continuous Improvement

To keep ahead of competition
Lowering of costs, continuously

Customer is not willing to pay for non-value added costs
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Challenges today . . .
Focus on individual customers Continuous product / service improvement Continuous improvement of cost structure
Continuous Innovation Information Availability

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Managing the challenges . .

3 key challenges
Demand and supply uncertainties Price competitiveness Supply network complexity
Facing the challenges

Collaboration Supply chain efficiency Ear to the ground Extremely responsive organisation
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The driving need . . .

Manage and Harness knowledge

Explicit knowledge: available to all Tacit knowledge: experience based, available in the mind
Convert knowledge into information Use information to manage Therefore, move towards Management by Facts
ERP creates an Information backbone

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What is an Enterprise?
Def: Def: a project or undertaking that is especially difficult, complicated, or risky a unit of economic organisation or activity; especially : a business organisation (as per Merriam-Webster) Merriam-Webster) 15-01-2012 18
The ENTERPRISE
Vendor Customer
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Logistic processes Procurement WareWareMaterials Services Vendor house
Production WareWarehouse
Sales
Customer
Material resources
Source: SAP AG
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Introduction Challenges today Enterprise & needs What ERP is Q&A Conclusion Planning Materials Sales / Marketing Production Management
Quality
Finance
Maintenance
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Hence, the Enterprise must have . .

A customer
That has a need that has to be fulfilled
The werewithal
To produce what the customer wants
A supplier
From whom to source the raw material
And partners
With whose help the material and services would flow
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An Enterprise, hence, is an entity . .

That offers services / products to other organisations . . for which is sources raw materials / services from other organisations, and completes its value addition . . and, having delivered its offering, gets remunerated . . and hence, depending on the nature of service / product, will have some / all of the following functions
Sales Marketing Inventory and Stores Purchase Production Finance and Costing Maintenance Quality 15-01-2012 23
An enterprise needs . .
Skills to perform each specific function
Accountancy Engineering Sales Production Management Stores Management Planning
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Resources to produce products / services
Material Time Money Services Manpower
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To deliver services / products . .

Each function has to be performed in a coordinated manner Which can only be done, if who is doing what, when is known Which means that the information required by various functions and generated by them needs to be managed properly The concept to integrate all the information and resources of an Enterprise for effective planning and usage is called Enterprise Resource Planning
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Competition Information Latest Innovations Freight Cost
Industry news
New regulations
Information,
Cash projection basis of which
Order book position
Machines . . . on the it will perform various under repair tasks and make and meet various commitments MTBF Inventory value
No of outstanding days
Labour Cost 15-01-2012
Pending Deliveries 27
Information needs of an organisation

Introduction Challenges today Enterprise & needs What ERP is Q&A Conclusion Labour Cost
Internal Data Sources

Pending Deliveries Inventory value Production Plan
External Data Sources

Competition Information Order book position Payment Received
Data acquisition Transaction System Data Capture Work Flows Information Architecture
Decision Support
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What ERP does . .

Integrates the diverse sources of information, internal as well as external Provides real time information Removes redundancy in data, improves data dependability Enables pro-active decision making Breaks departmental boundaries, controls process cycles Helps process standardisation Comes bundled with best business practices
Hence, results in improving the business processes of the enterprise
Improves the responsiveness of the organisation Provides significant and measurable business benefit
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With ERP .. ..
Organisational Slack
Inventory Cycle-time Expediting Capacity ....
Information Visibility
Management by Facts
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Example: Process Flow

Sales Department
Order Receipt Report
To Finance & Accounts
Cold Call
Pre-sales
Proposal
Order Receipt
Delivery Plan
To Prodn Planning
Production Planning Department From Purchase

Delivery Plan Material Availability Updated Matl Reqt Plan
Purchasing Department
Updated Matl Reqt Plan Material Availability
To Purch, Stores
Purchase List
Bill of Material
Material Requirement Plan
Material Requirement Vendor Identifn and Order Placement Existing Production Plan Revised Production Plan
To Purch, Finance
Updated Matl Avl Plan
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Presentation
31

Sales A/R
Mfg. Engineering General Ledger A/P Inventory Purchasing Production Planning
Engineering Design
Shop Floor execution
Controlling
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Presentation
32

Sales A/R
Mfg. Engineering
Engineering Design
General Ledger Shop Floor execution
Inventory
A/P
Purchasing Controlling Production Planning
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Presentation
33
Problems with 1000 islands . . . .

Multiple data entry points Redundant and multiple data items Low data dependability Faulty decision making Reactive system Only post-mortem possible; not pre-emption
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. . . therefore, to integrated world

Sales & Distribution Materials Mgmt. Production Planning Financial Accounting Controlling Fixed Assets Mgmt.
Data Centralisation ERP Knowledge Institutionalisation Quality Project

ManageManagement Plant MainMaintenance System Workflow Industry Solutions
Human Resources
Source: SAP AG
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Example: Process Flow with integration

Order Receipt Report Cold Call Pre-sales Proposal Order Receipt
Delivery Plan
Material Availability
Bill of Material
Existing Production Plan
Vendor Identifn and Order Placement
Purchase List
Updated Matl Reqt Plan
Revised Production Plan
Updated Matl Avl Plan
Smooth flow of information, and better managed operations!

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In an integrated system
Single point data entry

No data redundancy High data dependability Effective decision making
Real time, on line data availability

Faster response time
Pre-emptive measures like early warning Highly responsive and pro-active system
Better manageability, more agile
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ERP Eco-system
Hardware Vendors
Networking and SI Vendors
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ERP Application Software Vendors

Source: Panorama Consulting Group
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Other constituents of the eco-system

Consultants Large houses: TCS, IBM GS, Deloitte, Accenture, Infosys, Wipro Other vendors: there are many implementors of ERP in the country today Hardware / Data Storage / Networking / SI: IBM, HP, Dell, Oracle-SUN, Infosys, HCL, Wipro, L&T Infotech 3rd party applications EMC2, IDS Dr. Scheer etc. SAS Institute And many more
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ERP Applications: SAP

Introduction Challenges today Enterprise & needs What ERP is Q&A Conclusion SAP xApps
SAP xApp Resource & Program Mgmt SAP xApp Product Definition SAP xApp Mergers & Acquisition ... mySAP SCM mySAP SRM
SAP for <Industry>
SAP for Aerospace & Defense SAP for Automotive
...
SAP Packaged Solutions
Service Management for <Industry> Financial Insights for <Industry>
...
mySAP Business Suite

mySAP PLM mySAP ERP
Financials Human Resources Corporate Services Operations
SAP Smart Business Solutions

mySAP in-One mySAP CRM AllSAP Business One
SAP NetWeaver
SAP Enterprise Portal SAP Master Data Mgmt SAP Business Intelligence SAP Exchange Infrastructure --...
SAP Business One Server
Source: SAP AG
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ERP Applications: IFS

CASH FLOW SHOP FLOOR REPORTING SHOP ORDER REPETITIVE PRODUCTION PROCESS DESIGN BATCH PROCESS COMPLEX MRO VEHICLE INFORMATION MANAGEMENT PROCESS AUTOMATION INTEGRATION INVOICING SCHEDULING
SELF-SERVICE
ACCOUNTS PAYABLE ACCOUNTS RECEIVABLE FIXED ASSETS REPORT GENERATOR CONSOLIDATED ACCOUNTS GENERAL LEDGER ACCOUNTING RULES COLLABORATIVE SOLUTIONS
FIELD SERVICE SERVICE CONTRACT MANAGEMENT SUPPORT CENTER CUSTOMER QUOTATION SALES CONFIGURATOR
EXPENSE MANAGEMENT PROJECT REPORTING TIME & ATTENDANCE PAYROLL ADMINISTRATION TRAINING MANAGEMENT EMPLOYEE DEVELOPMENT
INSTRUMENTATION COSTING DESIGN ELECTRICAL DESIGN ASSET DATA MANAGEMENT ENGINEERING CHANGE MANAGEMENT PROJECT DELIVERY PDM CONFIGURATION CONSTRAINTBASED SCHEDULING ATP/CTP/PTP
CUSTOMER ORDERS CUSTOMER SCHEDULES
PREVENTIVE MAINTENANCE WORK ORDER EQUIPMENT METERING EQUIPMENT PERFORMANCE EQUIPMENT MONITORING
ePROCUREMENT
PERSONAL PORTAL MOBILE & WIRELESS SERVICES EVENT MANAGEMENT
PURCHASING
CONFIGURE TO ORDER ENGINEER TO ORDER
SUPPLIER SCHEDULES
WEB STORE
INVENTORY
CONNECT
SALES & MARKETING
PLANNING
DEMAND PLANNING
EQUIPMENT
RECRUITMENT
IFS FINANCIALS
BUSINESS PERFORMANCE
IFS eBUSINESS
CUSTOMER RELATIONSHIP MANAGEMENT
IFS SALES & SERVICE
IFS ENGINEERING
IFS IFS MANUFACTURING DISTRIBUTION

SUPPLY CHAIN MANAGEMENT
IFS MAINTENANCE
IFS HUMAN RESOURCES

BUSINESS MODELER
QUALITY MANAGEMENT
DOCUMENT MANAGEMENT
PROJECT MANAGEMENT
IFS Foundation1
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Source: IFS AB
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ERP Applications: OpenERP

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Source: OpenERP SA
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The path to today. . .

Introduction Challenges today Enterprise & needs What ERP is Q&A Conclusion ABC classes Reorder point Safety Stock EOQ 1960s Order point
MRP II + Finance MRP+ Control Demand Management Quality Bill of Materials Capacity Planning Maintenance Lead time Activity Scheduling Human Planning Bucket Resource----- Master Scheduling
1970s MRP
1980s MRP II
1990s ERP
Inventory Optimisation
Inventory Planning
Throughput Planning
Agile Enterprises
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. . and ongoing changes . .

Purchasing Supplier Contract s Contract s Manufacturing Sales / Distribution Customer The Virtual Corporation
Internet
Intranet
Internet
Source: SAP AG
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46
Thank You!
15-01-2012
Presentation
47

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Enterprise Resource Planning An Overview

D Bhattacharyya 15th November 2010

Information Technology today . . .

Information Technology today . . .

The number of IT Applications in operations are far and many

Information Technology today . . .

Information Technology today . . .

Information Technology today . . .

Death of distance Increase of reach Erosion of Geographic boundaries As a result

Each customer, therefore, has become important!

The changing business environment..

Has generated a lot of stress . . .

The changing business scenario . . .

3 forces influence today's business

The changing business scenario . . .

The changing business scenario . . .

The changing business scenario . . .

Product / Service Innovation and Continuous Improvement

Lowering of costs, continuously

Continuous Innovation Information Availability

Managing the challenges . .

Facing the challenges

The driving need . . .

Manage and Harness knowledge

ERP creates an Information backbone

Logistic processes Procurement WareWareMaterials Services Vendor house

Hence, the Enterprise must have . .

An Enterprise, hence, is an entity . .

Skills to perform each specific function

Accountancy Engineering Sales Production Management Stores Management Planning

Resources to produce products / services

Material Time Money Services Manpower

To deliver services / products . .

Competition Information Latest Innovations Freight Cost

Order book position

Labour Cost 15-01-2012

Information needs of an organisation

Internal Data Sources

External Data Sources

What ERP does . .

Inventory Cycle-time Expediting Capacity ....

Example: Process Flow

To Finance & Accounts

Production Planning Department From Purchase

Material Requirement Plan

Example: Process Flow

Mfg. Engineering General Ledger A/P Inventory Purchasing Production Planning

Shop Floor execution

Example: Process Flow

General Ledger Shop Floor execution

Purchasing Controlling Production Planning

Problems with 1000 islands . . . .

. . . therefore, to integrated world

Data Centralisation ERP Knowledge Institutionalisation Quality Project

Example: Process Flow with integration

Existing Production Plan

Vendor Identifn and Order Placement

Updated Matl Reqt Plan

Revised Production Plan

Updated Matl Avl Plan

Smooth flow of information, and better managed operations!

Single point data entry

Real time, on line data availability