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Enterprise Resource Planning

Enterprise Resource Planning. Enterprise Resource Planning. Enterprise Resource Planning Systems is a computer system that integrates application programs in accounting, sales, manufacturing, and other functions in the firm

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Enterprise Resource Planning

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  1. Enterprise Resource Planning

  2. Enterprise Resource Planning • Enterprise Resource Planning Systems is a computer system that integrates application programs in accounting, sales, manufacturing, and other functions in the firm • This integration is accomplished through a database shared by all the application programs ERP can be considered an initiative launched to better manage business processes across the organization using a common, integrated database, shared data management applications and reporting tools.

  3. Enterprise Resource Planning - Background An organization’s critical business processes often cut across many of its functional units. In most organizations, each process has its own data needs and applications that operate as distinct systems. The results of this approach: - Function-Centric view in the business units - Operational Inefficiencies Example: A customer order Logistics Accounting Purchasing Sales Production

  4. Customer orders Forecasts Master production schedule Bills of materials Routings Time standards Inventory records Inventory transactions MRP explosion Material requirements plan Cost and financial data Manufacturing resource plan Enterprise Resource Planning - Background The Idea of MRP ERP evolved from MRP (Material Requirements Planning) and MRP II.

  5. Enterprise Resource Planning - Background The Idea of MRP II “Instead of having one set of numbers for the operating system in manufacturing and one set kept by the financial people – once the manufacturing people have numbers that are valid, the financial people can use these to get their numbers. Of course, whenever there are two systems – the numbers are bound to be different. With MRP II, everybody can be working with the same set of numbers, but that’s only the technical difference. The big difference comes in the way management uses these tools…MRP II becomes a company game plan for manufacturing, marketing, engineering, and finance.” Oliver Wright, The Executives Guide to Successful MRP II, 1982.

  6. Enterprise Resource Planning – Background Timeline

  7. Financial Accounting Sales & Distribution Human Resources Manufacturing & Logistics ERP Functional Components Accounts Payable Accounts Receivable General Ledger Capital Investments Open Item Management ABC (costing approaches) Asset Management Customer Management Order Management Configuration Management Billing Rebate Processing Functional Components Payroll Benefits Scheduling Personnel Development Workforce Planning Travel Expense Accounting Largest and most complex Materials Management Plant Maintenance Quality Management Production Planning and Control Project Management Budgeting

  8. SAP System Functional Components

  9. Reasons for implementing ERP • Desire to standardize and improve processes • To improve the level of systems integration • To improve information quality • Integrate Financial Information • Integrate Customer Order Information • Standardize and Speed Up Manufacturing Processes • Reduce Inventory • Standardize Human Resources Information • Global Outreach • Avoid Redundancies

  10. ERP Disadvantages • Time-consuming • Expensive • Fit • Vendor Dependence • Too many features, too much complexity • Process Rigor (Standardized)

  11. The General ERP Process • Product Analysis • Module Selection • Process Analysis • Data Analysis • Applications Integration • Testing and Installation • Employee Training Average Implantation Time 24+ Months Meta Group Study

  12. How Much Does an ERP Implementation Cost? • The size and geographic distribution of the company. • The size of the ERP package. • Hardware • Software • Consultants and Analysts Fees • Time • Training • A large company may spend from $ 50 to $ 100 M or more USD for an integrated ERP implementation. • Meta group survey; 63 companies (large and small) in a range of industries. • Average cost $ 15,000,000. • High $300 M, $300,000,000 USD • Low $ 400 K, $400,000 USD

  13. Successful ERP Implementation Criteria • Top Management Support • Good Cost Estimation • Realistic Expectations • ERP Implementation • Cultural Impact • Training • Customization and Integration

  14. Hillerich & Bradsby About Hillerich & Bradsby

  15. Additional ERP Resources • SSA Global Technologies – www.ssaglobal.com • SAP – www.sap.com • Oracle/PeopleSoft – www.oracle.com • IBM -http://www-03.ibm.com/solutions/businesssolutions/erp • Microsoft (Great Plains) – www.microsoft.com • Also, American Software, i2, Manugistics

  16. Additional ERP Resources

  17. Additional ERP Resources

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