MCA E31 ERP Systems

UNIT - I
1. ERP Introduction
2. Benefits
3. The Evolution of ERP
4. The Conceptual model of ERP
5. The Structure of ERP.
 ERP Introduction
ERP (Enterprise Resource Planning)

Meaning
ENTERPRISE:- “An Enterprise is a group of people having
some common goal. The assemblage has some key
functions to perform in order to accomplish its goal.”

RESOURCES:- “ Resources incorporated are money,

Manpower, Materials, and all the supplementary
things that are required to run the enterprise.”
• PLANNING:- “ Planning is done to make certain that nothing
goes wrong. Planning is putting necessary function in place
and more importantly putting them in concert (jointly)”

Enterprise Resource Planning (ERP) is an integrated computer-

based system used to manage internal and external resources,
including tangible assets, financial resources, materials, and
human resources. It's purpose is to facilitate ( make Possible or
make easy) the flow of information between all business
functions inside the boundaries of the organization and manage
the connections to outside stakeholders. Built on a centralized
database and normally utilizing a common computing platform,
ERP systems consolidate all business operations into a uniform
and enterprise-wide system environment.
 ERP BENEFITS
Benefits of an ERP System or reasons for growth of ERP

• Effective utilization of resources

• Improvement in business performance
• Reduction of inventory due to JIT (Just in Time)approach
• Integration of information i.e. integration of all the department of an organization.
• Sharing of common data and information
• Global Adaptation
• Improvement in the quality of the product at the same price
• ERP targeted all types of business organization whether large business or small business
organization
• Lowers the total cost in supply chain management through JIT approach.
• Eliminate limitation in legacy system i.e. traditional system
• Order fulfillment improvement
• Improvement in customer service.
 EVOLUTION OF ERP
1960s - Inventory Management & Control
Inventory Management and control is the combination of information technology
and business processes of maintaining the appropriate level of stock in a warehouse.
The activities of inventory management include identifying inventory requirements,
setting targets, providing replenishment techniques and options, monitoring item
usages, reconciling the inventory balances, and reporting inventory status.
1970s- Material Requirement Planning (MRP)

Materials Requirement Planning (MRP) utilizes software applications for scheduling

production processes. MRP generates schedules for the operations and raw material
purchases based on the production requirements of finished goods, the structure of
the production system, the current inventories levels and the lot sizing procedure for
each operation.
 1980s Manufacturing Requirements Planning (MRP II)

Manufacturing Requirements Planning or MRP utilizes software applications for

coordinating manufacturing processes, from product planning, parts purchasing,
inventory control to product distribution.

1990s- Enterprise Resource Planning (ERP)

Enterprise Resource Planning or ERP uses multi-module application software for

improving the performance of the internal business processes. ERP systems often
integrates business activities across functional departments, from product
planning, parts purchasing, inventory control, product distribution, fulfillment, to
order tracking. ERP software systems may include application modules for
supporting marketing, finance, accounting and human resources.
 CONCEPTUAL MODEL OF ERP
Conceptual components of ERP
The ERP model consists of four components that are implemented through a
methodology. Figure 1 illustrates the integration between the components.
A clear mapping results, as can be seen in Table I, when this conceptual model
is compared to the 4Ps model.
Methodology encircles all four of the components to illustrate that each
component is addressed and implemented in an integrated manner.
Components are as follows: -
1. The software component
2. Process flow
3. Customer mindset
4. Change management
Figure 1
 The Software Component

The Software component of the ERP model is the component that is most visible to
the users and is therefore seen as the ERP Product. It consists of several generic
modules, some of which are listed below:-

1. Finance
2. Human resources
3. Supply Chain Management (SCM)
4. Supplier relationship management (SRM)
5. Customer relationship management (CRM)
6. Business Intelligence (BI)
 Process Flow
Process Flow deals with the way in which the information flows among the different
modules within an ERP system. This forms a very important part of understanding
ERP system.
 Customer Mindset
• The third proposed component of the ERP model is the customer’s mindset.
Resistance kills many ERP projects. A proposed ERP system may hold great
promise, but often fals to consider how the user are likely to view this so called
improvement. When user are asked to give up what they know and what they can
rely on, they will resist. A paradigm shift or customer mindset change must be
achieved.

• This has to be done at three level:

1. User influence
2. Team Influence
3. Organizational Influence
 Change Management
Change management play a major role in the successful implementation of an ERP
system and is the forth component in the ERP model. Change needs to be
managed at several levels:

1. User attitude
2. Project changes
3. Business process changes
4. System Changes
 ERP Methodology
• Methodology refers to a systematic approach to implement an ERP system that will
ensure the Proper integration of the four component.
There are five steps of ERP methodology:
• Pre- implementation
• Analysis Phase
• Design Phase
• Construction Phase
• Implementation Phase