ERP

Charactertistics and features of ERP (in details)

Need to focus on Enterprise Integration/ERP

Information mapping

Role of common shared Enterprise database

Difficulty in selecting ERP

Approach to ERP selection

Request for Proposal approach

Proof-of-Concept approach

Evaluation Criteria of ERP packages

Project Implementation Team Structure

Module VI

Module V

Module I
BPR
 

Business Process Reengineering Cycle

Module II
General ERP Implementation Methodology
. Identification of the needs for implementing an ERP package.
a. Why should I implement an ERP package?
b. Will it significantly improve my profitability?
c. Will it lead to reduced delivery times for my products?
d. Will it enhance my customers’ satisfaction level in terms of cost, delivery time, service and
quality?
e. Will it help reduce the costs of my products?
f. Will it enable me to achieve the same business volume with reduced manpower?
g. Will it enable me to re-engineer my business processes?
The other factors that should be taken into consideration are:
i. Need for quick flow of information between business partners.
ii. Effective management information system for quick decision-making.
iii. Elimination of manual preparation of various statutory statements.
iv. Need for a high level of integration between the various business functions.
. Evaluating the “As-Is” situation of your business. The various business functions should be first
enumerated. The process map should give you the following details for any business process:
a. The total time the business process takes to complete.
b. The total number of decision points involved.
c. The number of departments/geographical locations that the business process involves.
d. The flow of information.
e. The number of reporting points.
. Deciding upon the desired “Would-Be” situation of our business. In this step, we decide on what
we want our business processes to finally look like. Here we use the techniques of benchmarking to
ensure that the targets set are comparable to the best in the industry. Benchmarking can be done
on various aspects of the business like cost, quality, lead time, service, etc.
. Re-engineering of the business processes to achieve desired results. This step is also known as
Business Process re-engineering.
. Evaluation of various ERP packages based on -
a. Global Presence
b. Local Presence 
c. Investment in R & D
d. Target Market  
e. Price 
f. Modularity 
g. Obsolescence 
h. Ease of Implementation 
i. Cost of Implementation 
j. Post-Implementation Support
. Finalizing of the ERP package. After a thorough evaluation of all the ERP packages vis-à-vis the key
factors of your business, the package best suited to your business needs is selected. The process of
finalizing can be simplified by making a matrix of the key factors. You can then rate all the packages
under these heads.
. Installing requisite hardware and networks. In this step, one has to install the hardware and
networks required for the chosen ERP package. The installation of the hardware has to be well-
planned because generally the hardware arrives in time and lies idle due to the delays in
implementation. Also, the induction of the hardware should be in a phased manner to avoid blocking
of capital.
. Finalizing the implementation with consultant. The factors which go into the selection of the
consultant are -
 a. Skill-set available with the consultant (application area)
b. Installation base of the consultant
c. Industry-specific experience (knowledge of the various industry-specific business processes)
d. Finances involved in hiring the particular consultant.
. Implementation of ERP package. The broad steps involved in the implementation of the ERP
package are - 
a. Formation of Implementation Team
b. Preparation of Implementation Team
c. Mapping of business processes on to the package
d. Gap Analysis
e. Customization
f. Development of User-specific reports and transactions
g. Uploading of data from existing systems
h. Test runs
i. User Training
j. Parallel run
k. Concurrence from user on satisfactory working of the system
l. Migration to the new system
m. User Documentation
n. Post-Implementation support
o. System Monitoring and Fine Tuning

Implementation Team
Implementation Team consists of:
IT personnel 
Implementation consultants
Project Manager, Project Leaders and the Module Leaders 
Steering committee

Module III
ERP Selection
The first step in selecting an ERP system is generally to research vendor ERP systems on the market
and to identify a short list of vendors who will help to shape business requirements. The following
should be considered when researching vendors and gathering information:
. Other businesses using the vendor
. The vendor's financial position
. The vendor's implementation philosophy and support issues
. The hardware and software infrastructure used to support the ERP
. The vendor's direction and currency of software
. The vendor's release and upgrade strategies
. The vendor's user-base involvement in defining future functional changes 
. The vendor's development and maintenance resources

Request For Proposal Approach

The Request-For-Proposals approach is an expensive and time-consuming process for both the
company and vendor(s), but it can yield significant software savings when done right. In addition, one
of the benefits of bidding is a more detailed understanding of the ERP system functionality and a
willingness of the vendors to work with the company better to ensure a successful implementation. The
Request For Proposals (RFP), is sometimes called Request For Bids (RFB). 

The key elements of an RFP, from the perspective of an organization looking to obtain new business
system software should be three fold: 
. Provide an easy “apples to apples” comparison of potential suppliers 
. Ready access to key decision information.
. Eliminate any extra information which is not relevant to the decision process.

The five key elements in a quality RFP are: 

. Definition of why you are seeking new software (i.e., your buying criteria) 
. Description of your business, transaction volumes, user count, etc. 
. Clear definition of what information you are seeking from the suppliers 
. Quantitative (rather than qualitative)   evaluation criteria 
. Definition of how the process will work  moving forward and the time frames involved.

Proof-of-Concept Approach
This is the fastest approach of all, it is done when the company has chosen which package to
implement, it just needs to confirm the selection before signing the contract and start implementing it.
There can be several reasons why an organization has identified the preferred package.

Steps
. Define the critical requirements that are unique to your company and match to the vendors on your
short list. Please note: Critical requirements only. You have to assume that all systems will have an
"Aged Trial Balance". This list should not be longer than two pages. Only continue to step 2 with
those that sufficiently match.
. Visit a company using the system, in a similar industry and size as your own. You may not get all
criteria matched, but ask. With these demands, it is more difficult for the vendor to select who you
visit.
. Till now we  should have a favourite system. If we are still not comfortable enough to take the force,
this final step eliminates any further risk. Ask this vendor to bring in the trainer you will work with
after the sale is complete, not the professional presenter. Trainers have to live with their promises
after the sale, and will be quite forward about what the system can, or cannot do. 

Difficulties in selecting ERP Packages

. Cost
. User Interface
. Complexity
. Needs lot of BPR
. Approach of implementation 
. Implementation time
. Technology
. Helpful for each Management level
. Expected outcome meets expectations
. Security

EDI
 Electronic Data Interchange (EDI) is a set of standards for structuring information that is to be
electronically exchanged between and within businesses, organizations, government entities and other
groups, without human intervention. 
An inter-company, application-to-application communication of data in standard format for business
transactions.

Module IV
SAP
SAP, started in 1972 by five former IBM employees in Mannheim, Germany, states that it is the world's
largest inter-enterprise software company and the world's fourth-largest independent software supplier,
overall.  
The original name for SAP was German: Systeme, Anwendungen, Produkte, German for "Systems,
Applications and Products". The original SAP idea was to provide customers with the ability to interact
with a common corporate database for a comprehensive range of applications.

Integrated SAP Model

SAP R/3 Architecture

SAP R/3 is one of the main product of SAP, where R stands for Real Time and the number 3 relates to
three tier application architecture (Data base, Application Server and Client).
Most of the business in today’s world runs on SAP R/3 system. About 80% of the companies
implemented this software.

SAP R/3 Components

Internet communication Manager (ICM) - set up connection to internet. Supports protocol HTTP,
SMTP.
 Dispatcher distributes the requests to the work processes. If all the processes are occupied then the
requests are stored in dispatcher queue.
ABAP Work Process executes the ABAP code.
SAP gateway makes the RFC interface between SAP instances available. Remote Function Call
(RFC) is the standard SAP interface for communication between SAP systems. RFC calls a function
to be executed in a remote system. 
Message server exchanges the messages and balances the load.

mySAP Business Suite

The mySAP Business Suite includes various business modules and numerous sector and cross-sector
solutions. A distributed system of this nature requires a common infrastructure, which is provided by
SAP NetWeaver and, in particular, by the SAP Web Application Server (Web AS)—the successor to SAP
Basis. This type of system architecture is subdivided into three layers, which make up the basic
services of a business application system: the presentation layer, the application layer, and the database
layer. Each of these layers performs certain functions and constitutes a part of the overall system
landscape. 

PeopleSoft
Founded in 1987 by David Duffield and Ken Morris, PeopleSoft began with an idea Duffield had about
a "Client-Server" version of Integral Systems popular mainframe HRMS package. 
PeopleSoft expanded its product range to include a Financials Module in 19923, Distribution in 19945,
and Manufacturing in 1996.
In 2003, PeopleSoft performed a friendly merger with smaller rival J.D. Edwards.

Oracle moved to capitalize on the perceived strong brand loyalty within the JD Edwards user community
by rebranding former JD Edwards products. Thus PeopleSoft EnterpriseOne became JD Edwards
EnterpriseOne and PeopleSoft World became JD Edwards World. Oracle Fusion has taken the best
aspects of the PeopleSoft, JD Edwards and Oracle Applications and merged them into a new product
suite. The PeopleSoft name and product line are now marketed by Oracle under the new product Oracle
Fusion.

Oracle
Oracle Corporation (NASDAQ: ORCL) specializes in developing and marketing enterprise software
products — particularly database management systems. Through organic growth and a number of
high-profile acquisitions, Oracle enlarged its share of the software market. By 2007 Oracle ranked third
on the list of largest software companies in the world, after Microsoft and IBM. Subsequently it became
larger than IBM after its acquisition of Hyperion and BEA. The corporation has arguably become best-
known due to association with its flagship Oracle database. The company also builds tools for database
development, middle-tier software, enterprise resource planning software (ERP), customer relationship
management software (CRM) and supply chain management (SCM) software.

BAAN
Baan was a vendor of Enterprise Resource Planning (ERP) software that is now owned by Infor Global
Solutions. Baan or Baan ERP was also the name of the ERP product created by this company. The Baan
Corporation was created by Jan Baan in 1978 in Barneveld, Netherlands, to provide financial and
administrative consulting services. 

Module V
Supply Chain Management
Definition
Supply chain management (SCM) is the management of a network of interconnected businesses
involved in the ultimate provision of product and service packages required by end customers. It spans
all movement and storage of raw materials, work-in-process inventory, and finished goods from
point-of-origin to point-of-consumption (supply chain).

Key Drivers
Supply chain management must address the following problems:
Production
Location/Facilities
Inventory
Transportation
Information

Aims of Supply Chain Management

The ultimate aim of supply chain management is to satisfy the needs of the end-consumers
The objective of every supply chain is to maximize the overall value generated by an enterprise and it
consists of all stages involved, directly or indirectly, in fulfilling a customer request
The central aim of supply chain management, to have the right products in the right quantities (at
the right place) at the right moment at minimal cost, is translated into the interrelated issues of
customer satisfaction, inventory management, and flexibility. 

SCOR Model
 The Supply Chain Operation Reference (SCOR) model was developed by the supply chain council
with the assistance of 70 of the world’s leading manufacturing companies. It has been described as
the “most promising model for supply chain strategic decision making.” The model integrates business
concepts of process re-engineering, benchmarking, and measurement into its framework. This
framework focuses on five areas of the supply chain: plan, source, make, deliver, and return. These
areas repeat again and again along the supply chain. The supply chain council says this process spans
from “the supplier’s supplier to the customer’s customer.
Plan - Demand and supply planning and management are included in this first step. Elements
include balancing resources with requirements and determining communication along the entire
chain. The plan also includes determining business rules to improve and measure supply chain
efficiency. These business rules span inventory, transportation, assets, and regulatory compliance,
among others. The plan also aligns the supply chain plan with the financial plan of the company.
Source - This step describes sourcing infrastructure and material acquisition. It describes how to
manage inventory, the supplier network, supplier agreements, and supplier performance. It
discusses how to handle supplier payments and when to receive, verify, and transfer product.
Make - Manufacturing and production are the emphasis of this step. Is the manufacturing process
make-to-order, make-to-stock, or engineer-to-order? The make step includes, production activities,
packaging, staging product, and releasing. It also includes managing the production network,
equipment and facilities, and transportation.
Deliver - Delivery includes order management, warehousing, and transportation. It also includes
receiving orders from customers and invoicing them once product has been received. This step
involves management of finished inventories, assets, transportation, product life cycles, and
importing and exporting requirements.
Return - Companies must be prepared to handle the return of containers, packaging, or defective
product. The return involves the management of business rules, return inventory, assets,
transportation, and regulatory requirements.

SCOR Structure
 

SCOR Model Structure

Steven’s Model of SCM

Graham C. Stevens, who was a senior managing consultant at Peat Marwick McLintock, suggested a 4-
stage supply chain integration model or framework as below -  

Supply Chain Integration Model

Baseline: each department in the same company manages supply chain issues separately. At this
stage, "Functional Silo" is a major problem. Functional Silo is the way each function works on their
own objectives.
Functional Integration: each department in the same company works together to reduce costs.
Internal Supply Chain Integration: each department is now connected via the same IT
infrastructure to increase the efficiency. At this stage, "Corporate Silo" is the major issue. Corporate
Silo is the way each company works on their own agenda.
External Supply Chain Integration: each company in the same supply chain joins hands and work
together to achieve the same goal to satisfy customer's requirements.
 

Stevens integration model and the seamless supply chain 

Bullwhip Effect
The bullwhip effect can be explained as an occurrence detected by the supply chain where orders sent
to the manufacturer and supplier create larger variance then the sales to the end customer.  These
irregular orders in the lower part of the supply chain develop to be more distinct higher up in the supply
 chain.  This variance can interrupt the smoothness of the supply chain process as each link in the
supply chain will over or underestimate the product demand resulting in exaggerated fluctuations.

Factors contributing to the Bullwhip Effect

There are many factors said to cause or contribute to the bullwhip effect in supply chains; the following
list names a few:
Disorganization - between each supply chain link; with ordering larger or smaller amounts of a
product than is needed due to an over or under reaction to the supply chain beforehand.
Lack of communication - between each link in the supply chain makes it difficult for processes to
run smoothly.  Managers can perceive a product demand quite differently within different links of
the supply chain and therefore order different quantities.
Free return policies - customers may intentionally overstate demands due to shortages and then
cancel when the supply becomes adequate again,  without return forfeit retailers will continue to
exaggerate their needs and cancel orders; resulting in excess material.
Order batching - companies may not immediately place an order with their supplier; often
accumulating the demand first.  Companies may order weekly or even monthly.  This creates
variability in the demand as there may for instance be a surge in demand at some stage followed by
no demand after.
Price variations - special discounts and other cost changes can upset regular buying patterns;
buyers want to take advantage on discounts offered during a short time period, this can cause
uneven production and distorted demand information.
Incorrect Demand information - relying on past demand information to estimate current demand
information of a product does not take into account any fluctuations that may occur in demand over
a period of time.

Bullwhip effect example

Benefits of SCM
Improved delivery performance—quicker customer response and fulfillment rates
Greater productivity and lower costs
Reduced inventory throughout the chain 
Improved forecasting precision
Improved quality and products that are more technologically advanced 
Enhanced inter-operational communications and cooperation 
Shortened repair times and enhanced equipment readiness 
More reliable financial information. 
Fewer suppliers and shorter planning cycles 

ERP vs SCM
ERP and SCM today are commonly integrated in most companies. ERP focus is on providing an
integrated transaction processing that enhances organizational performance by increasing
information consistency and transaction efficiency. SCM’s on the other hand, are aimed at providing
a higher level of business planning and decision support functionality for effective coordination and
execution of inter-organizational business processes.

Points of comparison ERP SCM

Comprehensive Yes, covers many more areas than Relatively less

SCM 
Complexity Highly complex Relatively less complex

Sourcing Tables Relatively static Dynamic

Handling of constraints
Functionality
Speed of processing requests
In a ERP system, all the demand,
capacity and material constraints
are considered in isolation of each
other.
Relatively less dynamic as they
are mainly concerned with
transaction processing and have
more number of jobs to do
Relatively slower
Simultaneous handling of the
constraints
Can perform simulations of
adjustments with regard to the
constraints dynamically in real-
time
Faster

Customer Relationship Management

A true CRM integrates corporate strategy, business methodology, and technology to accomplish a
myriad of goals for companies that want to operate in a customer-driven environment. CRM provides
support for the front-end customer facing functionality (e.g., marketing, sales, and customer service),
which are usually not available in traditional ERP systems.

Evolution of CRM
 

Evolution of CRM

Types of CRM
Operational CRM - Provide front- and back-end support for sales and marketing, administrative
personnel, or customer-service processes.
Analytical CRM - Provide tools for collection and analysis of data gathered during the operational
process to help create a better relationship and experience with clients or end-users.
Collaborative CRM - Deal with the interaction points between the organization and the customer.

CRM Delivery Processes

Campaign Management 
to generate “leads” or potential clients for the organization.
Sales Management
to convert the lead generated by campaign management into a potential customer.
Service Management
provide ongoing support for the client and to assist in the operation of the product or service
purchase.
Complaint Management
to improve customer satisfaction by directly addressing the complaint of the customer and
supporting a continuous improvement process.

CRM Support Processes

Market Research
Focuses on systematic design, collection, analysis, and reporting of data, and on findings relevant
to specific sales activity in an organization.
Involves integration of external and internal data from a wide variety of sources.
 Loyalty Management
Provides the processes to optimize the duration and intensity of relationships with customers.

CRM Analytical Processes

Lead Management
Focus is on organizing and prioritizing contacts with the prospective customers.
Customer Profiling
Focus is to develop a marketing profile of every customer by observing his or her buying patterns,
demographics, buying and communication preferences, and other information that allows
categorization of the customer.
Feedback Management
Consolidates, analyzes, and shares the customer information collected by CRM delivery and
support processes with the analysis process and vice versa.

CRM Components
Market Research
The two key functionalities here are campaign management and market analysis.
Campaign management provides support for preparing such things as marketing budgets, ad
placement, sales targeting, and response management. 
Marketing analysis tools provide statistical and demographic analysis.
Sales Force Automation (SFA)
Provide basic functionality for sales personnel to automate sales lead distribution and tracking
etc.
Customer Service Support
Typically includes help desk ticket management software, e-mail, and other interaction tools
connected to a fully integrated customer database, which is connected to the SCM and ERP
application.
Data Mining and Analytics
Data must be collected, sorted, organized, and analyzed for trends, demographics, cross-selling
opportunities, and identification of other sales patterns.
 

CRM Vendors