ENTERPRISE INFORMATION SYSTEMS

A PATTERN BASED APPROACH

Topic 2

Enterprise system development and

deployment

McGraw-Hill/Irwin Copyright © 2005 by The McGraw-Hill Companies, Inc. All rights reserved.
 Content
• 1. The manufacturing Roots of ERP
• 2. Stages
• 3. Evolution of ERP
• 4. MRP-I and MRP-II
• 5. ERP (introduction)
• 6. Comparative coverage between MRP, ERP,
EIS
 Case study
• Page 55/596
• What are objectives?
• How about the solutions?
• What are the benefits?

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 1. The manufacturing Roots of ERP

• MRP –I : Material requirements planning

– Factory floor
– 1960s – 1970s
– Time – phased order release system
• MRP software allowed a plant manager to:
– Plan production
– Raw meterial requirements

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 1. The manufacturing Roots of ERP

• MRP be handled by:

– Mainframe
– Sequential file processing
– Electronic data interchange
– Avoiding cost and delays resulting
• MRP is known as Supply Chain Management
(SCM) now.
 MRP
• Inventory ordering
Tool
• Evolve to support
Planning

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 2. Stages

Stage – 1 → Stage -2 → Stage -3

MRP > ERP > ERP - II

Or Or
MRP-II MRP - III
Journey from MRP to ERP

Stages of Enterprise System

 2. Stages
• MRP-I: Material requirements planning which was
the historical background of ERP; its purpose
being to tap inventory i.e. raw materials planning
etc.
• MRP-II: manufacturing resoure planning which
looks after production-related activities.
– Shop floor management
– Distribution management
• ERP: enterprise resource planning has a broader
role and is not confined to one department but
has an elaborate purview.
 2. Stages
• ERP-II or MRP-III: Money resource planning
or ERP-II emphasises more on planning of
capital or managing the situation when
surplus money arises.
➢ 2005s the term EIS was formed with the
objective of providing a contemporary version
which included web enabled features, full
intergration, multi-enabled
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 3. Evolution of ERP
• The demands are placed on organizations:
– Emphasis on customers
– Aggressive cost control initiatives
– Need to analyze costs/revenues
– Flexibility to respond to changing
– More informed management decision-making
– Changes in ways of doing business
 3. Evolution of ERP
• Various aplications and planning systems:
– Management Information Systems (MIS)
– Intergrated Information System (IIS)
– Artificial intelligence (AI)
– Corporate Information Systems (CIS)
– Knowledge Management (KM)
– Enterprise Wide System (EWS)
– Business Intelligence System (BIS)
– Material Requirement Planing (MRP)
– Manufacturing Resource Planning (MRP –II)
– Money Resource Planning (MRP – III)
– Enterprise Resource Planning (ERP)
 Material Requirements Planning
(MRP)
• Material Requirements Planning (MRP) is a
computer-based production planning and
inventory control system.
– It concerned with both production scheduling and
inventory control (It is a material control system
that attempts to keep adequate inventory levels to
assure that required materials are available when
needed).
– MRP is applicable in situations of multiple items
with complex bills of materials.

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 The major objectives of an MRP system are to
simultaneously

• 1. Ensure the availability of materials,

components, and products for planned
production and for customer delivery,
• 2. Maintain the lowest possible level of
inventory,
• 3. Plan manufacturing activities, delivery
schedules, and purchasing activities

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 Three major inputs
• The three major inputs of MRP:
– master production schedule,
– product structure records, (BOM)
– and the inventory status records.

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 Master production schedule
• The demand for end items is scheduled over
a number of time periods and recorded on a
master production schedule (MPS).
• The master production schedule expresses
how much of each item is wanted and when it
is wanted. MRP takes the master schedule for
end items and translates it into individual time-
phased component requirements.

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 MASTER PRODUCTION SCHEDULE

• The master production schedule (MPS) is basically

the production schedule for finished goods.
• This schedule is usually derived from current orders,
plus any forecast requirements.
• The MPS is divided into units of time called "buckets."
While any time frame may be utilized, usually days or
weeks is appropriate.
• It is the plan for goods to be produced in
aggregate is broken down into its individual units
or finished goods.

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MASTER PRODUCTION SCHEDULE

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 Bill of material records
• The product structure records, also known as
bill of material records (BOM), contain
information on every item or assembly
required to produce end items.
• Information on each item, such as part
number, description, quantity per assembly,
next higher assembly, lead times, and quantity
per end item, must be available.

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 Types of BOM
• Manufacturing Bill of Materials (mBOM)
• Engineering Bill of Materials (eBOM)
• Production BOM
• Single-Level BOM
• Multi-Level BOM
• Assembly Bill of Materials.
• Engineering Bill of Materials (EBOM)
• Service BOM.
• Sales BOM.
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 BILL-OF-MATERIALS.

• is a hierarchical listing
of the type and number
of parts needed to
produce one unit of
finished goods
• a product structure tree
is used to clarify the
relationship among the
parts making up each
unit of finished goods

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Bill of Materials

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 Inventory status records
• The inventory status records contain the
status of all items in inventory, including on
hand inventory and scheduled receipts.
• These records must be kept up to date, with
each receipt, disbursement, or withdrawal
documented to maintain record integrity.

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 INVENTORY STATUS FILE
• contains a count of the on-hand balance of
every part held in inventory.
• In addition, the inventory status file contains
all pertinent information regarding open orders
and the lead time (the time that elapses
between placing an order and actually
receiving it) for each item.

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 An Outline of the MRP Process

• 1. Establish gross requirements.

• 2. Determine net requirements by
subtracting scheduled receipts and on hand
inventory (see slide 31) from the gross
requirements
• 3. Time phase the net requirements. (option)
• 4. Determined the planned order releases
(option)

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 Concepts: Gross Requirement (GR)

• The amount of required material for each

produced unit, the current stock, and the
ordered stock /stock in transit. This is the total
demand for an item during a specific time
period.

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 Time-Phasing Requirements

• Time-phased requirements are stated period-

by-period (typically one week long).
• Time-phased net requirements is time-phases
material requirements which expresses future
demand, supply, and inventories by time
period

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Inventory data

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Gross to Net explosion

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MRP record

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MRP Record

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MRP Record

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Explore Assembly B

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MRP Record – self-calculation
• PART D? if MIN ordering =100, LT (lead
time=3 days)
PART E? if MIN ordering =144, LT (lead time
=1 days)

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MRP – documents
 MRP- features – page 67
• Focus on time delivery
• Incorporate in-house and vendor lead times.
• MRP calculates procurement quantities
• MRP calculations are time-phased
• Reduce inventory levels
• Etc …
 5. ERP
• Enterprise resource planning (ERP) is a
process used by companies to manage and
integrate the important parts of their
businesses.
• An ERP software system can also integrate
planning, purchasing inventory, sales,
marketing, finance, human resources, and
more

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 6. Comparative coverage
between MRP, ERP, EIS –pg 79
• Features:
– MRP-II extends MRP- I with “just in time” concept.
– ERP systems seek to integrate all business
activities and processes throughout the
organizations (real time information)
– EIS Is a particular category of DSS designed to
maintain decision – making at the pinnacle of an
organization
 Difference Between MRP and ERP

• ERP distinguishing features

• Used for integrating and managing main business
practices to streamline information and processes
across the entire organization
• Used with any department such as HR, sales,
logistics, etc.
• Can manage large numbers of projects at a time
• Can include features such as marketing automation,
email marketing, customer help desks, etc.
• More expensive and expansive than an MRP

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• MRP distinguishing features
• Used for managing manufacturing processes for
planning, scheduling, and control over materials
• Specifically designed for the manufacturing industry
• Generally handles smaller projects—is overall a
simpler software
• Doesn’t include customer-facing features
• Considered to be a subset of ERP, so is often
included as a feature within ERP software

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Research on EIS – relative
module use

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Relative module use

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