ERP

ENTERPRISE RESOURCE PLANNING
Semester – IV
BMS
Edition: 2022
#44/4, District Fund Road, Behind Big Bazaar, Jayanagar 9th Block, Bengaluru, Karnataka
560069
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Syllabus
Module Module Content

Module 1  Evolution of ERP
 Definition of ERP
Introduction to  Reasons for the Growth of ERP
ERP (10 Teaching  Scenario and Justification of ERP in India
Hours)  Evaluation of ERP
 Various Modules of ERP
 Advantage of ERP
 An Overview of Enterprise
Module 2  Integrated Management Information
 Business Modeling
An Overview of  ERP for Small Business
Enterprise (10  ERP for Make to Order Companies
Teaching Hours)  Business Process Mapping for ERP Module Design
 Hardware Environment
 Selection for ERP Implementation
Module 3  Business Process Reengineering (BPR);
 Management Information System (MIS)
ERP and Related  Executive Information System (EIS)
Technologies (12  Decision support System (DSS)
Teaching Hours)  Supply Chain Management (SCM)
Module 4  Introduction; Finance,
 Plant Maintenance
ERP System (12  Quality Management,
Teaching Hours)  Materials Management.
 Introduction, SAP AG,

 Baan Company,
 Oracle Corporation,
 People Soft,
 JD Edwards World Solutions Company,
 System Software Associates, Inc. (SSA); QAD;
 A Comparative Assessment and Selection of ERP
Packages and Modules.

Module 5  Issues in Implementing ERP Packages;
 Pre-evaluation Screening;
ERP Implementation  Package Evaluation;
Lifecycle (12 Teaching  Project Planning Phase;
Hours)  Gap Analysis;
 Reengineering;
 Configuration;
 Implementation;
 Team Training; Testing;
 Going Live; End-User Training;
 Post Implementation (Maintenance Mode).

MODULE 1 : INTRODUCTION TO ERP
1.1 Introduction
Since the last decade, information technology has made a drastic change in our life. As
compared to an earlier stage, when the computer was used just like a typewriter, nowadays
users have become more intelligent and IT literate. Now the user knows that a PC can do
many more things rather than just typing a letter in a word processing software or making
balance sheets in excel. They expect more things out of their PC. During this phase of the
industry, every one of us must have heard the word ERP i.e., Enterprise Resource Planning.
The term ERP originally referred to how a large organization planned to use organisational
wide resources. In the past, ERP systems were used in larger more industrial types of
companies. However, the use of ERP has changed and is extremely comprehensive, today the
term can refer to any type of company, no matter what industry it falls in. ERP systems are
used in almost any type of organization large or small. For a software system to be
considered ERP, it must provide an organization with functionality for two or more systems.
While some ERP packages exist that only cover two functions for an organization (Payroll
and Accounting) most ERP systems cover several functions. An ERP system is based on a
common database and a modular software design. The common database can allow every
department of a business to store and retrieve information in real-time. The information
should be reliable, accessible, and easily shared
In one sentence, ERP is a combination of management practice and technology, where
information technology integrates with your company‘s core business processes to enable the
achievement of specific business objectives.
1.2 Evolution of ERP

Enterprise Resource Planning is the evolution of Manufacturing Requirements Planning
(MRP) II in the 1980s, which was mainly related to the Manufacturing Industry and was
designed to control the manufacturing process and plan the required production with efficient
output. Whereas, MRP is the evolution of Inventory Management and Control conceived in
the 1960s, which was mainly designed for the management of Stocks in any particular
industry. ERP has expanded from coordination of manufacturing processes to the integration
of enterprise-wide backend processes like production planning and scheduling of delivery. In
terms of technology, ERP has evolved from legacy implementation to more flexible tiered
client-server architecture. From a business perspective, ERP has expanded from coordination
of manufacturing processes to the integration of enterprise-wide backend processes. From a
technological aspect, ERP has evolved from legacy implementation to more flexible tiered
client-server architecture.
The following table summarises the evolution of ERP from the 1960s to 1990s:
System Year Description
Inventory Inventory Management and control is the combination of
Management and 1960‘s information technology and business processes of maintaining the
Control 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
Materials Requirement Planning (MRP) utilizes software
applications for scheduling production processes
1970‘s 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
Manufacturing Manufacturing Requirements Planning or MRP utilizes software
Requirement applications for coordinating manufacturing processes, from
1980‘s
Planning-II product planning, parts purchasing, inventory control to product
(MRP -II) distribution.
Enterprise Resource Planning or ERP uses multi-module
application software for improving the performance of the internal
business processes.
Enterprise
ERP systems often integrate business activities across functional
Resource 1990‘s
departments, from product planning, parts purchasing, inventory
Planning
control, product distribution and fulfillment, to order tracking.
ERP software systems may include application modules for
supporting marketing, finance, accounting and human resources.
1.3 Definition
Enterprise resource planning (ERP) refers to a type of software that organizations use to
manage day-to-day business activities such as accounting, procurement, project
management, risk management and compliance, and supply chain operations. A complete
ERP suite also includes enterprise performance management, software that helps plan,
budget, predict, and report on an organization‘s financial results.
ERP systems tie together a multitude of business processes and enable the flow of data
between them. By collecting an organization‘s shared transactional data from multiple
sources, ERP systems eliminate data duplication and provide data integrity with a single
source of truth.
Today, ERP systems are critical for managing thousands of businesses of all sizes and in all
industries. To these companies, ERP is as indispensable as the electricity that keeps the lights
on.
'ERP' refers to both ERP software and business strategies that implement ERP systems.
ERP Software

Software solution that addresses the enterprise needs taking the process view of an
organization to meet the organizational goals tightly integrating all functions of an enterprise.
ERP System
An ERP system is more than the sum of its parts or components which interact together to
achieve a common goal streamline and improve an organization's business processes.
ERP components include; ERP Software, Business Processes, Users and Hardware
1.4 Reasons for growth of ERP

There is no question that the market for enterprise resource planning (ERP) systems is much
demanded. Industry analysis is forecasting growth rates of more than 30% for at least the next
five years. Why are so many companies replacing their key business systems?
Here are some reasons:
 Enables improved business performance
 Cycle time reduction.
 Increased business agility.
 Inventory reduction.
 Order fulfillment improvement.
 Supports business growth requirements
 New products/product lines, new customers.
 Global requirements including multiple languages and currencies.
 Provides flexible, integrated, real-time decision support
 Improve responsiveness across the organization.
 Eliminates limitation in legacy systems
 Century dating issues.
 Fragmentation of data and processing.
 Inflexibility to change.
 Insupportable technologies.
 Takes advantage of the untapped mid-market (medium-size organizations)
 Increased functionality at a reasonable cost.
 Client-server/open system technology.
 Vertical market solutions.
These are some of the reasons for the explosive growth rate of the ERP markets and ERP
vendors. As more and more companies are joining the race and as the ERP vendors are
shifting their focus from big fortune 1000 companies to different market segments the future
will see a fierce battle for market share and mergers and acquisitions for strategic and
competitive advantage. The ultimate winner in this race will be the customer, who will get
better products and better service at affordable prices.
These are some of the reasons for the explosive growth rate of the ERP markets and ERP
vendors. As more and more companies are joining the race and as the ERP vendors are
shifting their focus from big fortune 1000 companies to different market segments the future
will see a fierce battle for market share and mergers and acquisitions for strategic and
competitive advantage. The ultimate winner in this race will be the customer, who will get
better products and better service at affordable prices.
1.5 Scenario and Justification of ERP In India

With globalization and the gradual lifting of regulation, there is a paradigm shift in running
the business. Indian companies now need to increase customer focus, improve the speed of
delivery, be cost-competitive and provide value for money (improved quality at a lower
price). Indian companies, therefore, need to implement ERP systems for improving their
business processes and becoming more competitive in the global environment.
India takes a somewhat special role in the ERP market as different ownership structures can
be found side-by-side. This includes
1. State-owned enterprises (SOE)
2. Foreign-invested enterprises
3. Privately-held companies.
Moreover, larger companies as well as major internationally operating companies may be

distinguished from small and medium-sized companies (SME). That is, the role of size and
ownership can be studied in relatively greater depth there than elsewhere. Another topic that
makes India an interesting source is the rapid change also concerning modern forms of
corporate governance
ERP system application can be followed back for more than two decades with many national
programs in India supporting IT developments. From the late 1990s, MRP II, ERP and SCM
became more and more popular; many industrial enterprises have upgraded their ERP
solutions or have directly applied new ERP systems of that time, such as SAP/R3, Oracle,
and BAAN IV/V. Meanwhile, Chinese ERP software companies were active in extending
their MRP II software products to ERP systems, the functionality of their ERP software
became more and more powerful, and they started to replace some of the foreign dominators
of the market.
Since 2001, the policy of using IT technologies to speed up industrialization has been widely
implemented in India. At the same time, several large-scale national projects on IT
applications in industrial enterprises also have been launched. Up to 2003, more than 3000
industrial enterprises, have applied ERP systems. Moreover, SME as emerging market
entities rise quickly and request new ERP solutions to meet their demands. All of these
demonstrate the maturity of the ERP market in India.
ERP for Domestic Vendors: Based on the study of the Indian market for ERP software,
domestic vendors are benefited due to the below reasons:
a. Low price: An SAP application easily costs more than 10 lakhs, while some domestic
systems cost as little as several thousand. Even with their 'high quality image in India, SAP
vendors have difficulties customizing the product, especially in the emerging SME Indian
market.
b. Customer service: Domestic vendors can reflect the market quite quickly while foreign
vendors may find it difficult to provide adequate and comprehensive customer support on
time due to the shortage of on-time communication and technical personnel.
c. Reporting format and content: India's accounting standards are different from
international accounting standards. This requires foreign vendors to modify their financial
accounting modules to generate the correct formats to meet local requirements. Many foreign
vendors might encounter difficulties to do this appropriately while their Indian competitors
took this advantage.
Difficulties for ERP in Indian Market: ERP journey from the back office to all the
operations in the enterprise creates a lot of practical difficulties and pressure on the Indian
industry few of them are:
a. Implementation: ERP experts will be able to restructure the ERP systems with the help
of resources and expertise available with them. However, doing it all of sudden is a difficult
task. The unrealistic deadlines and time pressures further add agony to this menace.
b. Finance: It is an important determinant of the ERP market in India. Some bigger
companies still hesitate to invest in ERP due to the huge costs. It is indeed encouraging to
find that a vast majority of them have realized its benefits and have determined to go for it.
However, some of them are keeping quiet due to the risks involved besides the unforeseen
expenses and losses.
c. Technical factors: ERP means restructuring in the technical and process aspects. The
fate of the businesses that have already implemented and deployed using ERP remains a big
question mark till it's successful. Even though change is inevitable and an element for
growth. However, it would be next only to impossible to change even before the current
change has stabilized in the market.
Future Trends For ERP In India
ERP packages now provide Web-enabled functionalities and e-business suites for use in B2B
and B2C transactions. In this context, SAP has launched mySap.com, Baan has a product
called Baan, and Oracle has incorporated e-business functionalities into their new ERP
software called Oracle Moreover, many ERP vendors have positioned themselves as one-stop
vendors for different integration requirements, and are adding CRM and SCM functionalities
into their software. This is in response to integration problems that organizations have had
when they have tried to interface with different best-of-breed solutions.
Therefore, basic ERP packages are expected to serve as the back-end transaction-
processing database, to which e-business modules incorporating functions relating to e-
procurement, CRM and SCM would be added.
The scenario of ERP In India
ERP Market growth in recent times, the ERP scenario in India is witnessing rapid growth.
Several manufacturing firms, automotive, steel, oil, textile and pharmaceutical companies
have already been implemented ERP solutions thus making ERP dominate the overall picture
in these organizations.
For the early adopters of ERP solutions, Finance and Accounting, Sales and Distribution,
Materials Management/Purchase, and Manufacturing are the most popular ERP modules
implemented. In recent times Plant Maintenance, HR, Transportation and Service modules
are also growing in popularity.
We find different industrial sectors like the cement sector, power sector, and food sector are
going for ERP solutions. The construction or project companies have also implemented
different ERP solutions suitable to their needs.
Currently, the SME segment in India has been one of the most aggressive adopters of ERP
software. Almost 60 percent of companies in the SME segment have already implemented
ERP. This substantial increase in the penetration level in the SME segment is attributed to the
introduction of low-cost ERP solutions such as e-resource ERP which also caters to the
country-specific localizations and availability of a large pool of skilled functional and
technical talents.
The primal objectives that the SMEs have for switching to ERP are to get aid in smooth
inventory management, timely scheduling of production cycles and shipment of goods,
managing human resources and online data communication.
According to estimates, the ERP market in India has witnessed a growth rate of 70 percent in
the last decade. As a result, the market has leapfrogged over the years to a tremendous
volume in terms of monetary gains. There were many reports which underlined the tangible
quantitative benefits accrued by Indian companies in the post-ERP implementation era.
Most of the time these benefits are difficult to prove on statistical grounds as soft benefits like
comfort in work life, maturity in planning, attitude changes, transparency, visibility etc are
either practically impossible to measure or correlate such improvements to ERP
implementation. Companies are supposed to set their objectives before implementation
followed by measuring the achievements after implementation, and only then should they
conclude about the effects of ERP.
1.6 Evaluation of ERP

Evaluation and selection of ERP packages is an essential criterion for successful ERP
implementation. Quality of selection will have a long-term impact on the processes of the
organization. It is also not easy to switch to another product with the concomitant scale of
investment and complexities.
This evaluation and selection process should be properly directed and normally comprises of
following activities:
 Formation of an evaluation committee: An ERP implementation is not an IT project but a

business-oriented development. Therefore, in addition to Chief Information Officer, this
committee should comprise all functional heads and be driven by a top management
representative. Since all business functions are represented in the selection process, the
chosen package would have wide acceptance subsequently.

 Requirement Analysis: This analysis should outline functional expectations of various
business divisions, such as warehouse, finance, procurement, from potential ERP packages.
Vital requirements specific to the company should be highlighted e.g.
 Must have Distribution Requirement Planning (DRP) functionality.

 In transit inventory and pallet tracking, as a part of shipping requirement.
 Multiple purchase orders linked to one bill of lading.
 Multi-currency and multi-locations functionality.
Requirement analysis forms a base for preparing a Request for Proposal (RFP), where
important technical and commercial perquisites are incorporated. Common examples of
technical perquisites: flexibility, upgradeability, User-friendliness, field-level security,
Operating system, and database compatibility. Common examples of commercial perquisites:
cost, reference sites, high-level project plan, resumes of consultants, post-implementation
support, the financial health of the company, local presence, number of installations and
upgrade.
 Selection Criteria: A pre-determined selection Criteria should be ready before the actual
selection process commences. Selection criteria are normally in the form of a questionnaire
and point system, where each question represents a business or technical need. Weightage for
each point or a group of points is predetermined which varies according to the criticality of
the issue. These processes help in making the selection process objective and transparent.
Selection Process: The selection process constitutes various stages as mentioned below:
1. Shortlisting of vendors: Hundreds of ERP packages are available in the market,

which has different concept, architecture, and sets of functionalities. Analyzing all the
packages is not feasible. Organizations need to identify a few best-suited packages by
looking at the product literature of vendors, finding out which product is being used
by their peer organizations and getting help from external consultants. Once a few
packages are short-listed, respective vendors should be asked to respond to the RFP,
as per its format.
2. Demo and Presentation: Responses from shortlisted vendors are evaluated by the
selection committee after collating scores obtained by them and a consensus is
reached about their final ranking. Anyone not fulfilling a predetermined vital
requirement is eliminated at this stage. The top two or three vendors are then invited
for a demo and presentation. The mode of presentation should be carefully scripted
and sent to the vendors in advance. They should be asked to walk through a particular
business cycle through their vanilla software. They should be specifically asked to
clarify any area of concern about their proposal, which may expose a weak/ problem
area of their offer.
3. Site visit and contract negotiations: After the committee has decided on a best-
suited package, visits to reference sites are imperative. The vendor should provide
reference sites of similar size and industry, identical versions and belong to the same
geographical location. Team members should have a look and feel of the systems
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operating at reference sites and ask pertinent questions covering overall satisfaction,
functionality, cost/ time overrun, support concerns, etc. After the site visit, if the
committee members feel that their selection is right, they proceed with the final
negotiation and procurement. Negotiations are normally held on license and annual
maintenance cost, payment plan including a leasing option, support issues and other
commercial and legal terms.
1.7 ERP Evaluation Criteria

ERP software should meet most of the following criteria, depending on your organizational
needs:
 Customer Relationship/Account Management

Ensure that the CRM module lets users view customers across a wide range of custom
views including products, geography, account type, and more. An effective CRM
Module should also allow ease of access to necessary ERP information on any device
at any time.
 Accounts Payable Reporting
Good ERP systems will provide your AP team with sufficient reporting so that
collections are more efficient and account aging is easier to assess.
 Bank Reconciliation
Your potential ERP solution needs a Bank Reconciliation feature to help your
organization reconcile bank statement balances with the General Ledger cash
accounts amount.
 Benefits Administration
Your ERP needs a system to manage and track participation in benefits programs,
including insurance, compensation, profit sharing and retirement programs.
 CRP (Capacity Requirements Planning)
If you need to determine the resources required to meet production requirements, a
CRP module is essential within your ERP.
 MRP (Material Requirements Planning)
Some organizations require production planning, scheduling, and an inventory control
system. If this is part of your requirements as well, check that the ERPs you are
evaluating include this module.
 BOM (Bill of Materials)
Do you need to use bills of material when creating production orders to manufacture
products? If so, be sure this feature is built into whatever ERP you are considering.
 Logistics Management
Since logistics management is essential to all of your organization‘s planning and
execution, having logistics management in your ERP is a core feature. I don‘t think an
ERP qualifies without logistics management as an integral feature.
 BI (Business Intelligence)

We‘ve touched on business intelligence requirements before – with many of the top
BI solutions being stand-alone products. However, BI can also be part of your ERP as
well. It‘s a matter of organizational preference whether you harness the BI tools in
your ERP or select a stand-alone, best-in-class BI tool.
 Email Tools
Email tools come in many different platforms. Being part of essential CRM
requirements, you‘ll likely already have them if you‘ve deployed a separate CRM.
However, if your ERP is also your core CRM (as listed above), make sure that robust
email tools are part of the product feature set.
 B2C Commerce
Here again, is a choice of organizational preference whether your ERP acts as your
point of commerce or you select a stand-alone commerce platform.
 Advanced Allocations
If you want help improving overall efficiency, the accuracy of financial reporting, and
shortening close cycles, having advanced allocations functionality in your ERP is
critical.
 Tax Administration: Payroll & Tax Filing
You need tax administration technology as a core part of your ERP solution as it
inherently saves your finance team substantial time, money and effort.
 Engineering Change Management
Managing your products and manufacturing and business processes is a fundamental
and continual challenge your organization likely faces. Having a solid ECM
component ensures that the challenge is most effectively handled. The solution should
have ECM with central logistics functions that can be used to change various aspects
of production basic data depending on specific conditions.
 Customer Credit Management
Your ERP software needs to report customers‘ credit standing for any period and be
able to monitor ongoing sales activity for customers designated as needing credit hold
evaluation for sales.
 Available-To-Promise (ATP)
ATP software module gives manufacturers better visibility into completion through
all levels and across the entire supply chain. This may functionality may be optional
to your organization but is something many organizations need to have come standard
in their ERP.
 Advanced Planning System (APS)
You need to track costs based on the activities that are responsible for driving costs in
the production of manufactured goods using APS. It should also be able to allocate
raw materials and production capacity optimally to balance demand and plant
capacity.
 Lean Manufacturing
If in manufacturing, you need tools that support lean manufacturing and flow
scheduling practices for production, replenishment and inventory.
 Business Process Management (BPM)
Business Process Management Software will provide the capability to automate
virtually any business process. This is vital to your ERP system and selection.
 Flexible Network Design
A flexible network design can increase the efficiency and scalability of a supply chain
module and is generally a critical and included element of any top ERP selection.
 Module/API Integration
Your selected ERP package needs integration between modules and optionally (but
often necessary) other 3rd party platform APIs so that all of the core business
functions are connected. Information should flow across the organization so that BI
reports on organization-wide results.
 Installation Type
You‘ll likely be selecting from either a SaaS or On-Premise ERP Installation. Both
have their pros and cons so make sure you evaluate your organization‘s preference
extensively. Part of the evaluation you are considering should include what are the
Implementation Services available, what are the Maintenance Contracts/On-site
maintenance availability, etc.
 Support
Any good ERP should include the following support channels: Forum/Community
Support, Phone & Email, Chat & Instant Message. Great Support would include 24×7
availability considering how critical their ERP system is to your organization
functioning at its best. Further, support should include extensive end-user training
development tools, as well.
 Training
ERP is an advanced technology with many different potential modules you‘ll want to
utilize. Make sure that upfront and ongoing training comes standard from your list of
potential ERP vendors.
 Previous Experience with Vendor
Has your organization engaged with this vendor for a previous project? Do some due
diligence on this to make sure there weren‘t past performance issues (integration, staff
interfacing, etc.) that rule out a possible vendor you are considering.
 Financial Stability
As we‘ve recommended before in our CRM checklist, be sure to check out financial
stability/status using services like Dun & Bradstreet. Check for funding history
(including most recent funding), count of employees, and other indicators that the
selection of ERP vendors you‘re evaluating are in good shape fiscally.
1.6 Various Modules of ERP

ERP packages contain many modules. The number and features of the modules vary with the
ERP package. In this chapter, we will see some of the most common modules available in
almost all packages:
 Finance
 Manufacturing Production Planning
 Sales and Distribution
 Plant Maintenance
 Quality Management
 Materials Management
This is by no means a comprehensive list. Some packages will have a subset of this and some
will have more modules and/or features.
For detailed information, we will have to consult the product literature of the specific ERP
system.
Finance Modules
The entire concept of information technology is based on the principle that providing the
right information to the right people at the right time can make a critical difference to the
organization. Much of this key information could be taken from the financial data. But
merely having the financial data is not enough. We need a set of processes and views of our
data, which provides up-to-the-minute financial information in exactly the form it needs to
make that critical difference and help with that crucial decision.
Accounting software needs access to information in each area of our organization from R and
D and market research through manufacturing, distribution, and sales. The financial solution
must provide the management with information that can be leveraged for strategic decisions,
to achieve competitive advantage. Whatever are the financial goals of the organization, the
financial application components of the ERP solutions work hand-in-hand to improve the
bottom line. This is true because the financial functionality is tightly integrated across all
business areas and all geographic areas. This tight integration includes all the other different
modules, from materials management to human resources to logistics.
Because the ERP system automatically links related areas; it eliminates the need to repeat
procedures. We enter the data once only within the ERP system and all of the areas will work
correctly and efficiently, creating a new level of efficiency in handling the financial data. The
finance modules of most ERP systems provide financial functionality and analysis support to
thousands of businesses in many countries across the globe.
The finance modules of most ERP systems will have the following five sub-systems:
 Financial Accounting (General Ledger, Accounts Receivable/Payable Special
Ledgers. Fixed Asset Accounting, Legal Consolidation).
 Investment Management (Investment Planning/Budgeting/Controlling, Depreciation
Forecast/Simulation/ Calculation).
 Treasury (Cash Management, Treasury Management, Market Risk Management,
Funds Management).
 Controlling (Overhead Cost Controlling, Activity-Based Costing, Product Cost
Accounting, Profitability Analysis).
 Enterprise Controlling (Executive Information System, Business Planning and
Budgeting, Profit Centre Accounting).
Sales and Distribution Modules

In today‘s global business environment, one thing companies can count on is rapid change
and the new opportunities and challenges that change is sure to bring. New competition
pushes businesses to achieve higher levels of service while evolving technology compresses
product life cycles and forces companies to adopt new technologies or risk losing market
share. In this ever-changing environment, keeping a competitive edge means being able to
anticipate and respond quickly to changing business conditions. To keep pace with these
rapid changes, companies need an integrated and flexible enterprise system that supports all
aspects of their business with state-of-the-art functionality.
This innovative solution should upgrade effortlessly and interface easily with third-party
applications, as well as have the ability to incorporate existing systems while extending its
reach to the Internet and e-commerce. With today‘s business environment characterized by
growing competition, shrinking cycle times, and the accelerating pace of technological
innovation, companies are increasingly being forced to streamline business processes.
In a world, in which it is no longer enough to simply have the best product, these companies
are focusing on core competencies and closer partnerships over the whole supply chain. Here,
increased efficiency in sales and distribution is a key factor to ensure that companies retain a
competitive edge and improve both profit margins and customer service. In helping
businesses to ‗beat them on delivery‘, the sales and distribution modules of many ERP
vendors offer a comprehensive set of best-of-breed components for both order and logistics
management.
Many of these systems are tightly integrated with the Distribution Requirements Planning
(DRP) engine of the ‗for just-in-time‘ deliveries. This integration enables the mapping and
supply of single-site or multi-site organizations and the definition of relationships in a
company‘s internal supply chains. Developing precise logistics planning for just-in-time
deliveries, this system can also generate replenishment orders by using defined warehouse
requirements.
The following are the sales-related business transactions:
 Sales queries, such as inquiries and quotations
 Sales orders
 Outline agreements, such as contracts and scheduling agreements
 Delivery/shipment
 Invoicing/billing
 After-sales support
During sales order processing, the following basic functions are carried out:
 Inquiry handling
 Quotation preparation and processing
 Contracts and contract management (order management)
 Monitoring the sales transactions
 Checking for availability
 Transferring requirements to materials planning (MRP)
 Scheduling the delivery

 Checking credit limits
 Invoicing/billing
Manufacturing Modules
Competition in the next millennium places an increased emphasis upon a time, as expressed
by speed, quality, service, and global focus. Manufacturers are measured by their ability to
react quickly to sudden, often unpredictable changes in customer demand for their products
and services. To compete successfully beyond the year 2000 requires manufacturing
applications that are time and activity-based and above all else focused on the customer.
Increasingly, these manufacturing applications are the center point within the spectrum of a
supply chain running from the customer to a supplier and encompassing the entire enterprise.
A good manufacturing system should provide for a multi-mode manufacturing application
that encompasses full integration of resource management. These manufacturing applications
should allow easier exchange of information throughout the entire global enterprise, or at a
single site within a company.
Regardless of how big or small an enterprise is these applications should provide a wealth of
feature/function, a broad scope of coverage, operational stability, and a platform-independent
architecture. These capabilities empower an enterprise to achieve productivity gains, adopt
forward-thinking technologies and implement process reengineering.
As a company‘s internal processes become more sophisticated or as market forces change,
these Solutions should lie capable of meeting the challenge. The manufacturing system
should be integrated with the other modules of the package. A robust system of
manufacturing planning business process and execution must satisfy a variety of business
practices and production methods.
These business practices and production methods place stringent demands on time
manufacturers. Regardless of how manufacturers view their internal operations to the
customer, it boils down to quick response to customer demand in two fundamental ways-
manufacturers either make products to stock before receipt of a customer order or they make
and ship the products upon the receipt of a customer order.
Manufacturers must accomplish this task quickly efficiently and cost-effectively to remain
profitable and competitive. Today, companies must be able to deliver customer-specific
producers with the lead-time of standard, off-the-shelf products. To help manage product and
market shifts, the manufacturing module provides the freedom to change manufacturing anti-
planning methods as and when they need a change.
The manufacturing modules of most ERP vendors do not limit businesses to a single
manufacturing method, such as make-to-stock or make-to-order; instead, many
manufacturing and planning methods can be combined within the same operation with
unlimited flexibility to choose the best methods or combination of methods for each product,
at each stage throughout its life cycle.
In addition, this control and visibility come without having to sacrifice the functionality
needed to manage different types of production efficiently. These systems support the entire
range of production strategies-only one system is needed to manage all manufacturing
activities. Engineer-to-order products can be planned using the system, while the system‘s
forecasting and distribution-planning features handle make-to-stock items. Products that are
assembled to order can be planned using advanced features available in the manufacturing
module. All demands can be aggregated into user-definable plans at a detail or summary
level.
Enterprise requirements then flow into consolidated production schedules and material and
capacity plans, and all product activity be scheduled and tracked through shop floor control
systems. The manufacturing module should enable an enterprise to marry technology with
business processes to create an integrated solution. It must provide the information base upon
which the entire operation should be run. It should contain the necessary business rules to
manage the entire supply chain process, whether within a facility, between facilities, or across
the entire supply chain. Control and execution can be performed at strategic, tactical, and
operational levels within the business. These require effective planning to support contract
commitments throughout supply chain control over intermediate-range planning in horizons
and time fences, and execution over the short-range of frozen scheduling required by the shop
floor. Whether a single-site to implementation, or several sites within one country, or
hundreds covering the entire globe the manufacturing system should provide the foundation
for creating concurrent business processes across the supply chain and achieving Return on
Assets (ROA) improvement. How does manufacturing respond to the customer?
Manufacturers must respond quickly and effectively to customer demands. While agility is
desirable, agility without an effective enterprise manufacturing system result in speed without
purpose. The very heart of an enterprise manufacturing system centers on its integrated
planning, business process and execution capabilities.
Traditional Closed Loop MRP concepts have long heralded the importance of effective
planning, business process understanding inventory execution. Strategically, effective-
planning results in improved inventory turn increased productivity and improved return on
assets. Tactically, effective business processes provide improved customer satisfaction,
reduced time to market, and improved market share. Effective execution provides short cycle
time, quality assurance, continuous improvement, and quick response to process variability.
All three elements contribute to a manager‘s decision to install enterprise-wide
manufacturing management merit system. Some of the major subsystems of the
Manufacturing module are:
 Material and Capacity Planning.
 Shop Floor Control.
 Quality Management.
 JIT/Repetitive Manufacturing
 Cost Management
 Engineering Data Management
 Engineering Change Control
 Configuration Management
 Serialization/Lot Control
 Tooling

Human Resources Modules
Human resources management is an essential factor of any successful business. The
competitive environment of the next millennium with its economic and technological
challenges will affect the HR department, in the same way, it will all the other areas of our
enterprise. In short, HR managers must continually review and optimize their business
processes. The HR modules of most ERP systems have a set of rich features and will
integrate seamlessly with the other modules and are thus, invaluable aids in improving
productivity. They offer company-wide solutions for HR departments and make it possible
for other departments to access specific employee data. A human resource management
system has to be adaptable to company-specific requirements, and should constantly grow
with increasing HR requirements. It should cover all the functions required in business
practices. It should be flexible enough to allow us to optimize our business processes by
tailoring the ERP solution to suit our organization‘s needs. Today, many businesses are
across boundaries. The system should support the organization‘s international needs with
country-specific versions of the HR components.
Apart from languages, currencies and legal requirements, accounting systems often vary from
country to country as well, making this a vital feature. A flexible structure enables quick and
easy customization of the system to suit our requirements. When we log on in a particular
language screens, messages and documents appear in the language we specify. We then have
access to the system's complete functionality. The different ERP systems offer many different
subsystems under the HR umbrella. Listed below are some of the most common subsystems.
Here again, the idea is not to be comprehensive but to give us an idea about the options
available.
The various subsystems under the HR module are:
 Personnel Management (HR master data, Personnel administration, Information
systems, Recruitment, Travel management, Benefits administration, Salary
administration)
 Organizational Management (Organisational structure, Staffing schedules, Job
descriptions, Planning scenarios, Personnel cost planning)
 Payroll Accounting (Gross/net accounting, History function, Dialog capability,
Multi-currency capability, International solutions)
 Time Management (Shift planning, Work schedules, Time recording, Absence
determination) Personnel Development (Career and succession planning, Profile
comparisons, Qualifications assessments, Additional training determination, Training
and event management)
Plant Maintenance Modules

The achievement of excellent performance demands delivery of quality production
expeditiously and economically. Organizations simply cannot achieve excellence with
unreliable equipment. The attitude towards maintenance management has changed because of
quick response manufacturing. Just in Time reduction of work in process inventory and the
elimination of wasteful manufacturing practices. Machine breakdown and idle time for repair
was once an accepted practice. Times have changed. Today when a machine breaks down, it

can shut down the production line and the customer‘s entire plant. The Preventive
Maintenance module provides an integrated solution for supporting the operational needs of
an enterprise-wide system. The Plant Maintenance module includes an entire family of
products covering all aspects of plant/equipment maintenance and becomes integral to the
achievement of process improvement.
The major subsystems of a plant maintenance module are:
 Preventive Maintenance Control.
 Equipment Tracking.
 Component Tracking.
 Plant Maintenance Calibration Tracking.
 Plant Maintenance Warranty Claims Tracking
Quality Management Modules

Just as the requirements for quality management systems have changed because of the ISO:
9000 standards, the term Computer-Aided Quality Management (CAQ) must also be
redefined. Computer-Integrated Quality Management (CIQ) is a more appropriate term
because an isolated CAQ system cannot carry out the comprehensive tasks of a quality
management system. The ERP system considers this by integrating the quality management
functions into the affected applications themselves (for example, procurement, warehouse
management, production and sales/ distribution), instead of delegating them to isolated CAQ
systems. As a result of this approach, the processes described in the quality manual can be
implemented and automated in the electronic data processing (EDP) system. The
representation of the elements of a quality management system within the ERP system is not
only the responsibility of the quality management module. Instead, the ERP system must be
considered as a whole in which all integrated modules contribute their part. Within the
framework of the system, for example, the human resources module handles personnel-
related matters, the Controlling module handles the management of quality-related costs and
the plant maintenance module handles the monitoring of test equipment.
As a part of the logistics application, the quality management module handles the traditional
tasks of quality planning, quality inspection and quality control. For example, it supports
quality management so procurement, product verification, quality documentation and in the
processing of problems.
The Quality Management module‘s internal functions do not directly interact with the data or
processes of other modules. The ISO: 9000 series of standards defines the functions of
quality management and the elements of a quality management system. The functions in the
Quality Management module support the essential elements of such a system. The other
integrated modules in the system complement this functionality. The ISO standards require
that quality management systems penetrate all processes within an organization. The task
priorities according to the quality loop, shift from production (implementation phase) to
production planning and product development (planning phase), to procurement and sales and
distribution, as well as into the entire usage phase. In the area of production, quality
assurance is no longer viewed in terms of inspection and the elimination of defects alone.
Instead, the production process itself becomes the focus of attention.
The quality management module fulfills the following functions:
 Quality Planning (Management of basic data for quality planning and inspection
planning, Material specifications, Inspection planning)
 Quality Inspection (Trigger inspections, Inspection processing within section plan
selection and sample calculation, Printshop papers for sampling and inspection,
Record results and defects, Make the usage decision and trigger follow-up actions)
 Quality Control (Dynamic sample determination on the basis (If the duality level
history, Application of statistical process control techniques using quality control
charts, Quality scores for inspection lots, Quality notifications for processing internal
or external problems and initiating corrective action to correct the problems,
Inspection lot processing and problem processing, Quality Management Information
Sys tern for inspections and inspection results and quality notifications)
Materials Management
The Materials Management module optimizes all purchasing processes with workflow-driven
processing functions, enables automated supplier evaluation lowers procurement and
warehousing costs with accurate inventory and warehouse management and integrates
invoice verification.
The main modules of the Materials Management module are:
 Pre-purchasing Activities.
 Purchasing.
 Vendor Evaluation.
 Inventory Management.
 Invoice Verification and Material Inspection.
1.7 Advantages of ERP

Installing an ERP system has multiple advantages – both direct and indirect. The direct
advantages include improved efficiency, information integration for better decision-making,
faster response time to customer queries, etc.
The indirect benefits include a better corporate image, improved customer goodwill,
customer satisfaction, and so on.
a) Reduction of lead-time
b) On-time shipment
c) Reduction in cycle time
d) Better customer satisfaction
e) Improved supplier performance
f) Increased flexibility
g) Reduction in quality costs
h) Improved resource utility

i) Improved information accuracy and decision-making capability
Reduction
The time elapsed time between placing an order and receiving it is known as the lead-time. It
plays a significant role in purchasing and inventory control. Most purchasing departments
urge the managers to anticipate material demands well ahead of actual need. All inventory
systems have safety mechanisms like safety stock; re-order level, and so on built into them to
avoid the situation where the material is out of stock. The consequences of the non-
availability of an item that is required for production can result in a lot of problems like
missing the delivery schedules, losing the customer goodwill due to delayed delivery, or even
losing the customer to the competitor.
One can avoid this situation by requesting the materials well in advance rather than when
they are required (early requests), or by keeping a large buffer stock, or by maintaining a very
high re-order level. But all of this means that larger inventories must be kept, which blocks
the money. Also, the practical consequence of allowing longer times for delivery seems to be
that the present lead times just grow to take up whatever slack is allowed.
Perhaps this is due to the „squeaky wheel principle‟- buyers who expect the shortest lead
times complain the loudest when deliveries are late and thereby receive the most attention
from suppliers. So the company should find out the minimum lead-time and should attempt to
correct supplier‘s delivery delays instead of automatically increasing existing lead-times. To
reduce the lead-times, the organization should have an efficient inventory management
system, which is integrated with the purchasing, production planning, and production
departments.
b. On-time shipment
Today, companies must be able to deliver customer-specific products (made-to-order) with
the lead-time of standard, off-the-shelf products. The companies must be able to change the
mode of production from make-to-stock to make-to-order, yet retain the cost and time
advantages of off-the-shelf products. Today, the ERP systems provide the freedom to change
manufacturing and planning methods as needs change, without modifying or reconfiguring
the workplace or plant layouts. With ERP systems, businesses are not limited to a single
manufacturing method, such as make-to-stock or make-to-order. Instead, many
manufacturing and planning methods can be combined within the same operation, with
unlimited flexibility to choose the best method or combination of methods-for each product at
each stage throughout its life cycle.
c. Reduction in Time Cycle
Cycle time is the time between receipt of the order and delivery of the product.
At one end of the manufacturing spectrum is the make-to-order operation, where the cycle
time and cost of production are high. This is because in a make-to-order situation the
manufacturer starts making the product or designing the product only after receiving the
order. The manufacturer will procure the materials and components required for production
only after getting the order. On the other end of the manufacturing operations, is the make-to-
stock approach where the products are manufactured and kept in the finished goods inventory

before the order is placed. In both cases, the cycle time can be reduced by the ERP systems,
but the reduction will be more in the case of make-to-order systems. In the case of make-to-
stock, the items are already manufactured and kept in warehouses or with distributors for
sales. Here, the cycle time is reduced not on the shop floor, but during the order fulfilment.
In the earlier days, even for the made-to-stock items, the cycle time used to be high. This was
because the process was manual and if computerized, not integrated. Suppose a customer
place an order.
d. Improved Resource Utilisation

As manufacturing processes become more sophisticated and as the philosophies of
elimination of waste and constraint management achieve broader acceptance, manufacturers
place increased emphasis upon planning and controlling capacity. The creation of an
accurate, achievable production schedule requires the availability of both material and
capacity. It is useless and indeed wasteful, to have financial resources tied up in material if
the capacity is insufficient or improperly planned. Waste not only raises costs but also affects
customer service levels and customer goodwill. The capacity planning features of most ERP
systems offer both rough-cut and detailed capacity planning. The system loads each resource
with production requirements from Master Production Scheduling, Material Requirements
Planning, and Shop Floor Control (detailed capacity planning). All planned released
production is evaluated and loaded against capacity definitions for each resource, and all
capacity requirements are pegged back to the orders comprising the load.
Capacity definitions are provided from the work centre and machine records. Work centres
can be facility-specific or enterprise-wide. Any work centre can be designated as a critical
work centre for evaluation by rough-cut capacity planning. This capability provides an easy
and efficient way to designate bottleneck operations that act as system constraints.
e. Better Customer Satisfaction
Customer satisfaction means meeting or exceeding customers‘ requirements for a product or
service. Assessment of the degree of satisfaction is usually made on at least three measures-
Whether the product or service includes the features that are most important to the customer.
Whether the company can respond to the customers‘ demands promptly, a criterion that is
especially important for custom products and services
Whether the product or service is free of defects and performs as expected. ERP systems have
proved that they can produce goods at the flexibility of the make-to-order approach without
losing the cost and time benefits of made-to-order operations. This means that the customer
will get individual attention and the features that he/she wants, without spending more money
or waiting for long periods. Also with the introduction of the web-enabled ERP systems, the
customers can place the order, track the status of the order and make the payment sitting at
home.
The customer could get technical support by either accessing the company‘s technical support
knowledge base(help desk) or by calling the technical support. Since all the details of the
product and the customer are available to the person at the technical support department, the
company will be able to better support the customer. All this is possible because of the use of

the latest developments in information technology by the ERP systems, and this will go a
long way in improving customer satisfaction.
f. Increased Flexibility
Because competition is growing, companies must learn to respond more rapidly to customers‘
requirements as well as changes in the market. They will need to design new products or
redesign old products quickly and efficiently. Only then, will companies have the chance to
capitalize on opportunities while they are available? The window of opportunity is often quite
small. The manufacturing process must be flexible enough to accommodate new product
designs with minimal disruption or time loss. Flexibility is a key issue in the formulation of
strategic plans in companies.
Sometimes, flexibility means quickly changing something that is being done or completely
changing to adjust to new product designs. At other times, flexibility is the ability to produce
in small quantities, to produce a product mix that may better approximate actual demands and
reduce work-in-progress inventories. Regardless of the definition of flexibility, traditional
fixed automation manufacturing facilities, while efficient, are often inflexible. Similarly,
extremely flexible operations are often inefficient. An argument can be made for the relative
merits of both efficiency and flexibility.
Both are desirable. Product flexibility is the ability of the operation to produce efficiently
highly customized and unique products. Manufacturers tried to introduce some amount of
flexibility by using the assemble-to-order approach. This provided them with some sort of
flexibility without increasing the production cost, but could not be applied to all the
situations.
g. Reduced Quality Cost

Quality is defined in many different ways–excellence, conformance to specifications, fitness
for use, value for the price, and so on. Whereas manufacturing and design engineers are
typically responsible for some of the technical issues in the quality assurance for products,
operations managers often conduct the analysis of quality-related costs, which is an important
task. Strategic opportunities or threats frequently motivate the launch of aggressive quality
management initiatives. Analyzing the cost of quality can provide the financial justification
for implementing them. Typically, the quality costs are in the range of 20% of the cost of
goods sold. Carefully planning quality improvement activities not only improves quality but
also lowers quality-related costs.
The American Society for Quality Control (ASQC) has developed a typology of quality-
related costs that are based on the work of several quality masters. Operations managers have
found the classification system useful for collecting data, which are consistent and for
identifying the opportunities for controlling quality costs that will have the greatest effect on
efficiency.
h. Improved Information Accuracy and Decision Making Capability
To survive, thrive, and beat the competition in today‘s brutally competitive world, one has to
manage the future. Managing the future means managing the information. To manage the
information, to deliver high-quality information to the decision-makers at the right time, to
automate the process of data collection, collation and refinement, organizations have to make
Information Technology (IT) an ally, harness its full potential and use it in the best way
possible.
We have seen that in today‘s competitive business environment; the key resource of every
organization is information. If the organization does not have an efficient and effective
mechanism that enables it to give the decision-makers the right information at the right time,
then the chances of the organization succeeding in the next millennium are very remote. The
three fundamental characteristics of information are Accuracy relevancy and timeliness.
1.8 Over-view of Enterprise

The term ‗Enterprise‘ is often used in general business solutions to describe a corporate
entity. An enterprise acts as a single entity, it is a group of people with a common goal, which
has certain resources at its disposal to achieve this goal.
The view of a company or organization is very different from the traditional approach where
the organization is divided into different units based on the functions they perform.
Many organizations have these departments in common such as,
Manufacturing/production department
 Production planning department
 Purchasing department
 Sales and distribution department
 Finance department
 R and D department
These departments are compartmentalized and have their own goals and objectives, which
from their point of view are in line with the organization‘s objectives. These departments
function in isolation and have their system of data collection and analysis. So the information
that is created or generated by the various departments, in most cases are available only to the
top management and not to the other departments
The result is that instead of taking the organization towards the common goal the various
departments tend to pull it in instead of taking the organization towards the common goal the
various departments tend to pull it in different directions since one department does not know
what the other does. Also, departmental objectives can sometimes be conflicting.
Example:
The sales and marketing people may want more product variety to satisfy the varying needs
of the customers while the production department will want to limit the product variety to cut
down production costs. So unless all the departments know what others are doing and for
what purpose, such conflicts will arise and disrupt the normal functioning of the organization.
In the enterprise way, the entire organization is considered as one system and all the
departments are its sub-systems. Information regarding all aspects of the organization is
stored centrally and is available to all departments.
This transparency and information access ensures that the departments no longer work in
isolation pursuing their own independent goals. Each sub-system knows what others are

doing, why they are doing it, and what should be done to move the company towards the
common goal.
The ERP systems help to make this task easier by integrating the information system,
enabling smooth and seamless flow of information across departmental barriers, automating
business processes and functions and thus helping the organization to work and move
forward as a single entity.
The Integration of Management Information System

For effective utilization of information within the organization, the enterprise needs to
integrate updated accurate information. This can be done with the use of management
information systems. Any effective system consists of proper inputs, efficient processing and
accurate output. Management information systems help in this regard. The basic elements
utilized in integrating business with management information systems are the people, the
business procedures and the information. The effect of the combination of the 3 elements is
the key to integrating business with the management information system. The information
generated by the people in collecting data, the methods of processing it and effective
dissemination of decisions and information can make this happen.
ERP facilitates a company-wide Integrated Information System covering all functional areas
such as Manufacturing, Sales and Distribution, Payables, Receivables, Inventory, Accounts,
Human Resources, Purchasing, etc.
Modeling Business with Information Systems

Creating a business model means understanding the various processes involved in the
business activity of the organization. The model helps to create an ERP system that closely
reflects the various business processes. The various linkages between these processes are
important on the stand to create a successful model. But integrating various linkages with the
information systems the business can be modeled as accurately as possible with the help of
the ERP.
Objectives and Types
The central, pervasive concept in IDM is that of the object. Everything in an IDM database is
an object; even the database is itself an object. The simple data abstraction idea is extended in
two significant ways
 An object may have more than one type
 An object may gain and lose types dynamically
We must now clarify the meaning of ―type‖. Each type of group object behaves similarly.
One might define types such as Employee, Account, Document, or Image, for example.
Every object is said to be an instance of one or more such types. As in a programming
language with data abstraction, the type provides a set of operations that define the way
instances of that type may be manipulated. Since an object may have more than one type,
corresponding to the different roles it may be viewed as playing; it may be manipulated via
the operations of several types.

Terminal Questions:
2 marks
1. Write note on evolution of ERP.

2. Define ERP and its meaning.
3. Write note on evaluation of ERP.
4. What are the advantages of ERP.
5. What are the disadvantages of ERP.
6. State the different modules of ERP.
7. Difficulties for ERP in India.
8. State different sub modules of Finance Module.
9. State the different modules of HR module.
10. Write a note on scenario of ERP in India.
4 marks
1. Explain any two modules of ERP.

2. What are the Advantages and disadvantages of ERP
3. Briefly discuss scenario and justification of ERP in India
4. What are the reasons for the growth of ERP
5. Briefly discuss process of evaluation of ERP.
6. What is the importance of the material management module?
10 marks
1. Briefly Explain different module of ERP.
2. Discuss Evaluation criteria of ERP

MODULE 2: AN OVERVIEW OF ENTERPRISE
2.1. ENTERPRISE
An enterprise is a group of people with a common goal which has certain resources at its
disposal to achieve this goal
 The enterprise acts as a single entity.
 This view of a company or organisation is drastically different from the traditional

approach
 In traditional approach, the organization is divided into different units based on the
functions they perform. Thus, we have the manufacturing department, production
planning department, purchasing, sales, finance, R & D etc.
 These departments function in isolation or as silos and have their own systems of data
collection and analysis.
 In most cases, the information created or generated by various departments re
available only to the top management and not to the other departments
 The result is that instead of taking the organisation towards a common goal the
various departments end up pulling it in different directions.
 This phenomenon is commonly known as the „silo effect‘ because employees

complete their tasks in their functional silos without regard to the consequences for
the other departments.
 A major challenge facing the enterprise is to coordinate the activities of the different
functional areas.
 In the Enterprise way, the entire organisation is considered as a system and all the
departments are its subsystems
 Information about all the aspects of the organisation is stored centrally and is
available to all the departments.
 This transparency and access to information ensures that the departments no longer
work in isolation pursuing their own independent goals.
ERP systems help to make their task easier by integrating the information systems, enabling
smooth and seamless flow of information across departmental barriers, automating business
process and functions, and thus helping the organisation to work and move forward as a
single entity.
2.2 Integrated Management Information

 In an enterprise, information systems can be designed so that accurate and timely data
are shared between functional areas. These systems are called Integrated
Information Systems.
 An information system is an open, purposive system that produces information using
the „input-process-output‟ cycle.
 The minimal information system consists of three elements- people, procedures and
data.
 People follow procedures to manipulate data to produce information.
 In today‘s world, an information system is an organized combination of people,

hardware, software, communications networks and data resources that collects,
collates, transforms and disseminates information in an organisation.
 MIS (management Information System), also called information reporting

systems, were the original type of management support systems, and they still form a
major category of information systems.
 MIS produce information products that support many of the day to day decision
making needs of the management.
 The problem with these information systems, however is that they operate at a
departmental level and they give only information that has been predefined.
 So each department will have its own data base and information systems
 The major disadvantage is people in one department do not have the information
about other departments.
 Secondly, these systems will give only the information that they are designed to
produce at the time they were built.
 What is needed is a system that treats the organisation as a single entity and caters to
the information needs of the whole organisation.
 Efficient, integrated information systems are very important for companies to be

competitive.
 An Enterprise Resource Planning (ERP) system can help integrate a company‘s

operations.
 Acts as a company-wide computing environment.
 Includes a database that is shared by all functional areas.
 Can deliver consistent data across all business functions in real time.
Integrated Information System
Definition:
Integrated System is a set of people, procedure and resources that collects, transform and
disseminates information in an organization.

An information system can be organized combination of people, hardware, software,
communication network and data sources that stores and retrieves, transform and
disseminates information in an organization.
Elements of Integrated Information System
 People
 Procedure
 Data
 The top five benefits of a fully integrated information system are:
1. Real Time Data
Through having integrated information in one system, all of the data is up to date.
This is essential for all elements of the organisation ranging from marketing
communications through to finance.
2. Better Communication
Team members will be able to communicate better through having exactly the
same information available to them at each time. Its saves having to mis-match
data between systems and departments.
3. Reduced Risk of Errors
Due to the fact that data will not have to be replicated, there is less chance of
human errors being made which leads to more accurate information available.
4. Greater Productivity
Employees can spend more time on tasks that will help the business to grow,
rather than having to replicate data and wait for information to be sent to them
from other departments.
5. One Secure Location
Through having all of the necessary data stored in one information system,
relevant data is easier for employees to access. Many leading business systems
allow restrictions on what individual employees are allowed to access so sensitive
information can be seen only by those who need it.
Fully integrated, complete business systems such as NetSuite and Sage 200 have benefits
across the entire organisation. It is a common misconception that such systems are only
relevant to those in accounting roles.
2.3. Business Modelling

 Business modelling or creating a business model, is one of the first activities in any ERP
project.
 A business model is not a mathematical model but a representation of the business as one
large system, showing the interconnections and interdependencies of the various
subsystems and business processes.
 Based on organisation‘s goals, objectives, and strategic plans, a business model consisting
of the business processes is developed.

 Based on the business model, the ERP system is developed with the aim of providing the
required information and necessary assistance to the various individuals to perform their
business processes more effectively and efficiently.
 In business modelling we model the business as an integrated system, what the various
business functions of the organisation are, how they are related, what are their
interdependencies, and so on.
 Business modelling is a precursor to business process reengineering, ERP

implementation, etc.
 A business model in other words , is a diagrammatic representation of different business

systems and processes, and their interconnections and interdependencies.
 The purpose of business modelling is to provide a general overview of the operations of a

business without going into the technical details of the processes and systems.
 It defines the activities performed and workflow structure in a broad manner.
 Every Business Model consists of various business processes that needs to be

implemented in the ERP system.
Business Modelling for ERP
 Business modelling is a pre-cursor to business process reengineering, ERP

implementation, etc.
 A business model is a diagrammatic representation of different business systems and

processes, and their interconnections and interdependencies. The purpose of business
modelling is to provide a general overview of the operations of a business without
going into the technical details of the processes and systems.
 It defines the activities performed and workflow structure in a broad manner.
 Every Business Model consists of various business processes that needs to be
implemented in the ERP system
 Illustration of a Business Model Chart

A business model is a high-level plan for profitably operating a business in a specific
marketplace. A primary component of the business model is the value proposition. This is a
description of the goods or services that a company offers and why they are desirable to
customers or clients, ideally stated in a way that differentiates the product or service from its
competitors
The 7 Elements of a Strong Business Model
Identify your specific audience
Targeting a wide audience won‘t allow your business to hone in on customers who truly need
and want your product or service. Instead, when creating your business model, narrow your
audience down to two or three detailed buyer personas. Outline each persona‘s demographics,
common challenges, and the solutions your company will offer. As an example, Home Depot
might appeal to everyone or carry a product the average person needs, but the company‘s
primary target market is homeowners and builders
Establish business processes
Before your business can go live, you need to have an understanding of the activities required
to make your business model work. Determine key business activities by first identifying the
core aspect of your business‘s offering. Are you responsible for providing a service, shipping
a product, or offering to consult? In the case of Ticket bits, an online ticket exchange
marketplace, key business processes include marketing and product delivery management
Record key business resources
What does your company need to carry out daily processes, find new customers and reach
business goals? Document essential business resources to ensure your business model is
adequately prepared to sustain the needs of your business. Common resource examples may
include a website, capital, warehouses, intellectual property and customer lists
Develop a strong value proposition
How will your company stand out among the competition? Do you provide an innovative
service, revolutionary product or a new twist on an old favorite? Establishing exactly what
your business offers and why it‘s better than competitors is the beginning of a strong value
proposition. Once you‘ve got a few value propositions defined, link each one to a service or
product delivery system to determine how you will remain valuable to customers over time
Determine key business partners
No business can function properly (let alone reach established goals) without key partners
that contribute to the business‘s ability to serve customers. When creating a business model,
select key partners, like suppliers, strategic alliances or advertising partners. Using the
previous example of Home Depot, key business partners may be lumber suppliers, parts
wholesalers and logistics companies

Create a demand generation strategy
Unless you‘re taking a radical approach to launching your company, you‘ll need a strategy
that builds interest in your business, generates leads and is designed to close sales. How will
customers find you? More importantly, what should they do once they become aware of your
brand? Developing a demand generation strategy creates a blueprint of the customer‘s
journey while documenting the key motivators for taking action
Leave room for innovation
When launching a company and developing a business model, your business plan is based on
many assumptions. After all, until you begin to welcome paying customers, you don‘t truly
know if your business model will meet their ongoing needs. For this reason, it‘s important to
leave room for future innovations. Don‘t make a critical mistake by thinking your initial plan
is a static document. Instead, review it often and implement changes as needed.
Characteristics of Good business Model
• A business model is developed on the basis of an organization's goals, objectives and

strategic plans. Further, the model illustrates how various business processes
exchange information among themselves and the underlying database.
• A good business model should be:

 comprehensible,
 coherent and
 complete.
• It should define clearly the different systems and subsystems of a business system.
Types of Business Models
There are as many types of business models as there are types of business. For instance,
direct sales, franchising, advertising-based, and brick-and-mortar stores are all examples of
traditional business models. There are hybrid models as well, such as businesses that
combine internet retail with brick-and-mortar stores or with sporting organizations like
the NBA.
Each business plan is unique within these broad categories. Consider the shaving industry.
Gillette is happy to sell its Mach3 razor handle at cost or for a lower price in order to get
steady customers for its more profitable razor blades. The business model rests on giving
away the handle to get blade sales. This type of business model is actually called the razor-
razorblade model, but it can apply to companies in any business that sells a product at a deep
discount in order to supply a dependent good at a considerably higher price
2.4 7 business models for small businesses

BUSINESS MODEL 1: The Manufacturer

This is model is based on a company making the product from raw materials or assembling
premade parts into a new product. They would sell directly to their consumers or they would
sell to a middle man. This is the most basic business model
BUSINESS MODEL 2: Bricks and Clicks
This model is designed for a company which has a physical and an online store. The
customer can either purchase the product in-store or they can order it online and collect it
directly from the store. This model offers the company a larger customer base to target as
they are doing business online and offline. An example of this is Cape Union Mart and
Roman Pizza
BUSINESS MODEL 3: Advertising
This model is based on creating content which people would like to consume and then
offering advertisers space on your platform to advertise their product. We can see this model
used on YouTube, many blog sites which have advertising on the side of the blog, and in
podcasts. The advertisers pay to have their ad on your platform. The only drawback to this
model is that your consumers may become frustrated with seeing the advert. Therefore, you
need to ensure the adverts on your blog, podcast or YouTube channel are relevant to your
product or that you offer a paid-for ad-free experience.
BUSINESS MODEL 4: The Marketplace
The benefit of this model is that you don‘t need to have any inventory. You are simply the
place which brings the supplier and the buyer together. The most successful company at the
moment is Airbnb. In this model, the marketplace owner earns their profit from asking a
processing fee.
BUSINESS MODEL 5: Subscription
This model looks at offering a consistent service to a consumer at a monthly fee. The benefit
of this model is that you know on an ongoing basis how much money you should make each
month. The most common example are subscription boxes or on-demand TV like ShowMax
BUSINESS MODEL 6: Direct Sales
This model has been around for a while but it has gotten a new modern overhaul. People are
looking to improve the product which is sold. An example is a company who offered
designers the opportunity to design their own t-shirt and sell it online within their platform.
The company is called Teespring.
BUSINESS MODEL 7: On Demand
With more consumers wanting instant gratification, the on-demand model has become more
popular. An example of the on-demand model is Uber or the local company, Hailer. These
companies satisfy a client‘s need for instant transportation from one area to another. This

model allows small business to mix new technology with existing infrastructure. Another
benefit is it works well with the movement of people wanting to become freelancers.
2.5. Business Process

What is Business Process?
A business process is a series of steps performed by a group of stakeholders to achieve a

concrete goal. Each step in a business process denotes a task that is assigned to a participant. It is
the fundamental building block for several related ideas such as business process management,
process automation, etc.
 A business process is a collection of coherent activities that takes one or more kinds
of input and creates an output that is of value to the customer.
 It starts with the order and ends with the delivery of one or several products.
 The products represent a value for the customer of these products. The customer
could be an external customer, as well as an internal customer (a department).
 Services are also considered as products
 Most companies maintain functional departments to compartmentalize their

operational units, the integrated business processes that companies use to perform
their work cut across these departments horizontally.
 Business processes, such as the order fulfillment process consist of activities that
occur in different, seemingly unrelated functions or departments.
 In other words these processes are cross functional, i.e. no single group or function is
responsible for their execution.
 It is a shared responsibility among many functional areas.

Types of Business Process
1. Primary Processes: These are the fundamental processes of a business

through which a company delivers the end product to the customer. Every
step involving in these processes works towards adding value to the final
offering.
2. Support Processes: Support processes don‘t add value to the final product
directly but they make an environment for primary processes to operate
efficiently and effectively. These processes support the everyday operations of
an organisation.
3. Management processes: Management processes govern operations, corporate
governance and strategic management. These processes set goals and
standards which lead to the efficient and effective working of primary and
support processes. Besides planning, these processes also involve monitoring
and control of other business processes. Management processes are used to
manage a business through strategic planning, tactical and operational
planning.
The importance of business processes
The need for and advantages of a business process are quite apparent in large organizations. A
process forms the lifeline for any business and helps it streamline individual activities, making
sure that resources are put to optimal use.

 Reduced expenditure and risk: a business process reduce expenditure and risk by
already laying out the most efficient ways of doing the jobs considering the potential
future shortcomings.
 Reduce human error: it reduces the human error by distributing tasks to people who
are specialised in it.
 Improving efficiency: it enhances the productivity of a department by mapping out
moves and relevant steps which are best for the business.
 More customer focused: a business process is a customer-oriented move. It
continuously updates the company about the customer wants and reviews about the
product/service.
 Bridging communication gaps: It bridges the communication gap between the
company and its customers through reviews and market research.
 Better time management: business process improves time efficiency by developing
strategies and flowcharts to minimize the time taken to do certain activities.
 Adaption of new technology: business process often keeps changing and improves
over time. The company adopts new technologies to keep their feet on the ground by
improving business process according to the latest technologies.
Key Reasons to have well defined Business Processes:
 Identify what tasks are important to your larger business goals

 Improve efficiency
 Streamline communication between people/functions/departments
 Set approvals to ensure accountability and an optimum use of resources
 Prevent chaos from creeping into your day-to-day operations
 Standardize a set of procedures to complete tasks that really matter to your
business
An Example of Business Process:
As an example, let‘s consider the hiring process of an HR department. Right from posting the
job opening to onboarding the employee, there are multiple steps involved in the process.
Although this can vary from organization to organization, a simple workflow might look like
this:
 The HR executive posts the job update

 Multiple candidates apply in a portal
 The HR executive screens the candidates and filters the best-fits
 The selected candidates are called for the next stages of the recruitment
 The right candidate is chosen at the last stage of the recruitment
 Salary and policy negotiations take place
 The offer letter is sent and the candidate accepts

2.6. Business Process Mapping with ERP Modules
A business process is a set of tasks or activities that produce desired outcomes.
Because the various process are carried out by different functional areas or departments,
effective communication and collaboration among the departments is essential for the smooth
execution of these processes.
Without this interaction, the process cannot be completed efficiently and effectively
An organisation uses many processes to achieve its objectives.
Four processes are directly related to creating and delivering products. They are:
Buy, Make, Sell, & Finance.
Organisations use specific terms to identify these processes, and accordingly ERP Modules
are also designed, they are as follows:
Procurement or Purchasing Process (buy):
It refers to all of the activities involved in buying or acquiring the materials used by the
organisation, such as raw materials, components, consumables, etc. that are needed to make
the products.
Production or Manufacturing Process (make):
It involves the actual creation of the products within the organisation. While the production
process is concerned with acquiring needed materials internally(by making them), the
procurement process is concerned with obtaining needed materials externally (by buying
them).
Fulfillment Process (sell):
It consists of all the steps involved in selling and delivering the products to the organisation‘s
customers.
Financial Management Process (managing money/Finance):
It consists of two major areas- Financial Accounting & Management Accounting

(Management Control).
Financial Accounting provides reports on past performances of the business to external

parties, while Management accounting or controlling provides feedback on the operational
performance of the business..
Closely related to buying, making, selling and financial management are four processes used
to design, plan, store and service products.
The Organisation uses the following terms for these processes:

Product data management process(design):
It supports the design and development of products from the initial product conception stage
through the discontinuation of the product.
Production Planning Process (Plan):
It uses historical data and sales forecasts to plan which material will be produced, in what
quantity and when.
Inventory Management Process (Store)
It is used to store and track both the raw materials and finished goods ensuring that there is no
surplus stock or shortage.
Customer Service Process (Service):
It is used to deliver after sales customer services such as repairs, maintenance etc.
Human Resource Management (HRM) process (people):
It focuses on the people within the organisation and includes functions such as recruitment,
selection, training, compensation management, performance management etc.
Information Management (IM) process (information):
It focuses on providing the decision makers the right information at the right time so that they
can make quality decisions and use information as a competitive weapon.
2.7. ERP FOR MAKE TO ORDER PROCESS

Make to order (MTO), or made to order, is a business production strategy that typically
allows consumers to purchase products that are customized to their specifications.
It is a manufacturing process in which the production of an item begins only after a

confirmed customer order is received.
Organisations that manufacture complex products face challenges of their inventory

becoming obsolete.
The problem is common for the products that are technology based, specialized industries
such as aircraft, vessel production, and construction
Make to order ERP software is a system that uses a production approach where goods are
only manufactured once an order has been placed and confirmed.
The method is generally used for highly configured products like automobiles, servers, or
costly inventories such as aircraft.
The system also helps to reduce finished goods inventory and manages stock obsolescence as
only what is required is manufactured.
The system enables one to fulfill an order with the exact specifications as per the customer‘s
needs.
ERP Software Solutions
 It is of prime concern for the modern day organizations for a synchronized and
coordinated working among the entities. Hence firms spent a lot in building proper
ERP solutions.
 Options for building ERP:

1. Make a new software
2. Buy software
Building ERP Systems
Building ERP
Systems
Make Buy
Make using
Internal Sources
Make using
External Sources
Building ERP Systems
Buy:
 Going for tailor made ERP packages available in the market like SAP, Oracle
application, Microsoft application, Baan, Peoplesoft, etc..
Make using Internal Sources:
 Developing a customer built ERP package, specific to the requirements of the

organization with the help of the in-house IT department.
Make using External Sources:

 Developing a customer built ERP package, specific to the requirements of the
organization with the help of a software solution provider.
Buying Tailor-Made(Suitable) ERP Solutions
 Generalized off the shelf application software packages.

 Modules based on rich functionalities for all business functions.
 User tested with lot of installations.
 No lead time requirement for software development.
 Tuned for more users/networks with adequate & in-built security.
 Parameterized for flexibility.
 Can sit on latest hardware & software platforms.
 Upgradation of functionalities with version control
Building using Internal Resources
 Lack of adequate & qualified manpower.

 Not driven with clear focus on expectations, time & cost.
 Poor software project management.
 Lack of seriousness with the management & IT team.
 High employee turnover.
 Lot of schedule gaps during project execution.
 Normally project life is more.
 Frequent change in the scope with the approval of the management.
Building using External Resources
 The whole package is designed and built:

 By keeping a specific enterprise & its business practice in mind.
 By incorporating the improvements / additions.
 With due integration.
 Without changing the current way of doing the business
 Providing flexibility to accommodate business fluctuations.

 Very economical while comparing the cost of implementing tailor made ERP
solutions.
 The company can opt for its choice of hardware, software & communication
platforms based on the skill availability.
 The company and the software vendor have the direct relationship during the project
execution.
 IT department has good control over the project.
 The existing practice & applications can be tuned and linked with the proposed
packages.
 Maintenance & improvements are easy & less costlier
Difference / dilemma in buy & build
When to Buy When to Build
When using an “out of box” When applications provide unique,

product, it allows internal strategic differentiation and are
developers to focus on creating not available through a packaged
unique differentiators rather than offering.
building basic components.
Packaged solution generates higher Custom development &

quality, more robust features & maintenance costs are significantly
greater reliability & scale at a lower lower than packaged software
cost than maintaining custom license and maintenance fees.
solutions.
The complexity & risk of building Projects have a low risk of failure
& deploying a custom application is
unacceptably high
When you want to automate non- When custom systems extend

core business functions. existing software investments to
meet specific business needs, which
commercial vendors cannot
produce quickly
2.7. ERP for Small Business

https://softwareconnect.com/erp/small-business/

What Do Small Businesses Need to Understand?
Within a small company or startup, employees wear multiple hats. Everyone pitches in
wherever and whenever the need arises (which is frequently). Who has the time to manually
process multiple spreadsheets and separate mountains of data? ERP systems geared towards
small businesses are able to blend and automate key business functions such as order
processing, production and finances.
However, ERP software is integrated over all departments of a company. Implementing an

ERP system entails careful planning in order to minimize the risk of failure and to ensure
goals are met.
This requires a standardized implementation blueprint, an established ERP strategy prior to

selection and involvement of all business and IT staff members in the process. Any business
can get a real ROI from the use of an integrated ERP system if executed correctly.
What Benefits Do Small Businesses Get From ERP?
 Transparency: Instead of each department having its own information system, all
relevant data can be shared and accessed by all the departments. This eliminates the
need to re-enter or export data, which can result in less errors, increased productivity
and reduced expenses on human resource.
 Decision-making: Real-time data provided by the system can be beneficial for
marketing, management, accounting, and enables the organization to make vital
decisions on time and reduce waste. Teams can detect any potential obstacles or
issues that may shake productivity levels. An overall picture of operations allows for
business leaders to make effective decisions and respond quickly to a changing
business environment.
 Productivity: With increased clarity by streamlined business processes, staff can shift
their focus on managing increased volumes of business. This aids in transforming
various facets of your business and overcoming the challenges involved in business
growth
What Is the Right Choice of ERP?
There is no one size fits all ERP system. Each business has different competitive profiles,
customer mixes and business standards that make for a massive range of solutions.
A good ERP option will offer a suite of business management tools such as CRM, web
hosting, ecommerce platform, a tasking system, a shipping manager, email marketing, etc.
However, too many unnecessary bells and whistles may cut back revenue.

As a small business you want to invest in the most cost-effective solution that meets your
needs, fits your industry and is manageable. There are various factors to consider when
choosing which ERP is best for you and your company.
Ease of Use: Consider the learning curve involved. Is it user-friendly? What would be the
amount of training involved? Modern ERP solutions come with responsive user interfaces
and can easily integrate with most business tools such as Microsoft programs and Google.
Customization: Does the software accommodate changing business models? Does the
software utilization, platform and user count adapt with business growth? The system should
be scalable to your business goals.
While most of the sophisticated enterprise-scale software will be too bulky and expensive, the
‗freemium‘ software (small, basic packages) will be too difficult to scale as your business
grows. It is important to select an ERP solution with the features that best align with your
business objectives.
Highly customized systems will generate a higher cost, so think before you customize.
Design a workflow and ask the vendors to run demos based on your requirements. It is
important to see first-hand how a particular ERP system will function within your business
Cloud or On-premise Platform: Traditionally, on-premise systems required expensive

licensing costs and large initial investments. Now with the emergence of cloud ERP
solutions, an affordable ‗pay-per-transaction‘ pricing model is now available to smaller
businesses and start-ups. This minimizes the risk of you purchasing an inadequate solution
that is too powerful for your needs.
For some companies it may be necessary to have the solution be in-house and installed on an
internal server, while others may prefer a web-based solution that is more mobile and can be
accessed through tablet and mobile devices. Determine which option best suits your business
objectives.
Frequency of Upgrading: Be aware of the support guarantee regarding mandatory upgrades.

Unless you are purchasing additional components for your software, make sure enhancement
fees are locked in and don‘t increase with developments and future releases. Also consider
the ease of upgrading; a cloud platform may provide faster and automatic updates while an
on-premise update may involve more work.
Security Measures: Ensure that the security of your data is as much of a priority to the
vendor as it to you. Be aware of how to manage and determine different access and
authorization roles in the system to prevent data violations. Make sure passwords are strong
and securely encrypted. Also, ask the vendor what security measures are employed for
integrating third-party products.

Support Service: Take into account how much support is offered by the vendor and find out
if there are any additional fees involved for troubleshooting your system. The vendor should
also have plenty of personnel to assist with setting up and maintenance of your ERP software.
Also, software buyouts and partnerships are now more commonplace. Protect yourself
against a situation in which the supplier management changes and make sure they guarantee
support for a certain extent of time on currently implemented products.
Total Cost of Ownership: The goal here is to maximize your ROI. The costs involved in
purchasing software can be confusing. Sales reps are known to downplay the costs and risks
involved. Be clear on what the costs for the software, implementation, maintenance,
customization, training, support, hardware and updates will entail. Determine the pre and post
implementation expenses and project these costs for the next 5-10 years.
ERP for Make to Order Manufacturers– Get Closer to the Customer
What’s key to consider when it comes to ERP for Make-to-Order manufacturers?

With pressure to adapt to rapidly changing markets and improve financial results, many
manufacturing companies operate using Make-to-Order processes in their operation, often
referred to as demand-driven processes.
It‟s important that technology solutions address operations – including:

 Supporting a proliferation of SKUs with relatively few of the same core components.
 Managing frequent, ad-hoc changes to your stock products‘ Bills of Materials to
accommodate customer‘s special requests.
 Managing supplier lead times within the time frame of customer demand.
As business improvement consultants, Ultra has worked on hundreds of engagements
helping enterprise teams refine and transform their business processes to respond to
market forces and achieve ROI.
Often, we are asked about ERP for Make to Order Manufacturers and business process
improvement strategies for enterprises on this path.
Improving Make-to-Order Processes

Optimizing Make-to-Order operations entails a re-defining of the relationship between
customer demand and manufacturing scheduling.
Although, in general, operating costs in a Make-to-Order environment are lower, the journey
of transformation requires careful and fundamental shifts in strategies, which, if not executed
with precision, can result in many missed benefits for both the customer and the
manufacturer.
We want to consider two primary focus areas when evaluating and implementing a solid
demand-driven operation.
1. Customer connection
2. Shop floor and execution systems
1.Customer Connection
The good news for companies that are considering the expansion of their Make to Order
capabilities is that there are many tools available that simplify the transition to demand driven
manufacturing and help support better collaboration with customers.
Configuring, Pricing and Quoting
One capability to consider is a CPQ tool that enables on-line collaboration with customers
for real-time Configuring, Pricing and Quoting.
As you refine your ERP methodology, consider that many of these tools are available as
either an integrated module of modern ERP for MTO companies or as standalone Cloud
offerings that transfer data back and forth to a separate ERP.
This tool can also be delivered to a customer via a self-service portal which simplifies the
collaboration between your company and the customer and empowers them to control their
own destiny when ordering products. A good configuration tool results in many benefits.
 Engineering design is built into the rules engine, thus avoiding compatibility issues
with chosen features and/or options.
 The need for changes to multiple BOMs is virtually eliminated as the configurator
enables changes to be made in one central rules table; the changes are then
implemented across all the possible variations.
 Pricing is also based on the configuration rules so chosen features and options are
automatically included or excluded for accurate pricing.
 The configuration tool also creates the appropriate routing instructions and many also
generate drawings that follow the order to the shop floor.
Functionality Available from ERP for Make to Order Manufacturers

Many systems of ERP for Make to Order manufacturers also support Available to Promise,
more advanced Capable to Promise, and or Profitable to Promise functionality, which
offers more accurate promising of delivery dates and prioritizes and optimizes inventory
allocation.
This delivers a much higher level of customer satisfaction than a traditional first-come-first-
served allocation approach.
As enterprises review business processes in an ERP software selection project and develop
an ERP implementation plan, they will see how both of these tools drive an exception-based
supply chain management process that can help reduce inventory while delivering superior
service levels.
Through the optimization capability, the more profitable and demand sensitive customers
receive a higher priority allocation of stock and therefore their service level often meets or
exceeds their expectations
2.Shop Floor and Execution Systems

The second focus area that we‘ll consider is shop floor and execution systems.

Because decision time frames are condensed in a Make-to-Order process, more dynamic
scheduling and optimization is needed to maintain good communication with the customer
and during the various stages of operations throughout production.
Features from ERP for Make to Order manufacturers help optimize the shop floor
execution:
 A real-time constraint-based planning and scheduling system that models
production scenarios for best fit against current demand, offering algorithmic
solutions to balance or resolve conflicting demand or delivery schedules. These types
of solutions run in a memory resident environment either as an extension to an
existing ERP for MTO companies or as an integrated part of the platform.
 A tightly integrated Manufacturing Execution System (MES) that enables visibility
and exception based processing throughout the work centers and production
operations as they process through the facility.
Key Benefits of Plant Floor Systems
 Inventory reduction through more strategic supply decisions
 Quality improvement through reduced waste and rework
 Higher revenues from increased market share
 Increased adaptability to demand changes
 Reduced overhead
When considering ERP for Make to Order, manufacturers move through several
suggested stages:
 Stage One: Business processes must change. A thorough understanding of current

processes is vital to building an understanding of the transformational gaps that need
to be bridged before proceeding to an MTO future state.
 Stage Two: Education on best practices in key concepts of MTO drives progress. For
example:
 How to develop an agile product design process to meet demand changes and
market drivers.
 How to shorten production planning horizons.
 How to make logistical operations more strategic as accurate promised dates
become more critical.
 Stage Three: A strategic road-map for transformation must be developed. A thorough
plan that manages change and risk should be agreed upon by the executive team and
project leaders.
 Stage Four: Current and future information systems capability should be evaluated.
 Will the current system support the change from MTS to MTO?
 What changes need to be made to technology to support the goal?
 Stage Five: Implement the changes supported by technology. Ensure that the
information system meets the future state requirements now and into the future.

2.8.Hardware Environment and its Selection for ERP Implementation
Any ERP implementation attracts expenditure on account of
1. Operating System (OS)
2. Database Management for hosting the system.
3. Network especially when the system is rolled out at different locations.
4. Licensing with ERP packages
Hosting OS:
• Unless a system is implemented from scratch, it may be a better option to integrate the
chosen ERP system with existing OS of the organization, which will reduce upfront
expenditure of implementation.
• The important consideration is that whether the preferred ERP system is compatible with
current hosting platform.
• Robust and scalability of existing platform.
• In the OS sector (for mainframe and server segment various flavors of UNIX (IBM, HP,
Solaris etc.) are in offer
• Microsoft windows and Linux OS is also used to run some open source ERP package but
yet to be popular for commercial applications
Supporting Database:
• Most popular players of database market are Oracle, IBM, Microsoft and Sybase,
constituting about 90% of market share.
• If the existing platform of database does not belong to mainstream offering, it may be
prudent to explore an alternative.
• There are exceptions, such as an organization selecting QAD solution, may consider use
of "Progress" RDBMS with which this package is most compatible.
• Another important factor relating to ERP platform is whether the ERP system to be
hosted in house or hosted remotely.
• If hosted remotely, all upfront cost relating to hardware, OS and RDBMS are eliminated.
The vendor may then charge an additional hosting cost periodically.
Network:
• Important networking issues relating to ERP implementation are- network topology
• Detailed networking design
– Setting up new or leveraging existing Local Area Networking (LAN) and Wide
Area Networking (WAN), constitute an important part of pre implementation/
implementation process.

– This includes cabling to plan workstations, laying fiber optic backbone, provision
for sufficient bandwidth to remote sites (particularly hosting distributed
application/database).
• Networking printers.
– Mode of sharing networked printers in various functional divisions such as
warehouses, accounting offices and sales units need to be planned beforehand
REQUIREMENTS FOR AGORA.DESKTOP

Software requirements
The current aGora version (v.4.61.770) requires to its proper working, any of the following
OS to be installed in the system:
 Windows® XP SP1
 Windows Server® 2003
 Windows® Home Server
 Windows Vista®
 Windows® 7
 Windows Server® 2008 R2
 Windows® Home Server 2011
 Windows® 8
 Windows® 8.1
 Windows Server® 2012 R2
 Windows® 10
Hardware requirements
The current aGora version (v.4.61.770) needs, to its proper working, the following hardware:
Minimum
 Intel/AMD 1.5 GHz processor

 2 GB RAM memory
 1 GB free in the hard disk
 1.024 x 768 screen resolution
 Internet connection
Recommended
 Intel/AMD 2.6 GHz processor

 4 GB RAM memory
 4 GB free in the hard disk
 1.280 x 1.024 screen resolution or higher Internet connection
Hardware /Software requirement for implementation of ERP system:
On Premise:
Companies run their ERP system on servers in their own data centres located on the
company premises, or in a private Cloud – both under their own direct control. The software
can either be purchased or leased for a fee. You continue to own and operate the hardware
required for your ERP system. In on premise use cases, the acquisition and operation of
servers and storage, the permanent generation of backups, and maintenance of the software
and hardware are in the companies' own hands. On premise solutions generally offer, and
companies generally take advantage of, the option to orient the software to company-
specific requirements with regard to custom functions. The described local, on premise
scenario used to be the most common approach to delivering and implementing business
software. Clearly, the need for (and costs of) hardware are higher in this scenario.
Public Cloud: - IT resources are not made available internally, but online by an external
service provider. For example, companies lease the ERP system with the associated
licenses and pay usage fees for the use of specific functional areas depending on their
degree of use. IT resources such as hardware/servers or applications are available over the
internet (instead of being operated in company data centres). Companies can flexibly
reserve, use and release these public Cloud resources via their Cloud provider as they
require. Hardware- related costs for the company are thus minimized or eliminated.
Software fromthe Cloud is primarily a standardized solution that is shared equally between
multiple users – thanks to dynamic management and the virtualization of resources. As a
result, Cloud operators generally achieve the scaling effect characteristic of the Cloud
model (economies of scale), which can be passed on to the client companies in the form of
multiple cost advantages.
Hybrid Cloud: - The hybrid scenario combines the on-premise and public Cloud
operating models: companies continue to operate business-critical applications and
applications that, for example, have very specific requirements or technical limitations,
under their own control – with their own hardware in their own data centres or in a private
Cloud. Simultaneously, other applications or application components access IT resources
from public Clouds. Terms such as "bimodal IT," which combines traditional and agile IT,
are often used in conjunction with hybrid approach. In terms of hardware needs and cost,
this hybrid cloud solution leaves you between the on premise (highest need for
owning/maintaining hardware) and the public cloud (lowest need for owning/maintaining
hardware) scenarios
2.9. Selection for ERP Implementation
Top 10 key criteria when selecting an ERP:
1. Business requirements
2. Upper management support

3. User support
4. Functional requirements
5. Integration with existing systems
6. Budget and resources
7. Technology and future scalability
8. Total cost of ownership and ROI
9. Evaluate and select options
10. Necessary customization
ERP selection criteria #1: business requirements
Develop a clear and comprehensive list of your requirements for your ERP. Use every
resource available to make this list excellent. Talk to your production workers and your
purchasing manager. Listen to executive management, and your customers and
suppliers. Call in former employees and current salespeople. When every thought is written,
then prioritize the entire list. Reach a solid consensus as to which requirements are
absolutely ―must have‖. The next priority tier includes things that are not mandatory but there
is general agreement that including them will benefit the company. Any other listed items are
in a lower category, merely ―nice to have‖.
ERP selection criteria #2: upper management support
This could seem like an obvious criterion. Too often, it is not recognized for its
importance. One can select the absolute best ERP for their organization, yet without upper
management support, the project is likely doomed. Support goes beyond simply getting a
spending approval. You want your management to actively embody their support. When a
resource from another department is needed, the manager can throttle progress by providing
lukewarm support. When a choice arises to support the new ERP or use the present system,
you want confidence that the manager truly supports the ERP even if there is a short-term
cost at the point of the choice.
ERP selection criteria #3: user support
People in every functional area will be users of the new ERP. Gain their support by ensuring
their needs and desires are included in the requirements list. Those users, wherever they
work, will have much to gain through the success of your ERP implementation. Let those
users know they will have the support they need such as training and equipment they need to
use the ERP and receive value for them as well as for the overall organization. Make certain
they know they will have support helping them through the needed changes. In return, they
will support your efforts to use and benefit from your new ERP. Make sure here that the
documentation users will need is available when and where needed by users and is of
sufficient quality to meet their needs.
ERP selection criteria #4: functional requirements
Your business has certain functional requirements that must be satisfied even before your
change and update requirements. Does this ERP support sales orders that include both
physical products related and services? If that is what your business sells, it has to. Your
business operates in multiple countries around the globe. Do the accounting components of
ERP include multiple currencies and the ability to work with the variety of tax systems in
those countries?
Think about any ERP components not required by your business. If your business is
distribution and you perform no manufacturing, can you easily work around any work-in-
process demands made by an integrated inventory system included in some ERPs?
ERP selection criteria #5: integration with existing systems
Most businesses considering an ERP selection have other systems that are quite adequate for
their purpose and the business is not interested in changing multiple systems along with their
ERP. The question now to be asked: how will those systems integrate with ERP? Almost
always, there are common data elements. Can ERP read and use the existing data in that
other system? Will you allow the same data to exist and how will you keep those separately
updated data elements compatible? Will you be better served by changing the other system
to use that data from ERP?
What integration tools come with this ERP? It should have simple integration such as .csv
files for occasional data updates. That type of update is inefficient and likely too slow for
everyday use. Web services and XML files that allow different systems to quickly transfer
data between systems are a more modern way to work.
Many customers and suppliers use EDI (electronic data interface) to share data between
companies. If this is needed, be sure your ERP supports that need.
ERP selection criteria #6: budget and resources
How much money is available for an ERP system? If you only have $10, then you have to
have a very strict selection criterion. A 2019 Software Path report stated that on average you
can expect to spend about $7,200 on each user of your system - that's a big investment and a
reminder that ERP selection is a long-term consideration. Most ERP systems will be used for
a decade or longer so ongoing maintenance and support for the ERP as well as the
infrastructure related are a budget concern. Your choice today will lock costs into future
budgets.
ERP selection criteria #7: technology and future scalability
These concerns apply to the software used to develop your ERP system and to the hardware
required to use that ERP. We know there will be ongoing developments and improvements
in both domains. We might not want either to perform on the bleeding edge of technology but
neither do we want either one to use obsolete technology today. At the same time, we want
to buy our ERP from a provider that has a good record of accomplishment of keeping up with
technology developments and who promises to maintain that strategy.
ERP selection criteria #8: total cost of ownership and ROI

Add up all the incremental costs you will incur due to this ERP. There will be the initial
purchase amount and some initial consulting expense. You might need some updates to your
servers and networks immediately. You will spend money on training and temporary labor
while your people are implementing ERP. You will have support and maintenance costs
every year while you use the ERP.
At the same time, you will benefit from improvements in the cost to perform work. You
might see additional revenue because you now can provide services and products to your
customers that were not possible without this ERP.
Spread those costs and benefits over time and calculate your return on investment. Most
businesses have a threshold return needed before making an investment. Ensure that this ERP
passes your business ROI threshold.
ERP selection criteria #9: evaluate and select options
The traditional ERP system running on an on-premises server and supported by an in-house
IT staff is not the only choice today. Many businesses choose an ERP that runs in the cloud
using a SaaS framework. The initial investment is reduced in favor of monthly ―rental‖
payments that include the software and most support needs.
You can choose a hybrid approach where your business owns the ERP but operates it in the
cloud running on shared servers.
Many ERP systems today are developed using open-source software too. These benefit from
free or very low cost to acquire the software. You have the source code for open-source so
you have the power for complete customizations. Users everywhere update open-source
ERP and they find and fix bugs. Those improvements are available to all users immediately
with no need to wait for a development company to issue a new revision.
If you have concerns related to these options, your choice will point to what ERP system
selection criteria are essential for your business.
ERP selection criteria #10: necessary customization
The perfect ERP will never require any customization. Since none are likely to be perfect,
any customization will be a selection criterion. Understand among your team what
customization is desired and whether it truly is essential. Today‘s ERP systems use
knowledge gained from thousands of customers. Is there some component of your business
that is unique among every other business around the world? Not likely. If your desired
customization can be worked around easily using an existing ERP, that customization is not a
selection criterion. If that customization can be deferred while you use an existing ERP and
evaluated later, it is not immediately a criterion, but the ability to implement that
customization later is a criterion.

On the other hand, if your desired customization is required, look at ERP systems with an eye
toward the ease and efficiency of that customization. Do you have developers skilled in the
programming language required? Are developers with that skill available in the employment
market?

Terminal Questions
2 Marks Questions
1. What is an Enterprise?
2. What are the main misconceptions about ERP?
3. In Integrated management information system what are the information
needed?
4. What is external data?
5. What is funding data?
6. What is market research data?
7. What is Management?
8. What is a system?
9. What is information?
10. What is business modeling?
4 Marks Questions
1. What are the reasons for the explosive growth of the ERP market?
2. What are the direct benefits of ERP systems?
3. What is Business Integration and how do the ERP systems achieve it?
4. What is an Enterprise? Give an overview
5. Explain Business Modeling?
6. What are the needs of business modeling?
7. Explain integrated data modeling?
8. How ERP helps for small business?
9. What is ERP for make to order companies?
10. Explain data modeling?
11. What are processes mapping explain?
10 Marks Questions
1. Explain the need of business modelling?

2. What do you understand by Business Modelling? Write the characteristics of good
business model in brief
3. What are the various types of symbols used to prepare business process? Explain
each in brief
4. Draw the process flow diagram for the Library Management system and MBA
admission process
5. Explain the factors need to consider while buying an ERP system?
6. Describe the components influencing Build Decisions in ERP. Also clarify the
hardware / software requirement for implementation of ERP system
7. Explain in detail the need of integrated data modelling?
8. Describe the role of ERP in various industries like automotive, capital goods and
Pharmaceuticals
9. Explain process modelling tools in detail?
10. Define business process mapping. List the reason for creating a process map?

MODULE 3 : ERP AND RELATED TECHNOLOGIES
3.1. Business Process Reengineering (BPR)
3.1.1 Introduction
BPR is a fundamental rethinking and radical redesign of business processes to achieve
dramatic improvements in cost, quality, speed and service. Business Process Reengineering
encompasses the envisioning of new work strategies, the actual process design activity and
the implementation of the change in all its complex technological, human and organizational
dimensions.
Business process re-engineering (BPR) is the act of changing an organization‘s major

functions with the goal of increasing efficiency, improving product quality, and/or decreasing
costs. This starts with an in-depth analysis of the business‘ workflows and identifying key
areas that need improvement. People who do this kind of work, often referred to as BPR
specialists, are hired by companies to facilitate transitions to more standardized processes.
3.1.2 Is Business Process Reengineering (BPR) same as Business Process Improvement

(BPI)?
On the surface, BPR sounds a lot like business process improvement (BPI). However, there are
fundamental differences that distinguish the two. BPI might be about tweaking a few rules here
and there. But reengineering is an unconstrained approach to look beyond the defined
boundaries and bring in seismic changes.
While BPI is an incremental setup that focuses on tinkering with the existing processes to
improve them, BPR looks at the broader picture. BPI doesn‘t go against the grain. It identifies
the process bottlenecks and recommends changes in specific functionalities. The process
framework principally remains the same when BPI is in play. BPR, on the other hand, rejects the
existing rules and often takes an unconventional route to redo processes from a high-level
management perspective.
BPI is like upgrading the exhaust system on your project car. Business Process
Reengineering, BPR is about rethinking the entire way the exhaust is handled.
Basis Business Improvement Business Reengineering

Incrementally improving Radically redesigning business
Definition
existing processes processes
Target Any process Strategic business processes
Primary
IT and work simplification IT and organizational redesign
enablers
Potential
10% - 50% improvement 10% fold(double) improvement
payback
What changes Same jobs, just more efficient Big job cuts, new jobs, major job

Basis Business Improvement Business Reengineering
redesign
Risk of failure Low High
3.1.3 Companies which introduce reengineering concepts with their impacts:

Company & Before Re- After Re-
Business Impact
Process Engineering Engineering
An integrated Fewer inconsistencies

Ford Motor Independent database reduction in clerical
database supporting
Company maintained by overhead.
multiple functions eg.,
Accounts purchasing, receiving
purchasing, receiving, Better responsiveness to
Payable and accounts payable
accounts payable customers.
Multi-step credit Timely decision – making.

authorization process A deal structure
More effective customer
involving multiple makes the credit
IBM Credit service.
departments & authorization decision
Authorization
multiple individuals using multiple Elimination of redundant
eg., price fixer, databases. tasks and bottleneck
checker (holdup).
Concurrent Elimination of bottlenecks

engineering. and delays.
Sequential product
Xerox
development process. Using a common Faster product
Product
Ie. Wait till prior integrated database development
Development
process gets complete
Computer assisted Responsiveness to market
design system. needs.
It ordered its own

stock of merchandise It let its vendor. Better inventory
Wal-Mart from vendors. management.
Inventory Replenish its
Management Dealt with excess inventory according to More effective inventory
inventory or market trends. replenishment.
insufficient inventory
Central negotiation of
Hewlett – Decentralized
corporate volume Cost savings through the
Packard‟s purchasing led to a
discounts. use of centrally negotiated
Purchasing loss of corporate wide
discounts.
Process discounts. Use of a shared
database of negotiated
Company & Before Re- After Re-
Business Impact
Process Engineering Engineering
prices.
3.1.4 Characteristics of BPR:

Re-engineering varies from one business to another. However, Michael Hammer and James
Champy observed some common characters in the re-engineering process of their client
firms.
1. Several jobs are combined into one: The feature of re-engineered process is absence of
an assembly line. The formerly distinct tasks/ jobs are combined and compressed into one.
The jobs are combined mostly based on the needs and preference of the customer.
2. When jobs are integrated, the chances of errors are reduced, eliminates
misunderstandings, delays and reworking are minimized.
3. Workers make decisions as they are required to do so. Jobs are combined, both
horizontally but also vertically. In other words jobs are compressed based on job enlargement
and job enrichment. Vertical integration incorporates the tasks of decision making in the top
ladders of the hierarchy. In addition, the workers in the re-engineering are empowered. The
empowered workers are motivated and self determined to make decision. Decision-making is
part of the work of the workers.
4. Compressing the work both horizontally and vertically reduces delays, overhead costs
and betterment of response and satisfaction of customers.
5. The steps in the process are performed in a natural order straight-line sequence is
avoided in the re-engineering. Activities are performed not in artificial order but in natural
order. This process is termed as ‗De-linearising‘ which allows performing of many jobs
simultaneously. This process reduces the process time and thereby delays.
3.1.5 Objectives of BPR:

BPR is very important for an organization because it makes business more efficient and
businesses cannot improve or innovate without it. Following are the needs and objectives of
BPR.
Changing nature of business operations
Rapid changes are taking place in all fields. Traditional way of operations is replaced by
fitter, smarter, and more streamlined operations. Changes have to be implemented fast and
companies that fail to go with changes are likely collapse. In this context, there is a pressing
demand to change company architecture and which cannot be achieved without redesigning
existing unfits processes.
Cost and cycle time reduction

BPR is to implemented in organizations to eliminate unproductive activities and redundant
human labor. When a business reorganizes by teams, it decreases the importance of having
management levels. It also increases information flows and avoids of errors and job repetition
Promotes quality
BPR needed to promote quality in all activities of an organization. This happens because
BPR decreases disintegration of work.
Better results and products
Efficiency and focused goals allow company and its employees to put more energy towards
products improvements. Re engineering business processes provides improvements in all
areas of business, and those improvements also reflect in product improvement.
Simple and streamlined operation
At the end of the BPR processes, business has streamlined its functions and removes
unnecessary processes that used to slow its activities. As a result, operations of business
become more directed towards the goals set out during BPR.
Increased efficiencies
Increased efficiencies come out with a streamlined operation. By reducing down operations
and change processes, things move easier and faster which ultimately increase overall
efficiency.
3.1.6 Principles of Re-engineering

Organize around outcomes, not tasks
Identify all the processes in an organization and prioritize them in order of redesign urgency
Integrate information processing work into the real work that produces the information
Treat geographically dispersed resources as though they were centralized
Link parallel activities in the workflow instead of just integrating their results
Put the decision point where the work is performed, and build control into the process
Capture information once and at the source.
3.1.7 Best business practices of BPR:

Task Elimination
Task Composition
Integral Technology
Empower

Order Assignment
Re-Sequencing
Specialist Generalist
Integration
Parallelism
Numerical Involvement
3.1.8 Framework components of BPR:

Customers
Products operation view
Behavioural view
External environment
Organizational structure
Organizational population
Information Technology
3.1.9 Different approaches of BPR:

Systematic approach: An organization maps out and attempts to understand an existing
process and then work through it systematically to create new processes to deliver the desired
outcomes.
Advantages:
Change can be made incrementally
Conducted with small chunks
Reduced disruptions (troubles) and risks
Disadvantages:
Its base is the existing process.
It is less innovative.
It can result in significant step changes in performance.
Clean sheet approach: Demands a fundamental re-thinking of the way that the product or
service is delivered and designs new processes from scratch.
Advantages:
In organization opinion, they have reached a breakpoint which is best for any process.

Previous attempts to reengineer process through a systematic approach have failed the results
Creating the desired culture with a new workforce is easier.
Disadvantages:
The required organizational change can be difficult to implement.
The risk is higher and the disruption greater.
Workers may refuse to switch to the new methods.
3.1.10 Steps that involved performing BPR:

To keep business process reengineering fair, transparent, and efficient, stakeholders need to get a
better understanding of the key steps involved in it. Although the process can differ from one
organization to another, these steps listed below succinctly summarize the process:
Define Objectives and Framework: First of all, the objective of re-engineering must be
defined in the quantitative and qualitative terms. The objectives are the end results that the
management desires after the reengineering. Once the objectives are defined, the need for
change should be well communicated to the employees because, the success of BPR depends
on the readiness of the employees to accept the change.
Identify Customer Needs: While, redesigning the business process the needs of the
customers must be taken into prior consideration. The process shall be redesigned in such a
way that it clearly provides the added value to the customer. One must take the following
parameters into the consideration:
Type of Customer and customer groups.
Customer‘s expected utilities in product and services
Customer requirements, buying habits and consuming tendencies.
Customer problems and expectations about the product or service.

Study the Existing Process: Before deciding on the changes to be made in the existing
business process, one must analyze it carefully. The existing process provides a base for the
new process and hence ―what‖ and ―why‖ of the new process can be well designed by
studying the right and wrongs of the existing business plan.
Formulate a Redesign Business Plan: Once the existing business process is studied
thoroughly, the required changes are written down on a piece of paper and are converted into
an ideal re-design process. Here, all the changes are chalked down, and the best among all the
alternatives is selected.
Implement the Redesign: Finally, the changes are implemented into the redesign plan to
achieve the dramatic improvements. It is the responsibility of both the management and the
designer to operationalise the new process and gain the support of all.
Thus, the business process reengineering is collection of interrelated tasks or activities

designed to accomplish the specified outcome.
Begin Organizational Change
Building the Reengineering organization
Identify BPR opportunities
Understanding the Existing Process
Reengineering the process
Blueprint the new business system
Perform the transformation
1.11 Process of Business Process Reengineering

Prepare for Reengineering
―If you fail to plan, you plan to fail‖. Planning and Preparation are vital factors for any
activity or event to be successful and reengineering is no exception. Before attempting
reengineering, the question ‗Is BPR necessary?‘ should be asked?
There should be a significant need for the process to be reengineered.
A cross-functional team is established with a game plan for the process of reengineering.
Another important factor to be considered is to understand the expectations of your customers

and where your existing process falls short of meeting those requirements.
Having identified the customer driven objectives, the mission or vision statement is
formulated.
Map and Analyze As-Is Process

Before the reengineering team can proceed to redesign the process, they should understand
the existing process.
The important aspect of BPR (what makes BPR, BPR) is that the improvement should
provide dramatic results.
A large manufacturer spent six million dollars over a period of one year in a bid to develop a
parts-tracking system and was all set to go online. Only then did he realize that he had totally
overlooked a small piece of information – ‗the mode of transmission of information between
the scheduling staff and the shop floor was through a phone call.‘
The main objective of this phase is to identify disconnects (anything that prevents the process
from achieving desired results and in particular information transfer between organizations or
people) and value adding processes.
This is initiated by first creation and documentation of Activity and Process models.
Then, the amount of time that each activity takes and the cost that each activity requires in
terms of resources is calculated through simulation and activity based costing (ABC).
Design To-Be process
The objective of this phase is to produce one or more alternatives to the current situation,
which satisfy the strategic goals of the enterprise.
The first step in this phase is benchmarking. ―Benchmarking is the comparing of both the
performance of the organization‘s processes and the way those processes are conducted with
those relevant peer organizations to obtain ideas for improvement‖
Having identified the potential improvements we perform simulation and ABC to analyze
factors like the time and cost involved.
Implement Reengineered Process:
Requirements for the construction of the To-Be components can be added and the result
organized into a Work Breakdown Structure (WBS).
The benefit here is that we can now define the causal and time sequential relationships
between the activities planned.
Using prototyping and simulation techniques, the transition plan is validated and it‘s pilot
versions are designed and demonstrated.
Training programs for the workers are initiated and the plan is executed in full scale.
Improve Process Continuously:
A process cannot be reengineered overnight.
Very vital part in the success of every reengineering effort lies in improving the reengineered
process continuously.
Two things have to be monitored – the progress of action and the results.
The progress of action is measured by seeing how much more informed the people feel, how
much more commitment the management shows and how well the change teams are accepted
in the broader perspective of the organization.

As for monitoring the results, the monitoring should include such measures as employee
attitudes, customer perceptions, supplier responsiveness etc
3.1.12 Companies use Business Process Reengineering to:

Reduce costs and cycle times. Business Process Reengineering reduces costs and cycle
times by eliminating unproductive activities and the employees who perform them.
Reorganization by teams decreases the need for management layers, accelerates information
flows and eliminates the errors and rework caused by multiple handoffs.
Improve quality. Business Process Reengineering improves quality by reducing the

fragmentation of work and establishing clear ownership of processes. Workers gain
responsibility for their output and can measure their performance based on prompt feedback.
3.1.13 Benefits of Reengineering

Eliminates waste, and obsolete or inefficient process
Significant reduction in cost and time
Revolutionary improvements in many business processes as measured by quality and
customer service
Increasing the competency of both top and low level companies
3.1.14 BPR Management Technique Focused

Customer focus-Customer service oriented processes aiming to eliminate customer
complaints.
Speed-Dramatic compression of the time it takes to complete a task for key business
processes.
Flexibility- Adaptive processes and structures to changing conditions and competition.
Quality-Obsession with the superior service and value to the customers.
Innovation-Leadership through imaginative change providing to organization competitive

advantage.
Productivity-Improve drastically effectiveness and efficiency.
3.1.15 Types of firms / Organizations that BPR can be Applied

BRP could by implemented to all firms (manufacturing firms, retailers, services, etc.) and
public organizations that satisfy the following criteria:
Strong management commitment to new ways of working and innovation.
Well formed IT infrastructure Business Process Reengineering could be applied to companies
that confront problems such as the following:
High operational costs
Low quality offered to customers
High level of ''bottleneck" processes at pick seasons
Poor performance of middle level managers

Inappropriate distribution of resources and jobs in order to achieve maximum performance,
etc.
3.1.16 How can you Re-Engineer your own Business Process

Assemble a re-engineering team representing each unit in the process and those that depend
on it.
Make sure that they analyze and scrutinize the process until they understand what it‘s trying
to accomplish.
Determine which of the steps do not add value to the process and think of new ways to
achieve the results.
3.1.17 Case Study:

Business Process Reengineering – Ford‘s Accounts Payable Case Study
Case Study – Ford
One of the companies that successfully utilised BPR in the initial years is Ford, for its
accounts payables system. Before implementation, Ford used the accounts payable as shown
in the figure below. Ford‘s purchasing department initially sends a purchase order for raw
materials. It also sends a copy of the purchase order to the accounts payable department.
After sending the raw materials, the vendor raises an invoice to the accounts payable
department. The accounts payable department tallies the purchase order, received materials
and invoices and makes payments to the supplier. Ford employed about 500 people to handle
the entire process, whereas its competitor, Mazda, a Japanese car manufacturer has managed
the same process with 100 people, a remarkably low number of employees even if the size is
taken into consideration.
Ford Accounts Payable Process – Before Business Process Reengineering
Instead of making minor changes to the business processes. Ford has decided to use BPR and
information technology to radically change its accounts payable process. It has implemented
an invoice-less process. The purchasing order will be raised by the purchasing departments
and updated in the database. As soon the materials have been received a warehouse man
would update the materials received and the payment will be automatically be made without
waiting for the invoice to be received from the vendor.

Ford Accounts Payable Process – After Business Process Reengineering
Through these changes in the business process, Ford had achieved a 75% reduction in
employees in the administration department.
3.2. Management Information System (MIS)
3.2.1 Introduction
To the managers, Management Information System is an implementation of the
organizational systems and procedures. To a programmer it is nothing but file structures and
file processing. However, it involves much more complexity.
The three components of MIS provide a more complete and focused definition,
where System suggests integration and holistic view, Information stands for processed data,
and Management is the ultimate user, the decision makers.
Management information system can thus be analyzed as follows:
Management - Management covers the planning, control, and administration of the

operations of a concern. The top management handles planning; the middle management
concentrates on controlling; and the lower management is concerned with actual
administration.
Information - Information, in MIS, means the processed data that helps the management in
planning, controlling and operations. Data means all the facts arising out of the operations of
the concern. Data is processed i.e. recorded, summarized, compared and finally presented to
the management in the form of MIS report.
System - Data is processed into information with the help of a system. A system is made up
of inputs, processing, output and feedback or control.
Thus MIS means a system for processing data in order to give proper information to the
management for performing its functions.

3.2.2 Definition
Management Information System or 'MIS' is a planned system of collecting, storing, and
disseminating data in the form of information needed to carry out the functions of
management.
3.2.3 Objectives of MIS

The goals of an MIS are to implement the organizational structure and dynamics of the
enterprise for the purpose of managing the organization in a better way and capturing the
potential of the information system for competitive advantage.
Following are the basic objectives of an MIS −
Capturing Data − Capturing contextual data, or operational information that will contribute
in decision making from various internal and external sources of organization.
Processing Data − The captured data is processed into information needed for planning,
organizing, coordinating, directing and controlling functionalities at strategic, tactical and
operational level. Processing data means −
Making calculations with the data
Sorting data
Classifying data and
Summarizing data
Information Storage − Information or processed data need to be stored for future use.
Information Retrieval − The system should be able to retrieve this information from the
storage as and when required by various users.
Information Propagation − Information or the finished product of the MIS should be

circulated to its users periodically using the organizational network.
3.2.4 Characteristics of MIS

Following are the characteristics of an MIS −
It should be based on a long-term planning.
It should provide a holistic view of the dynamics and the structure of the organization.
It should work as a complete and comprehensive system covering all interconnecting sub-
systems within the organization.
It should be planned in a top-down way, as the decision makers or the management should
actively take part and provide clear direction at the development stage of the MIS.

It should be based on need of strategic, operational and tactical information of managers of an
organization.
It should also take care of exceptional situations by reporting such situations.
It should be able to make forecasts and estimates, and generate advanced information, thus
providing a competitive advantage. Decision makers can take actions on the basis of such
predictions.
It should create linkage between all sub-systems within the organization, so that the decision
makers can take the right decision based on an integrated view.
It should allow easy flow of information through various sub-systems, thus avoiding
redundancy and duplicity of data. It should simplify the operations with as much
practicability as possible.
Although the MIS is an integrated, complete system, it should be made in such a flexible way
that it could be easily split into smaller sub-systems as and when required.
A central database is the backbone of a well-built MIS.
Characteristics of Computerized MIS
Following are the characteristics of a well-designed computerized MIS −
It should be able to process data accurately and with high speed, using various techniques like
operations research, simulation, heuristics, etc.
It should be able to collect, organize, manipulate, and update large amount of raw data of
both related and unrelated nature, coming from various internal and external sources at
different periods of time.
It should provide real time information on ongoing events without any delay.
It should support various output formats and follow latest rules and regulations in practice.
It should provide organized and relevant information for all levels of management: strategic,
operational, and tactical.
It should aim at extreme flexibility in data storage and retrieval.
3.2.5 Features of MIS

Management Information Systems (MIS) can be simply referred to as a system or process
that facilitates the smooth working of the organisation. The nature of MIS is truly multifold
because it plays a bigger role in business decisions, from costs to employee management.
Here are the major features that portray the nature of MIS:
MIS is utilised by every level of a management.
It clarifies and focuses on the strategic goals and objectives for the management.
MIS provides an effective system to analyse costs and revenues and further reviews
effectively and efficiently to bring a balanced in finances and costs.
MIS is maintained either through manual systems or automated systems or a combination of

both.
It also plays a incremental role in identifying, locating, measuring, tackling and limiting risks.
It lays down a framework of rules and regulations for the management to bring a clear and
concise communication between employees.
MIS provides an objective system of collecting, assessing and aggregating information for a
business.
3.2.6 Scope of MIS

After understanding what is MIS and the nature of management, we move on to the scope of
MIS. Information Systems is growing at a fast pace to become one of the most promising
career fields in today‘s world. With everything happening digitally, the demand for MIS
professionals is increasing more than ever. MIS involves performing a number of task
simultaneously such as-
Processing data
Initiating transactions
Responding to inquiries
Producing reports and its summaries
Manage the data created within the structure of a particular business
MIS acts in an organization just like a nervous system in a body by providing with the
relevant information for ease in the process of decision making.
The purpose of MIS is to work towards satisfying the information needs of everyone in the
business. It means providing the relevant information to those who need it.
Thus, MIS has a lot of potential to become one of the most promising careers for individuals
interested in the workings of a business.
3.2.7 Stages of Management Information System

There are three main stages of Management Information System (MIS):
Planning of MIS
Factors considered in this phase of MIS: Strategic Planning, Information Requirement

Analysis, Resources Allocation and Project Planning
Structure of MIS
Components to determine the structure of MIS: Operation Systems, Decision Support

System, Activities of Management, Functions in an organisation
Implementation of MIS

The activities for implementation of MIS are: Planning for implementation, Personnel
Education and Training, Use of new system and acceptance, equipment and software
installation, documentation and file conversion.
3.3. Executive Information System (EIS)

3.3.1 Introduction
An Executive Information System (EIS) is a kind of decision support system (DSS) used in
organizations to help executives in decision making. It does so by providing easy access to
important data needed in an organization to achieve strategic goals. An EIS usually has
graphical displays on a user-friendly interface.
Executive information systems can be used for monitoring company performance in many
different types of organizations as well as for identifying opportunities and problems.
Early executive information systems were developed on mainframe computers as computer-

based programs to provide the description, sales performance and/or market research data for
senior executives of a company. Executives, however, were not all literate or confident about
the computers. Also, EIS data endorsed only executive-level decisions that did not
necessarily support the entire company or enterprise.
Current EIS data is available on local area networks (LANs) throughout the company or
enterprise, facilitated by personal computers and workstations. Employees can access
company data to help make decisions in their workplaces, departments, divisions, etc. This
enables employees to provide relevant information and ideas above and below the level of
their company.
Executive support systems are intended to be used directly by senior managers to support
unscheduled strategic management decisions. Often such information is external,
unstructured and even uncertain. Often, the exact scope and context of such information are
not known in advance.
This information is based on data,

Business intelligence
Financial intelligence
Data with technology support to analyze
3.3.2 Executive Information System-Key Characteristics

1. Informational characteristics
i. Flexibility and ease of use.
ii. Provides the timely information with the short response time and also with the quick
retrieval.

iii. Produces the correct information.
iv. Produces the relevant information.
v. Produces the validated information.
2. User interface/orientation characteristics
i. Consists of the sophisticated self help.
ii. Contains the user friendly interfaces consisting of the graphic user.
iii. Can be used from many places.
iv. Offers secure reliable, confidential access along with the access procedure.
v. Is very much customized.
vi. Suites the management style of the individual executives.
3. Managerial / executive characteristics
i. Supports the overall vision, mission and the strategy.
ii. Provides the support for the strategic management.
iii. Sometimes helps to deal with the situations that have a high degree of risk.
iv. Is linked to the value added business processes.
v. Supports the need/ access for/ to the external data/ databases.
vi. Is very much result oriented in the nature.
3.3.3 Components of EIS

User Interface: User Interface allows the users to communicate with the EIS. User interface
must be easy to use and understand. Users should not be required to understand the complex
query languages and other mathematical or statistical formulas.
Hardware: Hardware refers to devices by which users give input, data processing and the
output is received. Users may give input via keyboard and mouse and CPU may be used for
processing and output may be received on monitor or from printer.
Software: Software is required for various calculations, providing graphical view to the
management, storing data in the form of Information, etc. Software allows user to get
information in the form it is actually required.

Telecommunication: In today‘s world the most important thing is communication. Users
may require transferring information from one point to another point. The information might
be a little confidential in nature. The secrecy of the information should be well maintained.
3.3.4 Factors of EIS

According to Watson, Executive Information System / executive support system depends on
some of the factors that can be summarized as the follows
1. Internal factors
i. Need for the timely information.
ii. Need for the improved communications.
iii. Need for the access to the operational data.
iv. Need for the rapid status updates on the various business activities.
v. Need for the access to the corporate database.
vi. Need for very accurate information.
vii. Need for the ability to identify the various historical trends.
External Factors
i. Increasing and intensifying the global competition.
ii. Rapidly changing the business environment.
iii. Need to be more pro active.
iv. Need to access the external database.
v. Increasing the various government regulations.
3.3.5 Capabilities of Executive Information System

Helps in accessing the aggregated or macro or global information.
Provides the user with an option to use the external data extensively.
Enables analysis of the address and the hoc queries.
Shows the trends, the ratios and the various deviations.
Helps in incorporating the graphic and the text in the same display, which helps to have a
better view.
It helps in the assessment of the historical as also the latest data.
Problem indicators can be highlighted with the help of the Executive Information System /
executive support system.
Open ended problem explanation with the written interpretations can be done with the help of
the Executive Information System / executive support system.
Offers management by the exception reports.
Utilizes the hyper text and the hyper media.
Offers generalized computing.
Offers telecommunications capacity.
3.3.6 Applications of EIS

Manufacturing: It determines whether a process is running correctly or not. It helps in
ensuring proper quality control of finished goods. It measures the actual process time and
compares with the standard time required for the process. It provides management with daily
production report, daily consumption report, safety stock report, economic order quantity, etc.
Financial: Every organization needs to ensure financial activities are running sound. EIS
may help to analyze whether payment has been realized from creditors within stipulated
period of time. It can help management in managing various other sources of finance.
Accounting: It helps in proper accounting and disbursement of accounting functions.

Advantages of EIS
Achievement of the various organizational objectives.
Facilitates access to the information by integrating many sources of the data.
Facilitates broad, aggregated perspective and the context.
Offers broad highly aggregated information.
User‘s productivity is also improved to a large extent.
Communication capability and the quality are increased.
Provides with the better strategic planning and the control.
Facilitates pro active rather than a reactive response.
Provides the competitive advantage.
Encourages the development of a more open and active information culture.
The cause of a particular problem can be founded.
3.3.8 Disadvantage of EIS

Due to technical functions, not to easy to use by everyone
Executives may encounter overload of information
Difficult to manage database due to the large size of data
Excessive costs for small business organizations
3.4. Decision support System (DSS)
3.4.1 Introduction
A decision support system (DSS) is an information system that aids a business in decision-
making activities that require judgment, determination, and a sequence of actions. The
information system assists the mid- and high-level management of an organization by
analyzing huge volumes of unstructured data and accumulating information that can help to
solve problems and help in decision-making. A DSS is either human-powered, automated, or
a combination of both.
A decision support system (DSS) is a computerized program used to support determinations,

judgments, and courses of action in an organization or a business. A DSS sifts through and
analyzes massive amounts of data, compiling comprehensive information that can be used to
solve problems and in decision-making.
3.4.2 Purpose of a Decision Support System

A decision support system produces detailed information reports by gathering and analyzing
data. Hence, a DSS is different from a normal operations application, whose goal is to
collect data and not analyze it.

In an organization, a DSS is used by the planning departments – such as the operations
department – which collects data and creates a report that can be used by managers for
decision-making. Mainly, a DSS is used in sales projection, for inventory and operations-
related data, and to present information to customers in an easy-to-understand manner.
Theoretically, a DSS can be employed in various knowledge domains from an organization

to forest management and the medical field. One of the main applications of a DSS in an
organization is real-time reporting. It can be very helpful for organizations that take part
in just-in-time (JIT) inventory management.
In a JIT inventory system, the organization requires real-time data of their inventory levels
to place orders ―just in time‖ to prevent delays in production and cause a negative domino
effect. Therefore, a DSS is more tailored to the individual or organization making the
decision than a traditional system.
3.4.3 Characteristics wanted in the Decision Support System

1. Must aid the decision maker in the decision making.
2. Should be able to address the semi/un-structured decision making situations.
3. Should be able to support the decision makers at some of the tactical or the strategic levels.
4. Should be able to create some of the general purpose models, stimulation capabilities and
the other analytical tools available to the decision maker.
5. Should enable the users to make use of the Decision Support System without any type of
help from the management information system or the technical professionals.
6. Should be able to fulfill the requirements of the information for any type of the decision
environment.
7. Must provide the mechanism for carrying on the rapid response to a decision maker‘s
request for some particular information.
8. Must possess the ability to interface with the corporate database.
9. Should be flexible enough to make it suitable for the various management styles.
10. Should facilitate the much needed communication between the different levels of the
decision making.
11. Must have an inbuilt flexibility.
12. Must possess the ability to evolve as the user sophistication grows.
13. Must be able to make use of the various types of the interactive methods that are better
for the use.

3.4.4 Components of a Decision Support System
1. The data base:
a. Is a collection of the current or the historical data from a number of the applications or the
groups.
b. Very well organized.
c. Provides very easy access for a large variety of the applications needed.
d. Data integrity is to be maintained in a very efficient way.
e. Decision Support System uses data that have been extracted from the relevant databases –
both the internal and the external – and then stored especially for the Decision Support
System.
2. The Model – base:
a. A model represents an abstract representation.
b. Illustrates the different components or the relationships of a phenomenon.
c. Can be a physical model, a mathematical model or the verbal model.
d. Types of the models can be categorized as the follows –
A. Behavioral Model –
I. Focuses on studying and understanding the different behavior/trends amongst the variables.
II. Examples of such a model can be trend analysis, co-relation, regression etc.
B. Management Science Model –
I. Based upon the principles of the management, the management accounting and the
econometrics.
II. Examples of such a model can include budgetary systems, cost accounting, capital
budgeting, inventory management etc.
C. Operations Research Model –
I. Based on the different mathematical formulae.

II. Represent the real life problems depending on the various variables and the parameters
expressed in the algebraic equations form.
III. Examples of such a model can be linear programming, ABC analysis, mathematical
programming techniques, material requirement planning.
3. The Decision Support System software system –
a. Allows interaction between the users of the system and the Decision Support System data –
base and the model – base.
b. Helps in the creation, storage and the retrieval of the models in the model – base.
c. Integrates them with the data in the Decision Support System data – base.
d. Provides a user interface.
3.4.5 Factors determining the results in the Decision Support System

1. User training
2. User exercise
3. Involvement
4. Length of the use
5. Top management support
6. Familiarity
7. Orientation towards the top management
8. Novelty of the application
9. Return on the investment
3.4.6 Types of Decision Support Systems

Communication-driven: Allows companies to support tasks that require more than one
person to work on the task. It includes integrated tools such as Microsoft SharePoint
Workspace and Google Docs.
Model-driven: Allows access to and the management of financial, organizational, and

statistical models. Data is collected, and parameters are determined using the information
provided by users. The information is created into a decision-making model to analyze
situations. An example of a model-driven DSS is Dicodess – an open-source model-driven
DSS.
Knowledge-driven: Provides factual and specialized solutions to situations using stored

facts, procedures, rules, or interactive decision-making structures like flowcharts.
Document-driven: Manages unstructured information in different electronic formats.
Data-driven: Helps companies to store and analyze internal and external data.
3.4.7 Advantages of a Decision Support System

A decision support system increases the speed and efficiency of decision-making activities. It
is possible, as a DSS can collect and analyze real-time data.
It promotes training within the organization, as specific skills must be developed to

implement and run a DSS within an organization.
It automates monotonous managerial processes, which means more of the manager‘s time can
be spent on decision-making.
It improves interpersonal communication within the organization.
3.4.8 Disadvantages of a Decision Support System

The cost to develop and implement a DSS is a huge capital investment, which makes it less
accessible to smaller organizations.

A company can develop a dependence on a DSS, as it is integrated into daily decision-
making processes to improve efficiency and speed. However, managers tend to rely on the
system too much, which takes away the subjectivity aspect of decision-making.
A DSS may lead to information overload because an information system tends to consider all
aspects of a problem. It creates a dilemma for end-users, as they are left with multiple
choices.
Implementation of a DSS can cause fear and backlash from lower-level employees. Many of
them are not comfortable with new technology and are afraid of losing their jobs to
technology.
3.5. Supply Chain Management (SCM)
3.5.1 Meaning of Supply Chain

―A supply chain is a network of supplier, manufacturing, assembly, distribution and logistics
facilities that perform the functions of procurement of materials, transformation of these
materials into intermediate and finished products, and the distribution of these products to
customers.‖
3.5.2 Definition of Supply Chain

According to Professor Douglas M Lambert. ― Supply Chain Management as the integration
of business process from the end user through original supplier who provide products,
services and information that adds value for the customers.‖
According to Ganeshan & Harrison. ―A supply chain is a network of facilities and

distribution options that perform the function of procurement of material transformation of
these materials into intermediate and finished products, and the distribution of these finished
products to customers‖
3.5.3 How Supply Chain Management (SCM) Works

Supply chain management (SCM) represents an effort by suppliers to develop and
implement supply chains that are as efficient and economical as possible. Supply
chains cover everything from production to product development to the information systems
needed to direct these undertakings.
Typically, SCM attempts to centrally control or link the production, shipment,

and distribution of a product. By managing the supply chain, companies can cut excess costs
and deliver products to the consumer faster. This is done by keeping tighter control of

internal inventories, internal production, distribution, sales, and the inventories of company
vendors.
SCM is based on the idea that nearly every product that comes to market results from the
efforts of various organizations that make up a supply chain. Although supply chains have
existed for ages, most companies have only recently paid attention to them as a value-add to
their operations.
Supply chains exist in both service and manufacturing organizations.
3.5.4 The 6 Supply Chain Models

Let‘s get right too it. The 6 supply chain models are:
The continuous flow models
The fast chain models
The efficient chain models
The custom configured model
The agile model
The flexible model
Here is a synopsis of each model:
The continuous flow model for supply offers stability in high demand situations that vary
very little. Manufacturers that produce the same goods repeatedly with very little fluctuation
can benefit from the continuous flow model. It is ideal for commodity manufacturing and
is one of the most traditional supply chain models.
The fast chain model is ideal for manufacturers that manufacture products that are
trendy with short life cycles. It works well with a business that must change their products
frequently and that needs to get them out fast before the trend ends. It is a flexible model.
The efficient chain model is a model that is best for businesses that are in very
competitive markets and where end to end efficiency is the premium goal.
The custom configured models focus on providing custom configurations especially during
assembly and production. It is a combination of the agile model and the continuous flow
model, a hybrid of sorts.
The agile model is primarily a method of supply chain management that is ideal for
businesses that deal in specialty order items. It is a model that focuses on the ability of the
supply chain to amp up in some cases but also be solid when there is not much movement
happening.
The flexible model gives businesses the freedom to meet high demand peaks and manage
long periods of low volume movement. It can be switched on and off easily.
3.5.5 Parts of SCM

In SCM, the supply chain manager coordinates the logistics of all aspects of the supply chain
which consists of five parts:
The plan or strategy
The source (of raw materials or services)
Manufacturing (focused on productivity and efficiency)
Delivery and logistics
The return system (for defective or unwanted products)
The supply chain manager tries to minimize shortages and keep costs down. The job is not
only about logistics and purchasing inventory. According to Salary.com, supply chain
managers ―oversee and manage overall supply chain and logistic operations to maximize
efficiency and minimize the cost of organization's supply chain."1
Productivity and efficiency improvements can go straight to the bottom line of a company.
Good supply chain management keeps companies out of the headlines and away from
expensive recalls and lawsuits.
3.5.6 Essential Features of Supply Chain Management

Integrated behavior- SCM incorporates integrates integration of stakeholders from supplier
to customers.
Mutually sharing information- For effective SCM mutually sharing information among
channel members is required, especially for planning and monitoring processes.
Mutually sharing channel risk and Rewards- Effective SCM also requires mutually
sharing channel risks and rewards that yield a competitive advantage. Risk and reward
sharing should happen over the long term focus and cooperation among the supply chain
members.
Co-operation- Co-operation among channel members is required for effective SCM. Co-
operation refers to similar or complimentary co-ordianted activities performed by firm in a
business relationship to produce superior mutual outcomes or singular outcomes that are
mutually expected over time.
Focus on serving customers – Supply chain succeeds if all the members of supply chain
have the same goal and the same focus serving customers. Establishing the same goal and
same focus among Supply chain members is a form of policy integration
Integration of Processes – The implementation of SCM needs the integration of processes

from sourcing to manufacturing and to distribution across the supply chain. The integration
can be accomplished through cross functional terms, in plant supplier personnel and third
party service provide
Partners to Build and Maintain Long Term Relationship – Successful relationships aim
to integrates channel policy to avoid redundancy and overlap while seeking a level of co-
operation that allow participants to be more effective at lower cost levels. Policy integration
is possible if there are compatible cultures and management techniques among the chain
members.
3.5.7 Objectives of Supply Chain Management

Service Orientation
System Orientation
Competitiveness and Efficiency
Minimizing the Time
Minimizing Work in Progress
Improving Pipeline Visibility
Improving visibility Demand
Improving Quality
Reduces Transportation Cost
Reduces Warehousing Cost
Service Orientation – (i.e services to customers) the very basis of supply chains has been to
provide superior customer service. Service is all about the value that the customer gets, which
in turn depends upon his own perception about what constitutes value. The design, the
alignment, the integration of the companies on the supply chain and the co-ordination
between them are all for the customer- the ultimate customer, and these are performed as
such.
System Orientation - system orientation is at the existence of any supply chain. Synergy due
to cooperation and coordination is the main gain of a supply chain. This entails that while

getting optimal results for the chain as a whole, results for the partners on the chain may not
necessarily be optimal, these could be less than optimal.
Competitiveness and Efficiency – Supply chain is a business organization. It provides value

to the customers while being competitive. Competitiveness is essential for it to healthy
sustain itself in order to be able to provide increasing value to its customer. Efficiency is an
important element of competitiveness.
Minimizing the time – efficient supply chain is an organization reduces the time required for
converting orders into cash. So there is minimal time lag and increase in productivity of the
organization.
Minimizing Work in Progress- supply chain minimizes total work in process in supply
chain.
Improving Pipeline Visibility – efficient supply chain improve the visibility of each one of
the activities of the supply chain by each one of the partner.
Improving visibility Demand- Efficient supply chain improves visibility of demand by each
one of the partners.
Improving Quality - Efficient supply chain management helps in improving the quality of
operation of the organization. TQM has become a major commitment throughout all facet of
industry. Overall commitment to TQM is one of the major commitment throughout all facets
of industry.
3.5.8 Components of Supply Chain Management

Procurement
Processing
Distribution
3.5.9 Factors Influencing Supply Chain Management

Consumer Demand.
Globalization.
Competition
Information and communication
Government Regulation
Environment

3.5.10 Functions of Supply Chain Management
The Role of global supply chain management primarily comprises five functions mentioned
below:
Purchasing
Purchasing is one of the first functions of supply chain management. It pertains to procuring
raw materials and other resources that are required to manufacture the goods. It involves
coordination with suppliers to deliver the materials without any delay. It is not a simple act of
buying things. There are various aspects one needs to consider when purchasing raw materials
or other items needed to manufacture finished goods. All purchasing activities can have a
significant impact on the sales and profitability of a company.
When sourcing raw materials, it is necessary to ensure that they are of a quality that is most
suitable for that company. It is a function of SCM to ensure that only such materials are
purchased. It is not enough to check this once. They must regularly test these items to ensure
consistency. Raw materials of inconsistent quality could adversely affect finished goods
production. This can result in the product losing its salient features. A small error in
purchasing can damage an organization‘s reputation.
The timely arrival of materials is necessary to ensure that all order fulfilment occurs as
required by customers. It is necessary to ensure no disruption in supply of materials to have
continuous production without any interruption. Purchasing in excess can result in
unnecessary blocking of money and usage of space. Hence, purchase managers must have up-
to-date information about orders and what materials will be needed to execute them on time.
Operations
The operation team engages in demand planning and forecasting. Accordingly, it further sets
the ball rolling for inventory management, production, and shipping. Before giving a raw
material purchase order, the organization must anticipate the possible demand for a product
and the number of units it needs to produce. If the demand is over anticipated, then it could
result in excess inventory cost. If the demand is under anticipated, the establishment wouldn‘t
be able to meet customer demand, thereby leading to revenue loss. So, the operation is a
critical function of supply chain department.
Operation managers are responsible for planning production in relation to demand. These
officials will have to arrange for raw materials and ensure that manufacturing will be done on
time to ensure prompt delivery of goods to customers. They must make sure that all machines
function properly without failure to complete production of goods on time. They must also
ensure that all other items like packaging materials, labels, and stickers are kept ready for
those products that need to be delivered to customers.
The other important function of SCM that falls under operations is the organizing of space.
Storage space is a costly commodity considering that real estate is very expensive in most
Indian cities. SC managers must manage available storage space very efficiently to ensure that

they store only essential goods in company warehouses. This will require them to plan both
raw material and finished goods availability very cleverly to ensure no excess or less stock.
Logistics
This is a supply chain management function that requires immense coordination. The
manufacturing of products has commenced. It needs space for storage until it is shipped for
delivery. There is a need for making local warehouse arrangements. Let‘s say; the products are
to be delivered outside the city, state, or country limits. This brings transportation into the
loop. There will also be a need for outstation warehouses. Logistics ensures that products
reach the end-point delivery without any glitches.
Arranging for transport for goods is not an easy job. If this includes shipping to other
countries, it is essential to ensure that staff members do all documentation properly. Incorrect
sets of papers could cause problems at both exporting and importing ports. This can cause
delays in goods reaching customers. The logistics manager must be familiar with formalities
that establishments must follow when sending goods to different countries. Various countries
also have testing requirements for different products.
Even in local transport of material, there can be unexpected problems. Vehicles can get
delayed due to mechanical issues. Supply chain managers must be able to arrange for an
alternative conveyance immediately. Weather and road conditions can delay materials. The
person must know such information and make arrangements to ensure goods arrive on time.
There must be a proper tracking mechanism in place to inform customers about their order
status.
All firms need raw materials, technology, time, and labor. However, all the processes need to
be efficient and effective. This phase is taken care of by the resource management function
team. It decides the allocation of resources in the right activity at the right time to optimize the
production at reduced costs. A major duty here is to properly allocate people for various jobs
to ensure that all work is done on time. The workforce is essential in moving goods and
ensuring the proper execution of orders.
Managing resources is challenging in factories where they use the same machines for making
different products. Resource managers must know how many orders in each item are to be
executed to allocate machines for each of them. Various other pieces of machinery are needed
to complete finished goods manufacturing. Arrangement of devices for packing and labeling
of goods are also part of supply chain department functions.
Time is another constraint when there are large volumes of orders to be executed. These
professionals must see whether a single shift is enough to complete a job or more shifts will
need to be included. Hence, they must make sure people are available to work more hours.

These managers must also calculate the cost involved in using more resources for increasing
production and ensure it doesn‘t affect profitability.
Information Workflow
Information sharing and distribution is what keeps all other functions of supply chain
management on track. If the information workflow and communication are lacking, it could
break apart the entire chain and lead to mismanagement. Data must flow in both directions as
far as logistics are concerned. Regular exchange of information must also happen between
external and internal entities in this process.
Information from downstream will include details of orders in hand and market trends. These
details are crucial for ensuring that enough quantities of raw materials are made available.
Knowing market trends from retailers and distributors will help to formulate sales forecasts.
Without such predictions, companies cannot plan for production. Organizations must also
arrange for finance if there is a need to increase production because of a sudden demand
increase.
Arranging for raw materials is among the essential roles of supply chain management. To
perform this perfectly, the official in charge must have accurate information about the
availability of various materials. Advance information of any shortage will help them purchase
excess and ensure production continues smoothly. News about price increases is also essential
to correct finished goods prices or look for other economic sources for such items.
We have understood how important it is for all companies to have good supply chain
management in place. It is necessary to see in detail what goals this function achieves.
3.5.11 The Three Levels of Supply Chain Management

1. Strategic Level
The top-level of supply chain management is responsible for the long-term decisions of the
company. The decisions made at this level lay the groundwork for the entire supply chain
process. Examples of decisions made at this level include things such as deciding which
products or services will be offered by the company. This task involves keeping track of
current market trends and customer feedback to improve existing products or introduce new
items to the product mix.
Along with product development comes decisions surrounding which suppliers to purchase
materials from and where the manufacturing operations should take place. Choosing the right
suppliers should involve decisions that consider the company‘s overall objectives and values.
For example, choosing a supplier for their sustainable practices may incur higher costs for
certain materials but will better reflect the values and goals of the company that is looking to
reduce their environmental impact and build a sustainable supply chain.
This level of supply chain management is crucial to develop an advantageous process that
will tie in all levels of the company to ensure that every decision being made accurately

reflects the overall goals of the company. This will ensure that all parts of the supply chain
are working together to deliver your goods to your customers and allow you to make profits.
2. Tactical Level
The second level of supply chain management is involved with all of the short- and medium-
term decisions of the supply chain. While the strategic level takes care of the general and
‗big-picture‘ decisions, this level is usually where the more specific processes are defined.
This is where manufacturing processes will be defined to ensure that a high-quality product
can be made for the lowest cost possible.
Tactical-level decisions play a substantial role in controlling costs and minimizing risks. The
focus here is on customer demand and achieving the overall best end value.
Other decisions made at this level can include transportation, warehousing, and inventory
logistics, notably whether these should be handled internally or outsourced. These decisions
can be different based on factors such as location, costs of transportation, costs or land
ownership, etc.
3. Operational Level
This level of supply chain management is the most commonly encountered. It is where the
day-to-day processes, decision-making, and planning occurs to keep the supply chain
running. Often times, companies and manufacturing facilities forget to take into account the
tactical and strategic level when making operational-level decisions.
It is critical for the operational level to carefully consider the options they are faced with and
make decisions that are aligned with the overall strategic and tactical decisions that have been
made. Even though the higher-level decisions are made with the intention of creating
advantageous processes throughout the supply chain, operations managers must make
hundreds of decisions every day to handle every unexpected thing that comes their way. The
best decisions are made within the strategic and tactical frameworks.
Some of the aspects of operational-level management include daily and weekly forecasting
for resource and capacity planning, monitoring logistics to ensure that enough inventory is
available and that materials are available on-time for production. Other decisions include
settling damages or losses with suppliers in the event that the manufacturing facility receives
material deemed to be of poor quality, which would affect the overall quality of products
being made.
It is essential for any manufacturing organization to understand the three levels of supply
chain management. Advanced Planning and Scheduling (APS) can easily help align the three
levels of supply chain management. These software‘s provide a thorough insight into your
manufacturing operations through visual production scheduling and is a must for companies
trying to take their operations to the next level.

3.5.12 Goals of Supply Chain Management
Order Fulfillment
Without selling goods, a company cannot earn revenue. For this, it is essential for orders from
customers to be fulfilled efficiently and as per customer requirements. All entities of the
supply chain work together to ensure that goods are available as required. This will result in
the execution of all orders. Streamlining order processing and avoiding duplicate work by
using efficient software will increase order processing speeds. This is a vital role of supply
chain management that has multiple benefits.
Supply Demand Matching
Order fulfillment is possible only if there are goods. It is the job of SC managers to ensure that
raw materials are available for producing items. There must be good coordination between the
sales team and purchase team to ensure that there is never a shortage of products that have a
high market demand at a particular time. A free flow of information provides this. Predicting
market trends using analytics is an excellent way of making sure that enough materials are
available to meet customer needs.
Reducing Waste
Waste reduction is an essential function of supply chain management through various

methods. Avoiding excess stocking of raw materials is a way to prevent wastage. Many
products cannot be used after a period, and this means they must be discarded. Having a clear
idea about customer demand helps to maintain an optimum quantity of raw and finished
goods. SC managers are constantly in touch with marketing teams to know demand trends and
alter product stocks accordingly. Having a proper inventory management system is vital for
achieving optimum stock levels.
Improving Delivery Speeds
With the proliferation of e-commerce sites, delivery speed is becoming a significant criterion
for customers. Companies are vying with each other to offer a faster supply of goods than
competitors. This has put immense pressure on supply chain managers. They must find ways
to speed up the movement of goods. Finding warehouses closer to customers is a way to do it.
Ensuring the timely availability of delivery vehicles can also help in reaching goods to
consumers on time. Collaboration with transporters ensures an uninterrupted supply of
vehicles.
Ensuring Real-Time Information
Information is crucial for any operation. This is especially true with this department, where
various persons are overseeing different but connected operations. Any delay in one could
affect everything down the line. This is why up-to-date status is made available for everyone.
Customers today demand to know the status of their orders. Information about raw material
needs must also reach purchasing teams on time. It is a crucial SCM function to ensure that an
adequate tracking mechanism is in place for real-time information for everyone.
Cost Reduction
When markets are highly competitive, and margins are thin, companies must constantly try to
reduce costs. Various costs come under supply chain management. Raw material prices,
storage costs, transport rates, etc., must be kept at the lowest possible levels. For this purpose,
SC managers must regularly lookout for new partners who can offer better rates. Good
interaction with existing suppliers, transporters, and warehouse owners will also help to bring
down costs. Managers in charge of various functions must always look for ways to bring more
economy in this process.
Facing Disruptions
Various disruptions can occur in a company‘s operations. A machine failure can stop
production temporarily. The non-availability of raw materials can affect finished goods stocks.
A sudden surge in prices of raw materials can affect profitability. Weather conditions can
affect goods movement resulting in delayed deliveries. All these are related to supply chain
management functions, and they must be ready to deal with these and ensure that neither the
company nor its customers suffer due to these factors. Risk management methods are used to
assess and mitigate these threats.
Improving Customer Experience
Severe competition has made all companies look at customer experience more seriously. No
firm can afford to lose even one customer because the cost of acquiring new customers is very
high. SCM plays a vital role in giving customers a better purchase experience. Exploring
various ways to reach goods to a buyer within a short time has become a priority for this
department. These professionals also try to reduce delivery expenses as much as possible to
sell products at competitive prices. Another way to please customers is to give them real-time
information on order execution.
Increasing Revenue & Profitability
The supply chain is a function that has a broader scope for cost reduction as they are involved
in purchasing, storage, and delivery of goods. Maintaining a good relationship with vendors
can help reduce raw materials costs. Having multiple suppliers ensures to get the best prices.
Optimizing storage space helps to reduce warehousing costs. It is possible to reduce delivery
expenses by choosing suitable transporting and distributing partners. Reduced costs and
increased sales help improve revenue and profitability.
3.5.13 Challenges Faced In Supply Chain Management

Increasing Costs
Throughout an organization‘ activities, there is an increase in cost for almost everything. High
fuel prices are driving transportation costs through the roof. Subsequently there is a hike in all
raw material prices. Labor costs are increasing as there is a shortage of skilled people to fill
positions in supply chain departments. Expenses for storing materials are also going up as

space becomes a rare commodity, especially in cities. SC managers must look at all possible
ways to reduce costs.
Multiple Supply Channels
With e-commerce companies becoming a more common method of purchase for many people,
there is high complexity in delivery channels. Working for such organizations will require a
good understanding of their system and meet delivery promises. These firms must deliver
goods directly to customers. There are also retailers and wholesalers who need to be supplied
from nearby storage locations to ensure low inventory for them. In addition to this, there are
those who want drop shipments that will need fast international services. The role of supply
chain department has become highly complex.
Rising Consumer Demands
As competition prompts e-commerce companies to offer close to impossible delivery times at

very low prices, it is the supply chain department that suffers. Because of a number of choices,
customers are demanding better service. They want fast delivery, low price, and excellent
quality. As the logistics department is in charge of purchase and delivery, all these
responsibilities fall on their shoulders. Performing their duties successfully is highly
challenging for these professionals.
High Risks
With pressure increasing on supply chain managers, there is a likelihood of mistakes

happening that can lead to highly adverse situations. With suppliers and customers spread
across various countries, there are a lot of things that must be considered and enough measures
taken to avoid loss of goods. The non-availability of real-time information can be worrisome.
Logistics managers are unable to input accurate data because of this. Compliance and
regulation issues add to these problems. SC managers must ensure that all risks are accounted
for, and steps are taken to avoid them.
Delays and Backlogs
Various other factors are creating delays and backlogs in supplies. New regulations in certain
countries mean additional tariffs and more time to process documents at ports. Suppliers from
other nations with lesser rules will make use of this situation. An increase in international
sourcing is creating congestion at most ports resulting in delays. There are problems with local
supplies due to the non-availability of transport. Managers in this department must be on their
toes always to ensure that they can overcome these problems and ensure prompt deliveries.
3.5.14 Skills Needed For A Supply Chain Manager

1. Data Analysis Skills
SC managers must possess data analysis skills to gain valuable insights. It helps them make
smarter decisions on various matters. This process includes a lot of factors that cannot be
predicted correctly. Looking through past data can help to make better forecasts. This will
allow these professionals to perform better and avoid unpleasant surprises. They can be better
prepared to face any situation and ensure that the process goes on without any disruptions.
2. Inventory Maintenance Skills
This is a very critical skill that is necessary for every logistics manager. Too much inventory
can cost a company a lot of money by way of slow-moving stocks and storage space. An
inadequate level of stocks can lead to the non-fulfillment of orders. This can lead to losing
customers. One needs to balance between the two. Looking at past data can help a lot in
predicting the requirement of goods at different times of the year.
3. Flexibility
As we can see, a lot of people both within and outside the company are involved in completing
the functions of SCM. This requires a manager to be flexible because there can be people from
different backgrounds and cultures. Being amicable will help to get things done in a smoother
way. In times of crisis, such an attitude will enable one to get support from every person
involved in this process.
4. Understand Regulations
The supply of materials can be across borders inside a country or even outside it. It is essential
that a logistics manager knows what documents must be prepared to ensure that there are no
legal issues when transporting goods. The person must also be aware of rules with regard to
stocking goods. They must follow the rules with regard to the safety of goods and personnel
inside a warehouse. Such familiarity with rules will ensure that work gets done smoothly.
5. Planning
Good planning is key to completing a job well. This is true for any profession. But it is a
critical activity in supply chain management. Market trends decide what must be produced and
how much quantity will be required. This means that once there is a sales forecast, these
professionals must plan everything from raw material procurement to delivery of goods to a
customer. This will include production planning, arranging space, and organizing transport for
delivery. All these items must be planned well if the job must be completed successfully.
6. Leadership
The function of SCM spans various departments. This means that the supply chain manager
has to get work done by a diverse group of people. This will need excellent leadership
qualities because only by inspiring others can work be completed successfully. Exhibiting
such characteristics will help earn the loyalty of staff members. They will willingly go beyond
their call of duty to ensure that work doesn‘t suffer in any way. Showing leadership qualities
also helps to inspire others to acquire such skills.
7. Business Acumen
Though they are not directly involved in selling or earning revenues, these managers‘ actions
can have a direct bearing on the sales and profits of an organization. This makes it necessary
for them to know about the business that their company is involved in. These professionals
must know what impact their work has on their firm‘s profits. This will help them make
changes that can improve efficiency and reduce costs. It is also necessary that they know what
is happening in the industry that their establishment operates in.
8. Decision Making
This is a skill needed for all leaders. But it is especially crucial for those in charge of the
activities of supply chain management. This is because there are various tough situations that
will require immediate decision-making. Their decision can affect organizational profitability,
reputation, and customer satisfaction. This means they must know what decision will be most
beneficial for their company. These decisions must also be taken quickly before any adverse
results occur.
9. Accountability
This is very difficult to maintain when an SC manager must depend on many people inside
and outside the firm for successful functioning. It is easy to blame any of these entities. But
what one must cultivate is to be accountable for every outcome, whether it is good or bad.
This will improve their team members‘ trust in them. Companies will also have confidence in
such managers who will take responsibility for their department‘s actions.
10. Adapt to Changes
Changes are most often seen in logistics departments. There are various external factors that
can affect their functioning. A machine failure at a supplier‘s factory could badly disrupt
production. The supply chain function includes ensuring a regular supply of raw materials as
purchases come under their purview. The person must be able to arrange for an alternate
supply of goods. They also have to make other arrangements if some factors are affecting the
movement of goods to customers. They must quickly be able to adapt to changes.
11. Interpersonal Skills
An SC manager must deal with people from different backgrounds. They have to get work
done by workers at lower levels. These professionals will also have to interact with top bosses
and get their needs fulfilled for smooth operations. It is also in their line of work to regularly
keep in touch with outside agencies like suppliers, distributors, transporters, and shipping
agents. Good interpersonal skills help them get their work done efficiently from all these
people while maintaining cordial relationships.
12. Communication
A logistics manager has to convey various instructions, requests, suggestions, and information
to different sets of people. These must be done orally and in writing. As they are done to
people with different educational and social backgrounds, it is necessary to convey messages
in different styles and standards. This is why these persons must be highly skilled in
communication. Others must understand them clearly so that precise action is taken and the
desired outcome achieved.
In addition to these skills, it will be advantageous for logistics managers to use tools and
techniques that will make their lives a lot easier. Let us see some of these tools that assist these
busy professionals.
3.5.15 Modern Tools for Efficient SCM

Shipping Status Alerts
These tools are increasingly being used by companies that have several consignments in
transit to various customers. One can find it difficult to answer buyers about the status of their
goods. These tools give regular alerts about where these goods are. This will help have real-
time information about different shipments.
Order Management Tools
This software is highly essential to perform the role of SCM efficiently, especially for those
companies that are supplying materials to various e-commerce platforms. These tools help in
managing orders and ensuring that they are not ignored by mistake. There are also various
reports that one can generate from these programs. This will help in analyzing order
processing time and optimizing the process.
Warehouse Management Software
This is great support for SC managers who struggle to manage space in their warehouses while
ensuring enough availability of goods. This software program helps in planning space based
on various inputs like sales forecasting, production plan, etc. For those who must manage
multiple warehouses in different locations, such a tool is a must-have. This helps to reduce
space costs to a great extent.
Vendor Management Tools
Companies having many supplies for various products find it difficult to manage them. It is
not easy knowing which supplier is more beneficial. This tool helps in analyzing transactions
with suppliers to know how they have impacted the main functions of supply chain
management. It is possible to know which supplier has provided maximum benefits to a
company. It allows managers to think about changing vendors or doing more negotiations.
Analytics and Reporting Tools
It is essential for department heads to ensure that their functions are effective. Knowing the
efficiency of different supply chain activities will help to improve wherever required.
Analytics tools use various parameters to assess performance. These reports will not only
show where delays or unwanted expenses are happening but also will provide valuable
insights that can help in making better decisions. Such a tool is very useful in improving
supply chain functions.
Over the years, supply chain management has evolved from a relatively simple concept to
engineering and managing extraordinary complex global networks. Did you know in the 1940s
and 1950s, the process of racking & stacking was introduced in order to take better advantage
of storage space that resulted in better warehouse design and layout? Since then, supply chain
practices have transformed with the evolving technology and knowledge.
3.5.16 Five Supply Chain Practices that Revolutionized Supply Chain Management:
Setting Up Supply Chain Council
Earlier, there used to be a single person who was held responsible for the entire supply chain
network. But now, without an internal council of leaders in place, the supply chain tends to
lack planning, organizing, and strategizing for efficiency as well as better functionality. The
supply chain is likely to fail if your organization doesn‘t have a governing body to
synchronize your existing supply chain strategy with that of the company‘s overall strategy.
Achieving Agility with AI
Back in the day, no one even heard of what Artificial Intelligence is, but now, this is all
everyone talking about. Artificial intelligence has the ability to collect huge amounts of data
and harness insight from this data, creating an opportunity to reconsider supply chains
tactically and strategically. This provides agility in the process since products are procured and
moved from one end of the globe to the other.
Introducing Sustainable Practices
Innovation has become the key to unlocking the potential of businesses, and the supply chain
process is no different. Therefore, organizations need to keep a close eye on the supply chain
operations and their internal practices in order to establish a sustainable platform to operate on.
This brings in the need for adopting several sustainable practices like blockchain, the adoption
of web-based supplier relationship management, etc.
Optimizing Inventory for Reduced Cost
Every business desires to reduce costs and improve its bottom line. This is where optimizing
inventory comes into play. There is a huge cost involved in inventory holding and storing,
approximated to around 20-25%. So, this cost can be saved by optimizing the storage of
inventory.
Identifying Areas Where Technology Can Lend a Hand
Technology has been helping humankind for over decades, and the supply chain is no
exception. But, in order to improve and streamline your supply chain processes, you need to
identify areas where newer technology can be integrated to help smooth functionality.
If you are planning to pursue a career as a retailer, you must invest in a supply chain
management course to gain more knowledge.

Terminal Questions:
2 Marks:
1. Define Business Process Reengineering

2. List out the Characteristics of BPR
3. What are the Objectives of Management Information System
4. Define Executive Information System
5. List out the components of Executive Information System
6. Discuss the various Applications of Executive Information System
7. Define Decision support System
8. State the components of a Decision Support System
9. Definition of Supply Chain
10. Discuss the goals of Supply Chain Management
11. What are the challenges faced In Supply Chain Management
4 Marks:
1. Explain the best business practices of BPR

2. Discuss the framework components of BPR
3. Explain the features and scopes of Management Information System
4. State the various Advantages and disadvantages of Executive Information
System
5. Explain the various factors influencing Supply Chain Management
6. Discuss the three levels of Supply Chain Management
10 marks:
1. Explain the different approaches of BPR

2. Enumerate the various steps that involved performing BPR
3. Explain the stages of Management Information System
4. Classify the different types of Decision Support Systems with examples
5. Illustrate the different Supply Chain Models with examples
6. Describe five Supply Chain Practices that revolutionized Supply Chain
Management

MODULE 4 : ERP SYSTEM
4.1 INTRODUCTION
Introduction ERP packages contain many modules. The number and features of the modules
vary with the ERP package. In this chapter, we will see some of the most common modules
available in almost all packages:
• Finance
• Manufacturing Production Planning
• Sales and Distribution
• Plant Maintenance
• Quality Management
• Materials Management
This is by no means a comprehensive list. Some packages will have a subset of this and some
will have more modules and/or features. For detailed information, we will have to consult the
product literature of the specific ERP system.

Fig. 4.1 Various modules of ERP
4.2 Finance Modules

• The entire concept of information technology is based on the principle that providing the
right information to the right people at the right time can make a critical difference to the
organisation.
• Much of this key information could be taken from the financial data. But merely having the
financial data is not enough.
• We need a set of processes and views of our data, which provides up to the-minute financial
information in exactly the form it needs to make that critical difference and help with that
crucial decision.
• Accounting software needs access to information in each area of our organisation from
RandD and market research through in manufacturing, distribution, and sales.
• The financial solution must provide the management with information that can be
leveraged for strategic decisions, in order to achieve competitive advantage
. • Whatever are the financial goals of the organisation , the financial application components
of the ERP solutions work hand-in-hand to improve the bottom line. Finance Quality

Management ERP System Material Management Sales & Distribution Manufacturing
Production Planning Enterprise Resource Planning Systems.
• This is true because the financial functionality is tightly integrated across all business areas
and all geographic areas. This tight integration includes all the other different modules, from
materials management to human resources to logistics.
• Because the ERP system automatically links related areas; it eliminates the need to repeat
procedures. We enter the data once only within the ERP system and all of the areas will work
in correct and efficient way, creating a new level of efficiency in handling the financial data.
• The finance modules of most ERP systems provide financial functionality and analysis
support to thousands of businesses in many countries across the globe.
• These ERPsystems not only include financial application components, but Human
Resources, Logistics, Business Workflow, and links to the Internet. Hundreds of business
processes are covered in these systems.
The finance modules of most ERP systems will have the following five sub-systems:
• Financial Accounting (General Ledger, Accounts Receivable/Payable Special Ledgers.

Fixed Asset Accounting, Legal Consolidation).
• Investment Management (Investment Planning/Budgeting/Controlling, Depreciation

Forecast/Simulation/ Calculation).
• Treasury (Cash Management, Treasury Management, Market Risk Management, Funds

Management).
• Controlling (Overhead Cost Controlling, Activity-Based Costing, Product Cost Accounting,

Profitability Analysis).
• Enterprise Controlling (Executive Information System, Business Planning and Budgeting,

Profit Centre Accounting).

Fig. 4.2 Finance modules with their sub-systems
General ledger
• The General Ledger (GL) is essential both to the Financial Accounting System and to
strategic decision making.
Financial Accounting
• General ledger
• Accounts Payable
• Fixed Asset Accounting
• Legal Consolidation
• Special Ledger Investment Management
• Investment Planning
• Budgeting
• Controlling
• Forecasting
• Simulation
• Calculation Treasury
• Cash Mgmt
• Treasury Mgmt
• Market Risk
• Funds Mgmt Controlling
• Overhead cost controlling
• Activity Based Costing
• Product Cost Accounting
• Profitability Analysis Enterprise Controlling
• Executive Information System
• Business Planning
• Budgeting

• Profit Centre Accounting
• Through active integration with business processes in logistics and in the accounting sub-
ledgers, the GL serves as a central pool of financial data for financial reporting as well as for
other accounting areas.
• However, the origin of centrally stored data can still be traced at any time by drilling down
on data from a given transaction.
• The General Ledger supports all the functions needed in a financial accounting system. This
includes flexible structuring of the chart of accounts at the group and company level,
distributed application scenarios, real-time simultaneous update of sub-ledgers and the
general ledger, elimination of time-consuming reconciliation, and parallel views of data, in
both the general ledger and the managerial accounting applications.
• The GL provides document parking, posting, reporting, and an integrated financial calendar
for automating periodic activities.
• The system also provides summary information from other components at a user-defined
level of detail.
• By creating combinations of entered data, data summaries are generated, which can be used
in planning, allocation, distribution, and reporting. Usually, the GL has features that allow us
to take advantage of functions in General Ledger and in Cost Centre Accounting. Accounts
receivable and payable
• ERP systems offer a financial overview of global business partner relationships in the
Accounts Receivable and Payable functions.
• These sub-ledgers are integrated, both with the General Ledger and with areas in Sales and
Distribution and Materials Management, where financial data originates.
• Accounts Receivable and Payable transactions are performed automatically, when related
processes take place in other modules. This module uses standard business rules for
procedures ranging from data entry and reporting, to processing payments and bank
transactions.
• Accounts Receivable and Payable functions include Internet integration, document

management, and full support for EDI processing, including automatic integration with cash
management and flexible reporting using customer and vendor information systems.
• The module also provides enterprise-wide credit management with workflow integration,
payment automation with EFT, and check processing and document parking with various
approval procedures.
• Asset accounting manages the company‘s fixed assets. Within the Financial Accounting
system, Asset Accounting serves as a sub-ledger to the General Ledger providing detailed
information on asset-related transactions.
• Significant features include country-specific charts of depreciation complying with local
legal requirements, full support throughout the asset life cycle from acquisition to retirement,
depreciation simulation, and interest calculation, and integration with project management
and order accounting for management of capital assets.
• Asset Accounting also provides integration with Plant Maintenance for management of
machinery and equipment, management of leased assets and assets under construction, mass
processing with workflow integration, and interactive reporting. Legal consolidation
• Consolidated financial statements need to be integrated effectively with operational data at

the individual company level.
• By using different valuation methods, we can plan balance sheet strategies to suit the
company‘s requirements.
• The Legal Consolidation sub-system is closely linked to the Financial Accounting System,
permitting direct data transfer from individual statements into the consolidated report. This
eases the workload of the staff and reduces data entry errors.
• In addition to the consolidated statements required by law, Legal Consolidation also allows
us to create multiple views of the consolidation data. With these views one can generate
reports about legal entities or segments of the business.
Enterprise Resource Planning Systems
Controlling
• The controlling system gathers the functions required for effective internal cost accounting.
• It offers a versatile information system with standard reports and analysis paths for the most
common questions.
In addition to this, there are features for creating custom reports to supplement standard
reports.
Overhead cost controlling
• Many organisation s experience a significant increase in the percentage of indirect costs,

which cannot be directly assigned to either the products manufactured or to the services
rendered.
• While cost monitoring and optimisation may be quite advanced in production areas;
transparency is often lacking in overhead cost areas.
• The Overhead Cost Controlling subsystem focuses on the monitoring and allocation of
overheads. Cost centre accounting
• Cost centre accounting analyses where overheads occur within the organisation. Costs are
assigned to the subareas of the organisation where they originated.
• The system offers a wide variety of methods for allocating posted amounts and quantities.
In particular activity, accounting permits the allocation of great many costs to products based
on cost sources and enabling assignments, which were not previously possible. Overhead
orders Overhead orders subsystem collects and analyses costs, based on individual internal
measures. This system can monitor and automatically check budgets assigned to each
measure.
Activity-based costing
• The goals of the entire organisation should come before the goals of individual departments,
when it comes to business process re-engineering.
• The Activity-Based Costing module is a response to the growing need for monitoring and
controlling crossdepartmental business processes.
• In addition to functions and products, seeing costs from a new perspective substantially
enhances organisation al transparency in overhead areas.
• The system automatically determines the utilisation of business processes by products,

customers, and other cost objects based on the cost drivers taken from the integrated
accounting environment.
This significantly reduces the effort involved in maintaining a business process model in a
separate system.
Product cost controlling
• Product cost controlling module determines, the costs arising from manufacturing a product,
or providing a service.
• Plan and standard values serve in valuating warehouse stock and for contrasting revenues
received with costs.
• In addition, the values in Product Cost Controlling are crucial for determining the lowest
price limit for which a product is profitable.
Simulations illustrate the effects of changes in production methods on the cost of goods
manufactured.
Cost object controlling
Cost object controlling helps to monitor manufacturing orders. Integration with the logistics
components results in a logistical quantity flow, which provides instant information on actual
cost object costs, allowing ongoing costing calculations at any time.
• Follow-up calculations determine and analyse the variances between actual manufacturing
costs, and the plan costs resulting from Product Cost Planning.

Profitability analysis
• Profitability analysis subsystem examines the sources of returns.
• As part of sales controlling, profitability analysis is the last step in cost-based settlement,
where revenues are assigned to costs according to the market segment.
• One can define any market segment - distinguishing, for example, between products,
customers, orders, sales organisation s, distribution channels, and business areas; and
evaluate it according to contribution and revenue margins.
• Information from profitability analysis frames important decisions in are as such as

determining prices, selecting customers, developing conditions and choosing distribution
channels.
Investment management
• Investment management provides extensive support for investment processes right from
planning through settlement.
• Investment management facilitates investment planning and budgeting at a level higher than
that needed for specific orders or projects.
• Investment management provides tools enabling to plan and to manage the capital spending
projects right from the earliest stage.
• In the initial stage of the capital spending process, we enter the application for the spending
project as an appropriation request.
• Depending on their complexity, investment measures, which need to be monitored

individually, can be represented either as internal orders or projects.
These internal orders or projects provide the means for actually carrying out the capital
investment, i.e. they serve as the objects for collecting primary and secondary costs for
calculating overhead and interest, for managing down payments and commitments, and for
handling other related tasks.
• As the result of having an asset under construction assigned to it, the investment measure
also benefits from the entire required asset accounting functions. Settlement is both flexible
and almost fully automatic.
• This kind of settlement ensures a complete integration with business planning and control,
and provides consistently up-to-date values.
• Investment Management module recognises the importance of the asset accounting aspects
of investment measures.
The system automatically separates costs requiring capitalisation from costs that are not
capitalised, debiting the correct costs to the asset under construction.
• For different accounting needs, the system can use different capitalisation rules for making
the split.
• At its completion, the investment measure can be settled to various receivers by line item.
Asset accounting provides precise proof of origin for all transactions affecting acquisition and
production costs.
• Budgeted balance sheets and cost planning are always based on current values.
Planned depreciation values for investment measures and appropriation requests can be
transferred directly to ongoing overhead cost planning. The system recalculates expected
depreciation amounts whenever planning data is updated.
Treasury module
• One can gain a significant competitive advantage by efficiently managing the short,
medium, and long-term payment flows and the resulting risk exposure.
• Tasks such as short-term monitoring and concentration of bank account balances, medium-
term planning, and forecasting of incoming and outgoing resources in accounts receivable
and payable to a long-term view of areas such as materials management and sales, underline
the importance of integrating information from various company divisions.
• Linking these operating divisions to realise and planned financial transactions and positions
in treasury has a significant impact on the company‘s success. Such integration also
facilitates management and control of cash flows and risk positions through all the divisions
in the company.
• The Treasury component provides us with a basis for effective liquidity, portfolio, and risk
management.
Cash management
• The cash management subsystem allows analysing financial transactions for a given period.
Cash management also identifies and records future developments for the purpose of
financial budgeting.
• The company‘s payment transactions are grouped into cash holdings, cash inflows and cash
outflows.
• Cash management provides information on the sources and uses of funds to secure liquidity
in order to meet payment obligations when they become due.

• Cash management also monitors and controls incoming and outgoing payment flows and
supplies the data required for managing short-term money market investments and
borrowing.
Depending on the time period under review, a distinction is made between cash position,
short-term cash management and medium and long term financial budgeting.
• The Cash management component thus ensures that all information relevant to liquidity is
available to us for analysis purposes, creating a basis for the necessary cash management
decisions.
Treasury management
• In the role of treasurer, the results of the current liquidity, currency, and risk positions are
taken and the conditions prevailing on the money and capital markets are considered before
implementing concrete decisions in the form of financial instruments in Treasury
Management. The treasury management component offers functions for managing financial
deals and positions, from trading to transferring data to financial accounting.
• Treasury management also supports flexible reporting and evaluation structures for
analysing financial deals, positions, and portfolios.
• For short-term liquidity and risk management, we can use the money market or foreign
exchange transactions to smooth out liquidity squeezes and gluts or to eliminate currency
risks. Securities and loans come into play in the medium and long-term. Derivative financial
instruments facilitate active management of interest rate and currency risks.
• The trading area contains functions for recording financial deals, exercising rights,
performing evaluations, and calculating prices (for example, option price calculator).
• In back office processing, we enter the additional data required for processing deals(such as
account assignment and payment details) and generate automatic confirmations. Position
management functions, such as securities account transfers or corporate actions relating to
securities are also supported in the back office area.
• The general ledger is updated in the accounting area, which also offers flexible payment
processing functions in addition to valuation and accrual-deferral methods. By using common
organisation al elements throughout, various organisation al structures can be represented in
the system, such as a central enterprise-wide treasury department or ‗in-house banks‘. This
also ensures full integration of Treasury into other modules of the system.
Market risk management

• Market risk management plays a vital role within treasury, in ensuring our company‘s
competitiveness.
• The process involves a complex feedback loop encompassing data collection, risk
measurement, analysis, and simulation as well as active planning of financial instruments.
This process dovetails closely with other treasury and corporate functions.
• Market risk management acts as an integrated, central risk control station with monitoring
and management functions. Access to information on current and future cash flows and on
financial deals already processed is an absolute must.
• As a result, cash management, which pools all cash flows from the business sectors, such
as sales and distribution or purchasing forms the basis.
• Consequently, all cash flows from the company‘s operating business can be accessed for the
purposes of risk management.
• Furthermore, all financial transactions managed in treasury management can be evaluated

together with the cash flows generated by the various operating divisions
• The component provides various measurements for analysing and assessing interest rate and
currency risks. Market-to-market, effective rate and effective yield calculations are based on
up-to-the minute market data, uploaded via data feed, and financial transactions or positions.
• By simulating market data, we can determine the risk structure of ‗what-if‘ analyses (such
as crash scenarios or worst-case scenarios).
• One can also measure and compare the impact of alternative hedging strategies using
simulated transactions. Funds management
• Funds management subsystem supports our funds management process from budgeting all
the way through to payments including monitoring expenditures, activities, resources and
revenues.
Budgets are entered for areas of responsibility that can cover as many management levels as
we require.
• Funds centres and their hierarchical structure provide the base for top-down budgeting and
represent responsibility areas within budget control.
• The system enables controlling various funds commitments and determines how much of
the budget has already been utilised via availability checking.
• The information system can supply with information at any time, on when, where, and how
funds commitments arose. Analyses by responsibility area and commitment items allow us to
identify any budget bottlenecks.
Enterprise controlling

• Enterprise controlling comprises of those functions that will optimise shareholder value,
while meeting internal objectives for growth and investment.
• These modules usually include executive Information System, Business Planning and
Budgeting, Consolidation, and Profit Centre Accounting.
Executive information system
• The executive information system provides an overview of the critical information

necessary to manage the organisation. This component integrates data from other ERP
components, and non-ERP data sources both inside and outside the enterprise.
• Drill-down reporting and report portfolio are available to evaluate and present the data. In
drill-down reporting, one can analyse the data interactively.
• Exceptions can be defined in order to highlight areas of concern. The drill-down reports can
also be made available in the graphical report portfolio for less experienced users.
• The report portfolio is aimed at users with basic knowledge of the system, who wish to
access information put together for their specific needs.
Business planning and budgeting
• Business planning and budgeting supports the management teams of business units and
groups in the calculation business targets, such as return on investment.
• This module also supports central investment planning, budget release and tracking. This
module automatically transfers data about investment requirements from transaction
applications, and provides extensive analysis functions for budget monitoring.
Profit centre accounting
• Profit centre accounting analyses the profitability of internal responsibility centres.

Organisation al structure of a company is represented in the form of a profit centre hierarchy
with the profit centre as the smallest unit of responsibility.
• All business transactions in Financial Accounting, Materials Management, Asset

Management, and Sales and Distribution, which affect profits, are automatically reflected in
Profit Centre Accounting.
• It is also possible to analyse selected balance sheet items by profit centre and use them for
calculation of ratios (such as ROI).
• Profit centre planning is part of total corporate planning. Profit centres, in particular,
emphasise the integration aspect of corporate planning, as plans from other application areas
can be combined, extended and altered in this module.

• Profit centre related postings could be analysed through the standard reports of the system
and facility to create cost win reports for special analyses.
There is also a provision to provide profitability information to appropriate management and

controlling departments.
4.3 Sales and Distribution Modules

• In today‘s global business environment, one thing companies can count on is rapid change
and the new opportunities and challenges that change in is sure to bring.
• New competition pushes businesses to achieve higher levels of service, while evolving
technology compresses product life cycles and forces companies to adopt new technologies
or risk losing market share. In this ever changing environment, keeping a competitive edge
means being able to anticipate and respond quickly to changing business conditions.
• To keep pace with these rapid changes, companies need an integrated and flexible enterprise
system that supports all aspects of their business with state-of-the-art functionality.
• This innovative solution should upgrade effortlessly and interface easily with third-party
applications, as well as have the ability to incorporate existing systems while extending its
reach to the Internet and e-commerce.
• With today‘s business environment characterised by growing competition, shrinking cycle

times, and the accelerating pace of technological innovation, companies are increasingly
being forced to streamline business processes.
• In a world, in which it is no longer enough to simply have the best product, these
companies are focusing on core competencies and closer partnerships over the whole supply
chain.
• Here, increased efficiency in sales and distribution is a key factor to ensure that companies
retain a competitive edge and improve both profit margins and customer service. In helping
business to ‗beat them on delivery‘, the sales and distribution modules of many ERP vendors
offer a comprehensive set of best-of- reed components for both order and logistics
management.
• Many of these systems are tightly integrated with the Distribution Requirements Planning
(DRP) engine of the ‗for just-in-time‘ deliveries.
• This integration enables the mapping and supply of single-site or multi-site organisation s
and the definition of relationships in a company‘s internal supply chains.
• Developing precise logistics planning for just-in-time deliveries, this system can also
generate replenishment orders by using defined warehouse requirements.
The following are the sales related business transactions:
• sales queries, such as inquiries and quotations

• sales orders
• outline agreements, such as contracts and scheduling agreements
• delivery/shipment
• invoicing/billing
• after sales support
During sales order processing, the following basic functions are carried out:
• inquiry handling
• quotation preparation and processing
• contracts and contract management (order management)
• monitoring the sales transactions
• checking for availability
• transferring requirements to materials planning (MRP)
• scheduling the delivery
• checking credit limits
• invoicing / billing
Creating printed or electronically transmitted documents (confirmations, and so on).
Depending on how the particular system is configured, these functions may completely be
automated or also may require some manual processing. The iota that results from these basic
functions(for example, shipping dates confirmed quantities, prices arid discounts) and is
stored in the system where it can be displayed and in some cases changed manually during
subsequent processing. The sales and distribution module very actively interacts with the
Material Management and Financial Accounting modules for delivery and billing.
Typically, a Sales and Distribution module will contain the following nine sub systems:
• master data management
• order management
• sales order management
• warehouse management
• inventory reporting
• inventory analysis
• lot control
• data collection
• shipping
• billing
• pricing
• sales supports
• transportation
• foreign trade Master Data Management
• Every company will have products, customers, and will require raw materials and will have
suppliers.
• The task of the Master Data management module is to keep information about all these
entities, so that these can be made available to the decision-makers and for the automatic
generation of reports, contracts, invoices, and so on.
• In sales and distribution, products are sold or sent to business partners or services are
performed for them.
Data about the products and services as well as about the business partners forms the basis for
sales processing.
• inquiry
• sales quotation
• contracts
• order Enterprise Resource Planning Systems
• shipping delivery materials management
• billing invoice
• financial accounting
• Automatic sales processing, using an ERP system, requires that the master data has been
stored in the system.
• In addition to sales and distribution other departments of the company, such as, accounting
or materials management access the master data.
Order management
• This module usually includes Sales Order Management and Purchase Order Management
and supports the entire sales and purchase processes from start to finish.
• With companies today being confronted with increasingly demanding customers and
increasingly complex buying and selling organisation s, both internally and externally, Order
Management combines the provision of efficient management solutions with the possibility
of anticipating and respond rug quickly to changes in global business conditions.
Sales order management

• Applications in sales order management represent a company‘s most important point of
contact with the customer.
• These applications allow the company to manage sales operations quickly and efficiently
and provide comprehensive solutions for the management of quotes, orders, contracts, prices,
and customer discounts. With use of templates, the system streamlines order entry procedures
to manage products ranging in complexity from standard stocked items to those that are
engineered-to-order.
• The system can also customise and streamline order entry procedures to the specific
requirements of both an individual business and its customers.
• Intelligent pricing and discount strategies, which are accompanied by simulation

capabilities to support ‗what-if scenarios‘ are available for multi-currency environments.
• Online available-to-promise calculations ensure that there is sufficient product availability

for a specific customer and if so to identify exactly where and when that product is available
built-in contract, and release management system evaluates whether or not customer contract
agreements are being met with and incorporates multilevel customer credit reviews and
substantial order blocking functionality.
• Evaluation of sales performance is possible through extensive report capabilities that

retrieve both current and past information that concern orders, cancellations, budgets, and
revenues.
• Rebate and commission control enables the automatic calculation of employee and supplier
commissions to reward achieved targets based on predefine agreements and customer
bonuses, or rebates to reward customers for purchasing certain quantities.
• Electronic Data Interchange (EDI) streamlines communication throughout a company‘s

entire supply-chain from customer to supplier.
• The system should support standard business documents such as orders and invoices, along
with general information such as project information and product specifications.
• A good system will have tools and features for Sales Force Automation (SFA) and
customer ser vice.
These tools include the tracking and tracing of appointments, schedules and follow-ups, plus
product and sales feasibility information.
Purchase order management
• Purchase order management is increasingly essential in today‘s ever more competitive

business environment because it enables a company to make the purchase decisions about
quality and price, where quality refers to supply lead-time as well as to the (to be purchased)
product itself.

• Purchase order management includes online requisitioning, centralised contract
management, just-in-time schedules, and vendor management.
• Offering access to an approved supplier list, purchase order management enables a

purchase quotation to be sent to multiple suppliers.
The purchase contract information is made available to the people in the purchasing
department.
• This information will help in supplier selection and provide an insight as to which suppliers
can supply items with the right specifications in the shortest period. The system will have
facility to generate purchase contracts.
• Purchase requisition is a function that is used in the purchase process. Purchase requisitions
allow companies to enter non-system-planned requirements for various types of items.
Requisitioning can be linked to workflow for authorisation purposes and to approve
suppliers. Schedules can be used instead of orders to provide detailed purchase and delivery
information: • These schedules are generated in contracts in just-in-time environments in
which customer service, in time delivery, and cost reduction are important and can be sent
through the supply chain by means of EDI communication.
• In addition, schedules are fully linked with other modules of the system. Sophisticated
vendor management tools allow companies to check the reliability and performance of
vendors.
• The vendor rating system can handle both objective and subjective criteria.
• Objective criteria are tracked and traced automatically by the system and can include
information about receipts, quality approval, invoicing and purchase order confirmation.
• Subjective criteria are determined by the user. Together these criteria enable companies to
make the right purchase decisions with regard to quality, price, and delivery.
• Purchase order analysis enables historical as well as statistical data to be used to assist in the
analysis of purchase activities.
Warehouse management
• This module provides real time information about inventory levels across the enterprise and
the tools manage the daily operational needs of single site or multiple site four wall
warehouses. • Coordination of an organisation‘s warehouse network is one of today‘s most
important business needs and requires an understanding of the relation ship among the
different organisation al units such as warehouses, production facilities, sales offices, and
purchase offices.
• While the mapping of a single site or multi-site organisation and the definition of
relationships in the internal supply chain can be undertaken with the help of the Distribution

Requirements Planning (DRP), the actual transfer of goods can be handled through the
warehouse management application.
• Various components of a good warehouse management application will be designed to meet

a wide range of warehousing needs such as, the mapping of internal goods flow within
warehouses and the monitoring of all warehouse inventory transactions.
• In addition, these components are centralised for areas that include production, sales,
purchase projects, and provide companies with the tools to inform customers about where the
company‘s or the customers goods are located, the number of goods on hand, current storage
conditions and projected delivery schedules.
• The warehouse Management application should also offer expanded capabilities such as
cross-docking, rules based inventory replenishment, picking optimisation, multi-level
packaging, and consigned goods management.
• These capabilities also allow for easy integration with financial tools to provide greater
enterprise-wide insight into costs.
Components of a good warehouse management application include the following:
• Inventory planning comprises all planned inventory movements, which enable the accurate
forecasting of trends and the consequent adjustment of reordering points, safety stock, lead
times for orders and service levels.
• Inventory planning also allows the commitment of inventory to a specific customer order-
hard allocation so that customers receive the right order in the right quantity at the right time.
• Inventory handling allows for monitoring of all warehouse order scenarios such as the
receipt issue and transfer of inventory functions include the previously mentioned expanded
capabilities such as cross-docking receipt by back-flushing, rules-based replenishment of
inventory, picking and wave picking optimisation, assembly and multi-level packaging.
• To ensure fast communication with suppliers and customers, advanced shipping

notifications can be received or sent by means of electronic data interchange (EDI), which
enables shipments to be received and allocated ahead of time.
• Intelligent location assignment used to create intelligent storage put away lists, which
enable the storage of goods, which are automatically inspected for quality and the detection
of dedicated locations by criteria such as item, storage conditions, packaging definitions, size
rostra lions, and location availability. Inventory reporting
• This function permits full visibility of inventory at a single or multiple sites and provides
the company with tools to give customers accurate delivery dates.
• The system‘s extensive reporting capabilities also enable consigned goods management.
Inventory analysis

• This module enables the analysis of information, which results from warehousing activities
and the use of feedback in process optimisation.
• In addition, inventory analysis supports inventory forecasting, inventory valuation, ABC

analysis and slow moving analysis.
Lot control
• This facility offers lot tracking and tracing so that a company can trace all the raw materials
and finished goods, which its products require.
• In a business world, where customers demand product responsibility, lot control helps to
store product quality data and meet ISO 9001 certification standards.
• Distribution Limbs Data collection This is an essential element in paperless warehousing,

which provides the communications link between storage and shipping systems and
warehousing equipment like bar-coding scanners.
Shipping
The shipping module supports the following functions:
• monitoring dates of orders due for delivery
• creating and processing deliveries
• planning and monitoring work lists for shipping activities
• monitoring material availability and processing outstanding orders
• picking (can be linked to the warehouse management system)
• packing deliveries • information support for transportation planning
• support for foreign trade requirements
• printing and sending shipping output
• data update in goods issue
• The ‗Delivery note‘ is the central shipping document.
When a delivery is created (at the shipping point), shipping activities such as picking and
delivery scheduling are initiated and monitored, and the data generated during shipping
processing is recorded.
• A delivery note can refer to a sales order or to a transportation order for stock transfer.
Depending on our requirements, we can create deliveries automatically using work lists

. • We can make agreements with our customers for complete and partial deliveries and for
order combinations. The monitoring functions allow us to monitor created deliveries and
outstanding sales activities.
Billing
• A business transaction is completed for Sales and Distribution when it has been billed.
• The ERP systems support billing functions like issuing of invoices on the basis of goods
and services, issuing of credit and debit, memos based on corresponding requests and
performa1 invoices, cancelling billing transaction, giving rebates, transferring billing data to
financial accounting, purchasing and so on.
• The billing system is integrated with the other modules like financial accounting, so that
the documents are automatically generated.
Pricing
• The term pricing is used broadly to describe the calculation of prices (for external use by
customers or vendors) and costs (for internal purposes, such as cost accounting).
• The pricing module keeps the information about the prices of the various items, the details
about the quantity discounts, the discounts to the different customer categories and so on and
enables the organisation to at generate documents like quotations, delivery notes, invoices
and so on.
• In addition, since this information is available to all the sales people, they can make better
decisions thus improving the sales performance.
Sales support
• The Sales Support component helps the sales and marketing department to support our
existing customers and, at the same time, to develop new business.
• Sales Support provides an environment where all sales personnel both the sales people and
the staff in the sales office - can contribute to and access valuable information about
customers, sales prospects, competitors and their products, and contact people.
• The Sales Support function has a rich tool set that will help in creating direct mailings to
develop new business as well as to consolidate the existing customer base on the basis of the
sales information already stored in the system, we can create address lists of the customers
and sales prospects whom we wish to target with our direct mailing campaign.
Transportation
• Transportation is an essential element of the logistics chain. It effects both inward and
outward movement of goods.
• Effective transportation planning is required to ensure that shipments are dispatched
immediately and that they arrive on schedule.
• Transportation costs play a considerable role in determining the price of a product. It is

important that these transportation costs should be kept to a minimum, in order to keep the
price of a product competitive. Efficient planning and processing of transportation contributes
to keeping these costs down.
• The aim of the transportation element of the SD system is to provide basic functions for
transportation, like transportation planning and processing, freight calculation, freight
settlement, customer freight calculation, customer freight invoicing as well as functions for
service agent selection.
• The transportation functionality fulfils the requirements in the areas of transportation

planning and processing, for both inbound and outbound shipments.
• We can control and monitor the entire transportation process from the planning stage right
through to the dispatch of the goods from our shipping point (outbound shipment) or the
vendor location (inbound shipment) and their arrival at the customer location (outbound
shipment) or our plant (inbound shipment).
Foreign trade
• In domestic, and increasingly, in international trade, we are required by the authorities to

adhere strictly to the laws and regulations.
• The growing tendency towards the formation of trade areas is a further challenge to a
company a worldwide basis.
• The entire logistics chain from the import of raw materials finished and unfinished goods to
the sale of goods and the transfer of data to materials management and financial accounts is
significantly influenced by foreign trade activities.
• These main tasks in foreign trade processing can be carried out using the foreign trade
system.
5.4 Manufacturing Modules

• Competition in the next millennium places an increased emphasis upon time, as expressed
by speed, quality, service, and global focus.
• Manufacturers are measured by their ability to react quickly to sudden, often unpredictable
change in customer demand for their products and services.
• To compete successfully beyond the year 2000 requires manufacturing applications that are
time and activity based and above all else focused on the customer.
• Increasingly, these manufacturing applications are centre point within the spectrum of a
supply chain running from the customer to a supplier and encompassing the entire enterprise.

• A good manufacturing system should provide for multi-mode manufacturing application
that encompasses full integration of resource management.
• These manufacturing applications should allow an easier exchange of information

throughout the entire global enterprise, or at a single site within a company.
• Regardless of how big or small an enterprise is these applications should provide a wealth
of feature/function, broad scope of coverage, operational stability and a platform-independent
architecture.
These capabilities empower an enterprise to achieve productivity gains, adopt forward –

thinking technologies and implement process reengineering.
• As a company‘s internal processes become more sophisticated or as market forces change,

these
• Solutions should lie capable of meeting the challenge.
• The manufacturing system should be integrated with the other modules of the package.
A robust system of manufacturing planning business process and execution must satisfy a
variety of business practices and production methods.
• These business practices and production methods place stringent demands on time
manufacturer. Regardless of how manufacturers view their internal operations to the
customer, it boils down to quick response to customer demand in two fundamental ways-
manufacturers either make products to stock prior to receipt of a customer order or they make
and ship the products upon the receipt of a customer order.
• Manufacturers must accomplish this task quickly efficiently and cost effectively to remain
profitable and competitive.
• Today, companies must be able to deliver customer-specific producers with the lead-time of
standard, off-the shelf products. To help manage product and market shifts, the
manufacturing module provides the freedom to change manufacturing anti-planning methods
as and when they need a change.
• The manufacturing modules of most ERP vendors do not limit businesses to a single
manufacturing method, such as, make-to-stock or make-to-order; instead, many
manufacturing and planning methods can be combined within the same operation with
unlimited flexibility to choose the best methods or combination of methods for each product,
at each stage throughout its life cycle.
• In addition, this control and visibility comes without having to sacrifice the functionality
needed to manage different types of production efficiently.
• These systems support the entire range of production strategies-only one system is needed
to manage all manufacturing activities.

Engineer-to-order products can be planned using the system, while the system‘s forecasting
and distribution-planning features handle make-to-stock items.
• Products that are assembled-to-order can be planned using advanced features available in
the manufacturing module. All demands can be aggregated into user-definable plans at a
detail or summary level.
• Enterprise requirements then flow into consolidated production schedules and material and
capacity plans, and all product activity be scheduled and tracked through shop floor control
systems.
• The manufacturing module should enable an enterprise to marry technology with business
processes to create an integrated solution. It must provide the information base upon which
the entire operation should be run. It should contain the necessary business rules to manage
the entire supply chain process, whether within a facility, between facilities, or across the
entire supply chain.
• Control and execution can be performed at strategic, tactical, and operational levels within
the business. These require effective planning to support contract commitments throughout
supply chain control over intermediate range planning in horizons and time fences, and
execution over the short range of frozen scheduling required by the shop floor.
• Whether a single-site to implementation, or several sites within one country, or hundreds

covering entire globe the manufacturing system should provide the foundation for creating
concurrent business processes across the supply chain and achieving Return on Assets (ROA)
improvement.
• How does manufacturing respond to the customer? Manufacturers must respond quickly
and effectively to customer demands.
• While agility is desirable, agility without an effective enterprise manufacturing system

results in speed without purpose.
The very heart of an enterprise manufacturing system centres on its integrated planning,
business process and execution capabilities.
• Traditional Closed Loop MRP concepts have long heralded the importance of effective
planning, business process understand inventory execution.
• Strategically, effective-planning results in improved inventory turns, increased productivity

and improved return on assets. Tactically, effective business processes provide improved
customer satisfaction, reduced time to market, and improved market share.
• Effective execution provides short cycle time, quality assurance, continuous improvement,
and quick response to process variability. All three elements contribute to a management‘s
decision to install an enterprise-wide manufacturing manage merit system.
Some of the major subsystems of the Manufacturing module are:

 Material and Capacity Planning
 Shop Floor Control
 Quality Management
 JIT/Repetitive Manufacturing
 Cost Management
 Engineering Data Management
 Engineering Change Control
 Configuration Management
 Serialisation/Lot Control
 Tooling Enterprise Resource Planning Systems
Material and capacity planning
• Today‘s customer-focused business environment makes it more critical than ever for
manufacturers to have an effective production plan for managing material and capacity.
• Customers want accurate shipment dates – sometimes to the hour even when there are
schedule and product changes.
The Planning systems of ERP packages are designed to provide the responsiveness. Our
company needs to meet those customer requirements.
• With these systems, planners can simulate alternative plans; gaining the information, which
they need to determine which parts and assemblies to make i.e. which to buy and when to
manufacture or increase.
• Most packages have features to generate recommendations for purchases and production
and wherever necessary recommend changes to current plans to prevent under or over-
utilisation of work centres, If requirements change often, exception-based planning features
can on continuously, providing virtually real-time visibility of the ‗hanging plans, using item
time fences to avoid erratic production plans.
• Material plans can be developed from a wide variety of sources that include the master
schedule, sales forecasts and dependent and independent demand. An extensive selection of
order modifiers provides even greater control and flexibility.
• For analysis, planners can create unlimited number of simulations. The company can
customise planning processes because input is described by system parameters that are easily
changed.
• To reduce effort and accelerate communication across the supply chain, planned orders can
be confirmed and converted automatically (or manually) into production and purchase orders.
• In addition, graphical reporting makes potential material and capacity problems easy to
identify.
• Meeting our business goals requires detailed production planning and effective execution
control.
Shop floor control
• The ERP packages give our company full control with flexible scheduling and sophisticated
shop floor functionality. They also offer extensive freedom for defining production processes
in the most appropriate way.
• Depending on the requirements of the company‘s product and processes, production can be
scheduled using work orders or repetitive build schedules.
• With the repetitive planning feature, companies can implement just-in-time techniques to
streamline material issue and production reporting.
• Using the shop floor control facility, the company has the visibility necessary for managing
lead-times and for carefully controlling the amount of work-in process and the timely release
of production orders.
• Most of these systems are flexible enough to enable the company to establish order-
processing priorities that reflect business priorities.
• For achievable supply chain plans, both internal and external operations - and their
relationships - are considered by the system before creating production plans and assigning
priorities.
• The Electronic Planning Board provides a graphical production management tool that
delivers immediate visibility of changes in capacity utilisation. The planning board shows all
scheduled production, current production status, utilisation, materials, and capacity
availability.
• Shop Floor Control with increasing emphasis being placed upon reducing manufacturing
time in support of the need to reduce product time to market, manufacturers have turned
greater attention to evaluating their shop floor activities.
• Process reengineering efforts and the elimination of waste have necessitated greater reliance
upon powerful, user-friendly, flexible shop floor planning and control systems.
• Management needs timely, accurate information and the ability to manage the shop floor by
exception. Cost information must be flexible as well.
• Factories are being realigned to reduce material travel time through a facility. This
realignment places an added burden upon the supporting systems.
• Managers must often time experiment with trial-and-error approaches in the never-ending
search for process improvement. Shop floor control systems must be flexible and adaptable to
changing needs.
• A shop order can be reprinted at any time with user selection of whether to reallocate
material. This reprinting gives a shop supervisor the flexibility to print a duplicate copy when

an order is split between operators. This feature also gives the shop scheduler the ability to
reprint the shop packet and to reflect new material allocations that correct previous shortages.
• Every shop order can be maintained throughout its life. All systems provide a full function
shop-order-maintenance capability allowing the user to evaluate and adjust operation steps
and components.
• Orders can be rescheduled either backward or forward.
• For example, an operation‘s start date can be overridden to reflect changed events and then
the order can be forward scheduled to reflect the impact upon future operations. Quality
management
• With product quality under the microscope in all industries today, every company strives for
superior quality in its products and ser vices.
• All manufacturing modules track quality control activities across the enterprise from
intermediate producers to finished goods. These systems allow a wide variety of
characteristics and parameters to be specified in test and inspection operations and maintain
an extensive history to improve product quality and identify recurring problems.
• Elimination of defects in standard product designs and manufacturing methods, before

production, is just as important as eliminating defects during production.
• In fact, to achieve quality levels, manufacturers must focus on identifying and correcting
defects in underlying product designs and production methods and not simply inspect the in-
coming material and finished goods.
• The Quality Management Systems usually support the benchmarking and use of optimal
product design, process engineering and quality assurance data by all functional departments
within the manufacturing enterprise, thereby facilitating definition of repeatable processes,
root cause analysis and the continuous improvement of manufacturing methods.
• This documentation supports the job functions of the quality assurance and production
managers validating the manufacturer‘s conformance to 1S0 9000, Good Manufacturing
Practices (GMP) worldwide, MIL-Q-9858 in the United States, and a variety of country
specific industry standards of quality assurance.
• Specification Control in the Quality Management System offers a state-of-the art approach
for documenting specifications and enables an organisation to standardise and simplify its
quality assurance and control functions.
• Sample types, sample rules, and testing levels are completely user-defined for maximum
flexibility and ease of use. Maintenance of standard specifications detailed sampling
instructions and testing procedures is performed online.

• Cyclic, subsequent, and repeat testing options are available to support the material
acceptance function with breakdowns of test procedures into multiple dispositions to improve
inventory turnover and reduce inspection lead-times.
• The system database eliminates redundant specifications and ensures that a single change to
standard procedures takes effect immediately throughout the organisation. User-defined
review and commitment controls ensure maximum accuracy.
• The Material Procurement subsystem provides tools for implementing Total Quality
Management programs within an organisation. Original manufacturers may be defined
independently from vendors, so that businesses can strictly adhere to quality assurance and
control functions without preventing their buyers from seeking the best possible price and
delivery terms.
• Each item supplied by an original manufacturer may be linked to a standard product

specification. Actual test results and material disposition histories are retained by item, lot,
original manufacturer and specification for in-depth quality performance review and analysis.
• Material Inspection subsystem offers a wide range of capabilities for process supervision
and control.
These capabilities are fully integrated with the other modules like purchasing, inventory
management and shop floor control functions to ensure that the right quality control
procedures are followed.
• Capabilities include online maintenance of product specifications by production method

and customer, event driven sample requests, sample login, test results entry, quality
performance analysis and equipment calibration support.
• Product quality metrics are collected and archived in a manner that offers full support for
statistical process control techniques.
• Material Disposition is another feature available in many systems that offers advanced
material review and disposition functions that ensure the right quality control decisions are
made and leave an audit trail of decisions for compliance purposes.
• Capabilities include automated material review and approval, automated material

disposition, sub-lot control, optional automatic second disposition, optional.
• Automatic repeat testing, grading, re-designation, and implementation of user defined

policies and procedures for authorisation and control. Production Reporting supports
complete production reporting. Both employee and crew labour reporting is possible, with
crew reporting automatically allocating efficiencies between crewmembers.
• User defined shift teams can be entered to support quality circles and subsequent reporting
of results. Employed clock maintenance provides for designation of employees and teams.
Both labour grades and labour rates can be designated. Labour grades entered by employees

override those designated for the work centre. Labour rates enable the entry of actual cost
data, even when labour grades have not been established.
The Shop Floor Control system is fully integrated with Cost Accounting and Control.
• Both production reporting and employee/clock maintenance contribute data that is

summarised at the time of shop order close with full variance analysis reporting made
available to the user.
• Shop Floor Control also makes use of a powerful and flexible shop calendar facility, which
can be global with overrides reflecting each facility and each work centre within the facility.
Just-in-time/repetitive manufacturing
• The pan decade has seen a surge of interest in the adaptation of Just-in-time (Jill
manufacturing techniques), while companies have embraced the concepts of waste
elimination, product factory layout, manufacturing cells and Kanban signalling, many
implementations have struggled due to lack of software tools to effectively support the
transition.
• Many systems not only provide high volume repetitive manufacturing functionality, but also
provide for the transition to rate based production by allowing the use of repetitive
scheduling, even for products that are not rate based.
This allows a production facility to transition products from discrete manufacture into a JIT/
Repetitive focus.
• For example, when the demand pattern for an item begins to stabilise and show a
repeatable/predictable pattern, then a production schedule can be initiated even though the
item may not be designated as rate-based.
• Over the time, as the item‘s demand pattern grows, the item can be switched to lull rate
based production scheduling. This transition capability enables production facilities to adopt
process reengineering, setup reduction programs, single minute exchange of die (SMED)
programs, Employee Empowerment Work Teams, etc. with the confidence of knowing that
the planning and control system will effectively support their efforts. JIT/Repetitive in eludes
strong analytic capabilities.
• A production inquiry presents both cut rent production status and history. The history
provides current day, month to date, and year to date results as well as calculations of
maximum and average production results per hour.
• A purchase/production plan report shows current on hand quantity and scheduled receipts
by planning period.
• A cumulative production report shows production status information by item, which

includes quantity ordered, received, remaining and due, as well as quantity allocated and year
to date receipts.

• A downtime analysis report highlights all causes of downtime by reason code. A quality
control/reject analysis report tracks all rejections by reason code.
• A yield analysis by operation identifies where loss in productivity is occurring. A

cumulative purchasing report shows total procurement needs by item, effectively displaying
daily delivery performance and summed delivery results.
• An item allocation report provides details regarding on-hand and allocation status for child
items, including lot number and lot tracing status for lot-controlled items.
• AJIT work list compares the production plan to the capacity plan for rate-based items.
This tool quickly identifies discrepancies based upon actual performance, so that production
rates and/or daily output goals can be adjusted proactively and monitored on a timely basis.
• Reports covering employee efficiency and detailed cost by item are also provided together
with lot tracing status for lot-controlled items.
Cost management
• With competition increasing the pressure on margins, a business needs accurate and detailed
manufacturing cost reporting for effective business management.
• ERP packages provide extensive cost information at several levels that helps businesses
identify cost drivers and reduce product costs. They support multiple inventory valuation
methods, so that we can choose the costing method that best reflects our company‘s business.
• We can choose standard, LIFO (Last in First Out), FIFO (First in First Out), moving
average unit, or lot costing method and costing methods can be assigned by item.
• To reduce administrative overhead, prevent input errors, and provide faster and more
accurate information for planning, these systems provide detailed records of time and
materials data on the shop floor.
• For example, many systems have features that let our company compare estimates and
production costs for different work centres, machines, employees and order quantities while
monitoring overtime, indirect hours, subcontracted jobs and other costs.
• Moreover, to provide even more accurate production and inventory planning, these systems
can track material usage for each job. And, if the activity is associated with a project, project
information is automatically updated.
• Many vendors also support Activity Based Costing (ABC) with activity visibility by cost
object as well as costs for user-defined groupings, such as departments.
• There will be provisions that allow employees to report non-production activities such as
maintenance, holidays and illnesses.

• Manufacturing system provides extensive information about production costs at several
Levels, which give us the visibility that we need to identify cost drivers and reduce product
costs.
Engineering data management
• The first step to shorter product development cycles is increased efficiency in design and
development activities.
• Engineering Data Management is designed to help-reduce errors and increase design

productivity by providing an automated link between engineering and production
information.
• Most packages allow a smooth integration, with popular CAD packages, to simplify the
exchange of information about drawings, items, BOMs and routings. Engineering change
control
• By using Engineering Change Control, businesses can gain effective control over
engineering change orders. Our company can define the authorisation steps for approving and
implementing an Engineering Change Order.
• When these steps are completed, the system automatically implements the change in the
production database.
Configuration management
• The Configuration Management dramatically reduces order cycle time by eliminating the
lengthy engineering review, typically associated with determining feasibility and the costs
associated with the configured end item.
• This reduction is achieved by creating a flexible user-defined knowledge base that is

accessed by a powerful analytic engine.
• The knowledge base contains the sales and engineering expertise of the organisation.
Product attributes and variables, such as height, width, or cubic pounds of pressure entered in
the knowledge base in the form of an option matrix.
• The knowledge in the option matrix structure can also be augmented by user defined
calculations,such as Height x Width = Area and by Boolean rules. Boolean rules allow
definition of complex product relationships.
• For example, ‗If refrigeration and insulation are chosen under trailer options and the total
area is greater than 120 feet, and then double axle must be chosen under axle options‘.
• The analytic engine interprets the knowledge base in conjunction with user selections, to
ensure that the customer specified product could be built and sold.

• As a result, the order entry process is a dynamic conversation between the order taker and
the customer that culminates with a fully priced and coasted product on the sales order, as
well as the related manufacturing detail necessary to move the order directly into production.
• The process starts with an attribute master containing configuration related questions and
answers. Attributes are the building blocks of a configuration structure.
• The configuration structure categories and sequences attributes to create a flow of

questions and possible answers, drawing the entry of sales orders for configured products.
Serialisation / lot control
• Many systems will provide the facility for the designation of raw material lots and the
serialisation of component parts made from those lots.
• This serialisation is applicable to commercial aviation, defence industry suppliers, and

capital equipment manufacturers who provide service over the life of their products on an
individual unit-by-unit basis. Examples include heavy machinery, off road equipment, and
highway tractor/trailers.
• Manufacturers, who use lot control often, must allocate production prior to its completion.
The lot control system provides for the pre-allocation of lot numbers. This feature is available
throughout the product offering and includes MRP, shop floor control, order processing and
JIT.
• Many systems allow production orders to be pre-assigned with lot numbers for the parent
item. When the shop order is released, the lot master record will be created and allocations to
higher level parents will be permitted.
• The manual pre-allocation of reassigned lots is possible for both customer orders and shop
orders with visibility to planned and actual production, as well as existing inventory.
Tooling
• For many manufacturers, ensuring that proper tooling is available is just critical to
production schedules as the availability of material.
• The ERP systems extend capacity and inventory management to include these valuable
resources. These systems help to ensure that tools and materials arrive together at scheduled
operations by storing tools in inventory, planning, and allocating the required tools as part of
the production order
. • They al provide visibility of tool use, calculate the remaining useful life of a tool and
automatically route tools for maintenance based on usage.
4.5 Human Resources Modules

• Human resources management is an essential factor of any successful business. The
competitive environment of the next millennium with its economic and technological

challenges will affect the HR department in the same way, it will all the other areas of our
enterprise.
• In short, HR managers must continually review and optimise their business processes. The
HR modules of most ERP systems have a set of rich features, and will integrate seamlessly
with the other modules and are thus, invaluable aids in improving productivity.
• They offer company-wide solutions for HR departments and make it possible for other
departments to access specific employee data.
• A human resource management system has to be adaptable to company specific

requirements, and should constantly grow with increasing HR requirements. It should cover
all the functions required in business practices.
• It should be flexible enough to allow us to optimise our business processes by tailoring the
ERP solution to suit our organisation‘s needs.
• Today, many businesses cross boundaries. The system should support the organisation‘s
international needs with country-specific versions of the HR components.
• Apart from languages, currencies and legal requirements, accounting systems often vary
from country to country as well, making this a vital feature. A flexible structure enables quick
and easy customisation of the system to suit our requirements.
• When we log on in a particular language screens, messages and documents appear in the
language we specify. We then have access to the systems complete functionality.
• The different ERP systems offer many different subsystems under the HR umbrella. Listed
below are some of the most common subsystems. Here again, the idea is not to be
comprehensive but to give us an idea about the options available.
The various subsystems under the HR module are:
• Personnel Management (HR master data, Personnel administration, Information systems,

Recruitment, Travel management, Benefits administration, Salary administration)
• Organisational Management (Organisational structure, Staffing schedules, Job descriptions,

Planning scenarios, Personnel cost planning)
• Payroll Accounting (Gross/net accounting, History function, Dialog capability, Multi-

currency capability, International solutions)
• Time Management (Shift planning, Work schedules, Time recording, Absence

determination) Personnel Development (Career and succession planning, Profile
comparisons, Qualifications assessments, Additional training determination, Training and
event management)

4.5.1 Personnel Management
• Personnel management includes numerous software components, which allow us to deal
with human resources tasks more quickly, accurately, and efficiently.
• We can use these components not only as part of the company-wide ERP solution, but also
as stand-alone systems.
• Personnel Administration Information is no longer owned by specific departments, but is

shared by multiple entities across an organisation. This eliminates duplicate entries, reduces
the chance for error and improves data accuracy.
• The HR modules provide a global, fully integrated data structure for the enterprise without
compromising our control over individual segments of the operations.
Employee master data
• Human Resource module has a centralised database with integration to multiple

components for processing employee information.
• The system provides tools to save time and help us tailor the system to fit our needs.
The HR module contains features for storing any desired information about our employees.
Most systems have the facility to scan the original documents for optical storage.
• The HR Information System displays graphical information such as organisation charts or

employee data. The system can produce charts and reports-both standard and customer-
defined.
Recruitment management
• This function helps in hiring the right people with the right skills. Reducing the cost of
recruiting and hiring new employees is a challenge for the HR professional, who is
responsible for placing people in the right job, at the right time, and with the right skills and
education.
• These requirements are fulfilled only through effective automation of the entire recruitment
process. The recruitment component is designed to help meet every facet of this challenge.
• This component includes processes for managing open positions requisitions, applicant
screening, selection and hiring, correspondence, reporting and cost analysis.
• Effective management of the organisation‘s job openings helps the HR recruiters, managers,
and interested candidates.
• The HR Recruitment component allows direct access to data stored in other components of
HR including Personnel Administration, Payroll and Personnel Planning. These links
eliminate duplication of data entry and improve our productivity.

• Some examples of shared data related to job openings include position open date, location
and reporting specifics, job descriptions, and skills and education requirements.
This information can be used for both internal job postings and external advertisements in
newspapers, magazines, colleges or recruitment firms. We match employee and applicant
qualifications with the requirements of the job to select candidates. HR Recruitment
interfaces directly with word processing packages to generate standard applicant letters.
• In some systems, there is even the facility to send e-mail messages. Many systems provide
tools to analyse costs incurred during advertising and interviewing for each open position.
With the HR Recruitment component we can efficiently manage our job openings, our
applications and applicant data, costs, and the hiring process.
• Once a selection has been made and an applicant has been hired, the data gathered during
the recruitment process becomes new hire information.
• Duplicate data entry is eliminated along with the possible introduction of errors if the data
had been reentered. Travel management
• This module helps us in processing the travel expenses effortlessly, in several currencies
and formats. HR Travel Management allows us to process a business trip from start to finish
from the initial travel request right through to posting in Financial Accounting and
Controlling.
• This includes any subsequent corrections and all retroactive accounting requirements.
Integration with the other modules ensures correct posting, taxation and payment of trip
costs.
• Travel data can be entered by the person travelling, or by a secretary or by the relevant
department, either before or after the trip.
• The entry of a travel request automatically generates a workflow that makes the
administrator‘s work much easier.
• Business, employee, and country specific trip provisions can be implemented via system
settings. Travel Management automatically calculates the tax. It also automatically processes
credit card transactions for a particular trip.
• The receipts can be entered in any currency and include supplementary receipt information.
An optical archive is available for the long term archiving of travel receipts.
• Travel costs can be divided into different levels (employee, trip destination and receipt).
Expenses can be posted to numerous account assignment objects, for example, cost centre,
order, project, or cost object.
• We reimburse costs incurred during a trip through payroll accounting, accounts payable
accounting, or by data medium exchange.

• In addition, Travel Management provides multiple report formats. We can enter receipts in
any currency and then print reports in our native currency.
• Travel Expense Accounting provides us with self-explanatory forms, statements and an

electronic approval process to improve communications and reduce unnecessary calls to the
HR department. Benefits administration
• This system brings flexibility and power to our benefits program. As organisations continue
to grow, as laws change and employee requirements expand, we need a flexible system to
satisfy all our requirements.
• The Benefits Administration component provides us with the capabilities and flexibility to
manage effectively benefits programs for diverse employee populations.
• Benefits Administration uses a hierarchical structure that gives us the ability and flexibility
to add new programs at any time.
• This system can maintain an unlimited number of benefits types and individual plans that
are offered to the employees.
• With Benefits Administration, we can establish benefits groups based on specific employee
demographics.
A company needs options for enrolling employees in benefits programs.
• This module furnishes us with real-time processing, allowing us to prepare employee

specific enrolment forms, using all employee data.
• Using the Benefits Administration component, we can define eligibility groups and rules
based on a wide range of factors. We can determine the variables, rules and cost formulas for
each benefits plan.
• We can design the types of benefits plans that best fit our employee demographics.
• We determine the options to offer employees and the Benefits Administration component
provides the framework to administer them efficiently. The costs associated with each
benefits plan option are automatically calculated to ensure consistent and accurate reports.
• With the Benefits Administration feature, we can maintain an unlimited amount of savings
plans for our employees to consider.
• The Benefits Administration component gives us the capability to maintain both deferred
and non-deferred options, as well as employer-matched and unmatched contributions. The
component tracks employee changes and investment histories.
• These systems have powerful querying and reporting features that can provide us with
standard reports, to assist us in administering our programs and help us respond to requests
quickly, accurately and confidently. The employees can also have direct access to their

individual benefits information flow eliminating many time consuming questions that the HR
staff would otherwise have addressed every day.
Salary administration
• This function helps us in simplifying the process of rewarding our employees.

Administration of salaries is an ongoing process within our human resources department.
• It is particularly important during the review process, when our goal is to reward good
performance justly. The Salary Administration module assists us in the salary review process
by taking into account standard salary changes within the company, as well as individual
compensation exceptions.
4.5.2 Organisational Management

• This module will assist us in maintaining an accurate picture of our organisations structure,
no matter how fast it changes.
• In many cases, graphical environments make it easy to review any moves, additions, or
changes in employee positions. We can also create multiple simulations for the organisation,
as we explore our options for making adjustments in personnel.
• Planning features designed to assist us include graphical organisation charts; staffing

schedules by headcount, percentage and working hours; job and work centre descriptions and
job tasks and descriptions. Personnel costing are a strategic success factor for every company.
• Accurately forecasting personnel costs provides our management team with a more
complete cost picture to assist them in making informed decisions. • The Personnel Cost
Planning functions enable us to perform cost comparisons between target and actual
personnel costs and create cost previews.
• We can forecast wages, salaries and other cost elements for open and filled positions, based
on simulated, planned, or actual payroll figures.
4.5.3 Payroll Accounting

• The Payroll A/c counting system can fulfil the payroll requirements and provide us with the
flexibility to respond to our changing needs.
• Payroll Accounting should address payroll functions from a global point of view. We
should be able to centralise our payroll processing, or decentralise the data based on country
or legal entities.
• Most Payroll Accounting systems give us the options and capabilities to establish business
rules without modifying the existing payroll. Many systems have the features to remind us
when transactions are due for processing.
• When the process is completed, a built-in audit trail date stamps the record for future
reference. The system automatically creates a history record for every payroll transaction.

With Payroll Accounting, we have the ability to tailor the system to our organisation‘s
requirements.
• When policy or legislative changes occur, we can adapt the system. The system maintains
information on employees in a master file shared with all other modules.
• Whether our business operates solely in one country or has expanded to international
locations, most ERP vendors have incorporated features that will satisfy our requirements.
• With country-specific versions of Payroll Accounting, we can fulfil language, currency and
regulatory requirements.
4.5.4 Time Management

• This module assists us in simplifying the administration and evaluation of time data. Time
Management is a powerful tool that helps us administer and evaluate data related to the time
our employees spend working. This component can simplify our efforts irrespective of
whether the organisation uses centralised or decentralised data to determine employee-
working hours.
• Time Management manages work schedules efficiently and effectively by automating

schedule generation and allowing flexible definition of time models and schedules per
location and organisation level.
• With Time Management, we can set flexible working hours and process work notices as
times are recorded. Individual and group piecework calculation for employee incentive wages
is also available through the incentive wages feature.
• The Time Evaluation component allows daily processing of employee time data. It is a
flexible tool designed to handle complicated evaluation rules to fulfil regulatory requirements
and determine overtime and other time related data.
• The Time Evaluation component stores our organisations‘ business rules and automatically
validates hours worked and wage types.
• The results of time evaluation can be shown on a time sheet that provides a detailed
overview of daily balances and time wage types.
• Most packages provide a review feature that will provide all necessary information and
tools to review and maintain employee time data. Shift planning
• Shift planning module helps us to plan our workforce requirements quickly and accurately.
We are able to arrange a target plan that can be drafted for any given period.
• We can plan our shifts according to our requirements, taking into consideration all criteria,
including absences due to leave or sickness and employee requests for time off.

• Shift planning keeps us informed at all times of any staff excess or deficit; a convenient
planning hoard is provided to guide copying shifts and us when entering for any designated
period.
• Furthermore, we can check the plans at any time against rules governing employees‘
working time, for example, to detect non-compliance with relevant legislation.
• All time data relating to our employees is centrally administered. Also short term changes to
our shift plan brought about by for example, sickness or over time are relayed direct1y to the
Time Management component.
• Another advantage of Shift Planning is that it enables us to temporarily assign an employee

or employees to another organisational unit where they are needed, allowing for a temporary
change of cost centre. Personnel development
• This function helps in selecting the best people and enhancing careers more effectively. The
system provides advanced tools to automate the labour intensive process of matching internal
job requirements to qualified candidates. We can profile predefined tasks and prerequisites of
each position in our organisation. Additionally, we can profile the qualifications of
employees and external candidates under consideration for each position. A comparison of
qualifications and profiles assists us in selecting individuals for further
• Consideration in Effective personnel development planning ensures that the goals of the
organisation and the goals of the employee are in harmony.
• The benefits of such planning include improvements in employee performance, employee

potential, staff quality, working climate and employee morale. A good system should provide
organisations with a method of modelling suitable career opportunities for employees within
the company.
• There should be features to determine the areas in which employees need further training.
Once this is established, we can draw up individual plans for further education.
• Training and Event Management Every successful organisation should plan the training
and events faster than ever before.
• A good HR system will have features to assist us with planning, managing and analysing
our scheduled seminars, training courses and business events.
• Detailed information for each of the events is maintained to facilitate production of event
catalogue and schedules.
• There should be tools to maintain information on the internal or external organisers of each
event, as well as details such as prerequisites, objectives, content, time schedule prices,
capacity, locations, attendee billing information, and budgets resources such as instructors,
rooms, equipment and course materials an automatically suggested, saving us a great deal of
data entry time.

• On completion of a training course, appraisal forms can be automatically issued. Appraisals
can be carried out for instructors, attendees, business events and training courses.
• There will be features for providing the training coordinator with reports on event data,
ranging from catering requirements to registrant qualifications for each business event. The
reporting feature provides measurements of education and training performance.
4.6 Plant Maintenance Modules

• The achievement of excellent performance demands delivery of quality production
expeditiously and economically.
• Organisations simply cannot achieve excellence with unreliable equipment. The attitude
towards maintenance management has changed because of quick response manufacturing.
• Just in Time reduction of work in process inventory and the elimination of wasteful
manufacturing practices. Machine breakdown and idle time for repair was once an accepted
practice.
• Times have changed. Today when a machine breaks down, it can shut down the production
line and the customer‘s entire plant.
• The Preventive Maintenance module provides an integrated solution for supporting the
operational needs of an enterprise-wide system.
• The Plant Maintenance module includes an entire family of products covering all aspects of
plant/equipment maintenance and becomes integral to the achievement of process
improvement.
• The major subsystems of a plant maintenance module are: ‚ Preventive Maintenance

Control‚ Equipment Tracking‚ Component Tracking‚ Plant Maintenance Calibration
Tracking‚ Plant Maintenance Warranty Claims Tracking Preventive maintenance control
• Preventive Maintenance Control provides planning, scheduling, and control of facilities and
equipment. Equipment lubrication, component replacement, and safety inspection can be
planned scheduled and monitored.
• Maintenance tasks can be tracked for each machine or piece of equipment by two user
defined modes, as well as calendar day frequency.
• These modes could include tracking by hours of operation, units of production produced,
gallons of fuel consumed, or the number of days in operation since the last service interval.
• Preventive Maintenance Control enables organisations to lower repair costs by avoiding

downtime, machine breakage and process variability.
• Companies achieve higher machine utilisation and improved machine reliability and
tolerance control along with higher production yields.
Equipment tracking
• Equipment is an asset that needs to be monitored and protected. In many situations,
equipment maintenance costs constitute the single largest controllable expenditure of an
organisation.
• All facets of plant location history and utilisation history are described and tracked. This
history includes acquisition and disposition information and associations between different
pieces of equipment to pinpoint operational dependencies.
• Running totals for operation units to date (miles, hours, days, units of production, etc.) are
also provided. Each piece of equipment is defined by a model and serial number.
• User defined data sheets can be developed which allow for the grouping of user data into
formats that can be linked to equipment records.
• All of this information can be used to create equipment specifications, which provide
detailed information for technical specialists working in equipment operations, maintenance
and transportation control.
Component tracking
• Components are, typically, subsets of larger equipment and deserve the same amount of
cost controlling scrutiny.
• Component tracking enables equipment managers to identify components with chronic

repair problems. They can determine whether a repair or replacement should be covered by
warranty.
• Planning component replacements, rather than waiting for component failures to occur,
reduces unscheduled equipment downtime.
• Component tracking includes repair/exchange history and component service life. Plant
maintenance calibration tracking
• Plant Maintenance Calibration Tracking allows organisations to leverage their investment in

the Plant Maintenance module by providing for the tracking of equipment calibration in
support of IS0:9000 requirements.
Plant maintenance warranty claims tracking
• Plant Maintenance Warranty Claims Tracking is an administrative system designed to

provide control of all items covered by manufacturer and vendor warranties.
• It enables plant management to recover all of the warranty, reimbursements to which they
are entitled but have not been able to recover in the past.
• Features include the ability to establish the type and length of warranty, for example,
elapsed day, months, mileage stipulation, or operating units.

• A complete history is performed for each item covered by the warranty, and complete
information regarding the warranty service provider is generated.
4.7 Quality Management Modules

• Just as the requirements for quality management systems have changed because of the ISO:
9000 standards, the term Computer-Aided Quality Management (CAQ) must also be
redefined.
• Computer-Integrated Quality Management (CIQ) is a more appropriate term because an

isolated CAQ system cannot carry out the comprehensive tasks of a quality management
system.
• The ERP system considers this by integrating the quality management functions into the
affected applications themselves (for example, procurement, warehouse management,
production and sales/ distribution), instead of delegating them to isolated CAQ systems.
• As a result of this approach, the processes described in the quality manual can be
implemented and automated in the electronic data processing (EDP) system.
• The representation of the elements of a quality management system within the ERP system
is not only the responsibility of the quality management module.
• Instead, the ERP system must be considered as a whole in which all integrated modules
contribute their part. Within the framework of the system, for example, the human resources
module handles personnel related matters, the Controlling module handles the management if
quality related costs and the plant maintenance module handles the monitoring of test
equipment.
• As a part of the logistics application, the quality management module handles the traditional
tasks of quality planning, quality inspection and quality control.
• For example, it supports quality management so procurement, product verification, quality

documentation and in the processing of problems.
• The Quality Management module‘s internal functions do not directly interact with the data
or processes of other modules.
• The ISO: 9000 series of standards defines the functions of quality management and the
elements of a quality management system.
• The functions in the Quality Management module support the essential elements of such a
system. The other integrated modules in the system complement this functionality. Enterprise
Resource Planning Systems
SAP AG

4.8.1 Company Profile
• SAP AG founded in the year 1972, SAP (Systems, Applications and Products in Data
Processing), located in Walldorf, Germany, and is the leading global provider of client/server
business application solutions.
• Today, SAP has installations in more than 15 countries.
• SAP‘s ERP package comes in two versions: ‚ Mainframe version (SAP R/2) and ‚
Client/server version (SAP R/3)
• Most prominent among SAP‘s product range is enterprise application suite R/3 for open
client/server systems.
• With SAP Systems, customers can opt to install the core system and one or more of the
functional components, or purchase the software as a complete package.
• The System is accepted as the standard in key industries such as oil, chemicals, consumer
products, and high technology and electronics.
• The SAP group employs a work force of over 19,300 and has offices in more than 50
countries worldwide.
SAP is the most successful vendor of standard business-application software and is the
fourth-largest independent software supplier in the world.
• In its most recent fiscal year, ending December 31, 1998, SAPAG reported revenues of DM
847 billion, a 41% increase over 1997‘s revenues. In the same period, sales of R/3 rose by
31%.
• Since 1988, SAP AG has been a publicly held corporation, with its shares being traded on
the German and Swiss stock exchanges.
• In 1995, the company was added to the DAX, the index of German blue-chip companies.
SAP listed its ADRs (American Depository Rights) on the NYSE (New York Stock
Exchange) in August 1998. 7.2.2 Products and Technology
• SAP has developed an extensive library of more than 800 predefined business processes,
spanning each functional software requirement.
• These processes may be selected from the SAP library and included within installed SAP
applications, after tailoring the application solution to suit the user‘s exact requirements.
• New business processes and technologies become available regularly, enabling SAP
customers to add state-ofthe-art solutions to meet ever-changing business demands.
• The power of SAP software lies in real-time integration, linking the company‘s business
processes and applications, and supporting immediate responses to change throughout the
organisation on a departmental, divisional, or global national strength of the products.

• It extends to every aspect of the applications, such as the support of multiple currencies
simultaneously and the automatic handling of country-specific import/export, tax, legal and
language requirements.
• The complete suite of R/3 applications is available in 24 languages, including Japanese

(Kanji) and other double-byte character.
4.8.2 R/3 – Overview

• R/3 employs a three-tier client/server architecture widely recognised by SAP customers,
technology partners and industry analysts as a winning approach to solving some of today‘s
most demanding information-management challenges.
• The architecture separates a system into three functional layers, each structured to support
the demands of its function. ‚ The database layer resides on central servers or mainframe host
computers. ‚ The application layer holds the processing logic of the system, preparing and
formatting data for individual offices or departments. ‚ The presentation layer, typically on
personal computers, handles all the tasks related to the presentation of data, including user
interfaces that enable easy access to complex applications and data.
• SAP has also incorporated and integrated the intranet and Internet technologies into
business solutions for its customers.
• Both internally and together with its partners, the company is defining and creating a
number of internet standards based interfaces, applications and business processes that will
extend the usefulness of SAP software in entirely new ways and to new classes of customers.
• Through its Industry Business Units (IBUs) and its extensive development network closely
with its customers to develop new information technology approaches to meet the unique
demands of a wide spectrum of industries.
• With this approach, customers become members of the SAP development sharing their best
practices and solutions.
4.8.3 The R/3 System

• As a company, one needs dynamic strategies to meet the challenges of today‘s fast-paced
business world.
• The ability to respond nimbly to new customer needs and seize market opportunities as
they arise is crucial.
• A powerful, open IT infrastructure that will optimally support the business activities and is
flexible enough to adjust to change and progress has become a necessity.
• SAP‘s R/3 System is the world‘s most-used standard business software for client/server
computing.

• R/3 enables us to respond quickly by making us more flexible, so we can leverage changes
to our advantage. Our everyday business will surge, letting us concentrate on strategically
expanding to address new products and markets.
The R/3 System is ideal for companies of all sizes and industries.
• It gives them both a forward-looking information management system and the means to
optimise their business processes.
• At R/3‘s core are powerful programs for accounting and controlling, production and
materials management, quality management and plant maintenance, sales and distribution,
human resources management and project management. Already, over 2,000,000 users put
R/3 business applications to the test every day. Information and early warning systems are
also available
. • The Business Information Warehouse conveniently edits external and internal data to
support decision-making at all corporate levels.
• The R/3 System is an unbeatable combination of functionality and technology. Although

designed as an integrated system, R/3‘s modules can also be used individually.
• We can expand it in stages to meet the specific requirements of our business. R/3 runs on
the hardware platforms of leading international vendors, and can mesh smoothly with our in-
house applications.
• It is open enough to allow interoperability with third-party solutions and services. It is quick
and efficient to install. The R/3 System enjoys full 24-hour support from SAP‘s global
service network. R/3 overcomes the limitations of traditional hierarchical and function-
oriented structures like no other software.
• Sales and materials planning, production planning, warehouse management, financial

accounting and human resources management are all integrated into a workflow of business
events and processes, across departments and functional areas.
• Employees receive the right information and documents at the right time at their desktops.
R/3 knows no organisational or geographical boundaries.
• Corporate headquarters, manufacturing plants,sales offices, and subsidiaries all merge for
the integrated handling of business processes.
• R/3 does more than just opening up completely new IT solutions within our company. Its
applications also link your business processes with those of customers and suppliers to create
complete logistical chains, covering the entire route from supply to delivery.
• R/3 lets you integrate banks and other business partners into inter-company
communications, both nationally and internationally.

4.8.4 Best Business Practices and New Technologies
• R/3 software lets us integrate all our business operations in an overall system for planning,
controlling and monitoring. We can choose from 800-plus ready-made business processes
and their number continues to grow.
• They include best business practices that reflect the experiences, suggestions and
requirements of leading companies in a host of industries. R/3 lets us profit directly from this
wealth of business and organisational know-how.
• R/3 continues to evolve in close dialogue with the customers. Cutting-edge technologies,
such as object orientation, are incorporated into the development work and are translated into
practical customer benefits.
• SAP is always on the lookout for ways to harness innovative applications to extend the
ways in which one can use R/3.
• For example: More and more companies are using the Internet not just for marketing and
communications, but for procurement customer service and order processing. R/3 is directly
linked to the Internet and is ready for electronic commerce.
4.8.5 Dynamic Information Management

• R/3 is a major strategic tool for achieving these aims. R/3 gives enterprises of all sizes and
from all types of industries, a flexible software base for their business infrastructure.
• Moreover, they profit from the quality and powerful functionality of R/3‘s applications,
which meet the information management needs of both medium-sized and large multinational
companies.
• This flexibility, as regards enterprise size, is demonstrated by the fact that over 50% of R/3
installations are in small and medium-size companies.
• R/3 solutions are hard at work in some vertically structured industries. Automobile
manufacturers use R/3 to build flow factories, in which just-in-time materials and assemblies
flow from the supplier into production and then as finished products to the customer.
• Retail companies use R/3 to boost consumer response.
• The pharmaceutical and chemical industries use R/3 to integrate commercial and technical
applications.
• Banking and insurance businesses use R/3 to coordinate revenue, risk management, and
optimally manage their financial assets.
• Manufacturing companies use it because R/3 simultaneously supports several types of

production.
• Special enhancements to the R/3 System enable government agencies to make their services
more efficient and cost-effective.

• In wholesale businesses, R/3 speeds up all processes-from suppliers to final customers and
permits the simultaneous optimisation of wholesale and consumer prices.
• Publishers and media take advantage of R/3‘s flexibility to respond to short-term changesin
the markets.
Utilities use R/3 to reorganise their business processes and improve the quality of their
services. 97/JNU OLE
4.8.6 R/3 Application Modules

• The applications in R/3 are modules designed to tap the company‘s performance potential.
They link operational steps to forge automated workflow chains, control the flow of
information from one department to another and connect the company with its customers and
suppliers. Process-oriented operations increase productivity.
• Because R/3 connects processes that belong together, every employee has fast, convenient
access to all required information on the spot. Information is up-to-the-minute and consistent.
The integrated nature of the workflow management gives our staff a new understanding of
the work environment.
• A team orientation replaces departmental thin king and strengthens individual initiative and
motivation.
• R/3 helps all our employees work together. R/3 provides a flexible organisational structure.
• From a broad spectrum of functions and alternative business processes, we can select the
modules that we want which will mould the company into an internally consistent
organisational system, depending on our specific requirements. The system‘s modularity also
allows us to choose between incremental installation and ―big bang‖ implementation, with
simultaneous conversion of all systems.
• SAP matches its core processes to the company‘s needs by customising additional
applications, which are provided by SAP‘s partners.
• The in-house staff can do the work simply and easily with the ABAP/4 ® Development
Workbench, which is an integral part of the R/3 System.
• R/3 brings together people who work on shared tasks-within the same company, in a
network of companies, or in their dealings with customers and business partners.
• R/3 unlocks ways to optimise organisational structures for a smoother flow of information
at all levels and between all parts of the organisation.
• With integrated workflow management and access to up-to-the minute information, R/3 lets
employees assume greater responsibility and work more independently.

4.8.7 R/3 Modules
• R/3‘s applications are modules. They can be used either alone or in combination with other
solutions.
• From a process oriented perspective, greater integration of applications increases the

benefits derived.
The following are the R/3 modules:
• Financial accounting collects all the data in our company relevant to accounting, provides
complete documentation and comprehensive information, and is at the same time an up-to-
the-minute basis for enterprisewide control and planning.
• Treasury a complete solution for efficient financial management that ensures the liquidity of
our company worldwide, structures financial assets profitably and minimises risks.
• Controlling a complete array of compatible planning and control instruments for company-
wide controlling systems, with a uniform reporting system for coordinating the contents and
procedures of our company‘s internal processes.
• Enterprise controlling continuously monitors our company‘s success factors and

performance indicators based on specially prepared management information.
• Investment management offers integrated management and processing of investment

measures and projects from planning to settlement, including pre-investment analysis and
depreciation simulation.
• Production planning provides comprehensive processes for all types of manufacturing: from
repetitive, make to-order and assemble-to-order production, through process, lot and make-
to-stock manufacturing, to integrated supply chain management with functions for extended
MRP-II and electronic Kanban, plus optional interfaces for PDC, process control systems,
CAD and PDM.
• Materials management optimises all purchasing processes with workflow-driven

processing functions, enables automated supplier evaluation, lowers procurement and
warehousing costs with accurate inventory and warehouse management and integrates
invoice verification.
• Plant maintenance and service management provides planning, control and processing of
scheduled maintenance, inspection, damage-related maintenance and service management to
ensure availability of operational systems, including plants and equipment delivered to
customers.
• Quality management monitors, captures, and manages all processes relevant to our quality
assurance along the entire supply chain, coordinates inspection processing and initiates
corrective measures and integrates laboratory information systems.

• Project system coordinates and controls all phases of a project, in direct cooperation with
Purchasing and Controlling, from quotation to design and approval, to resource management
and cost settlement.
• Sales and distribution actively supports sales and distribution activities with outstanding
functions for pricing, prompt order processing and on-time delivery, interactive multilevel
variant configuration and a direct interface to Profitability Analysis and Production.
• Human resources management provides solutions for planning and managing our
company‘s human resources, using integrated applications that cover all personnel
management tasks and help simplify and speed the processes.
4.8.8 R/3-Open for Customised Strategic Information Management

• With SAP‘s Business Workflow ®, the fetters of conventional methods of operation are
changed. Integrated workflow technologies and applications link company-specific work
processes to the business processes of the R/3 System. Workflow applications automate and
control the flow of information, and transport documents such as orders or invoices from one
work centre to another, and from one employee to another.
• Workflow management with R/3 speeds the flow of budget releases and purchase
requisitions, increases the efficiency of change management in engineering/design and
manufacturing and simplifies subsequent processing of documents transmitted by fax or EDI.
R/3 also works well with third-party workflow solutions.
• The openness of R/3 strengthens our independence. When we use R/3, we are free to choose
our technical infrastructure. We determine which hardware, operating systems, or databases
we want to use.
• The entire range of offerings from the leading international vendors is open to us. We can
even plan our IT strategy with various systems from different manufacturers.
• Most importantly, the openness of R/3 safeguards our investment in the long-term. As our
company grows, R/3 grows with us and if we change our hardware environment, R/3 stays
with us without jeopardising our software investment. R/3 works seamlessly with a variety of
systems and applications. That gives us many different options for useful add-on applications
and cooperative information processing. The Business Framework of SAP‘s strategic product
architecture enhances this openness.
• Object-oriented interfaces allow specific business functions to operate as standalone

software products without any loss of integration. Alongside the benefits of greater
cooperation and flexibility, the business framework speeds up the software maintenance and
product rollout cycles.
4.8.9 Distributed Applications

• R/3‘s innovative technologies do more than just ensure an optimal flow of information
within your R/3 System.

• SAP Application Link Enabling (ALE) permits the seamless incorporation of autonomous
application systems and components in a business communication is network.
• How does that help us? For example, we can install R/3 systems at corporate headquarters
or in plants, branch offices, or subsidiaries so that they can perform their own tasks
independently. • When these business messages are exchanged between these systems, the
ALE services ensure time-controlled and event-driven communication.
For example, that master data can be updated, periodic results from sales offices can be
transmitted to headquarters, or planning data and inventory information can be exchanged
between local and central areas of the company.
• The same applies for the integration of business processes and information from R/2®
applications, third-party solutions, and independent R/3 components.
• The openness of R/3 sets the pace in the market for client/server software. One can: ‚ link
together R/3 systems or loosely couple distributed R/3 applications ‚ link both third-party
software and popular desktop programs such as MSWord, MS Excel, and MS Project to R/3
applications ‚ integrate specialised systems for computer-aided design (CAD), plant data
capture (PDC), or mobile data entry ‚ incorporate industry-specific solutions, such as
laboratory systems or geographic information systems (GIS) ‚ include enhancements to R/3
applications, such as systems for production optimisation and transportation planning ‚ open
up new business opportunities with e-commerce, thanks to direct cooperation between R/3
and the Internet ‚ use Java technology to make R/3 available to our users with a familiar GUI
on the Internet ‚ include fax, e-mail, optical archiving systems and multimedia tools in the
R/3 System‘s business applications ‚ electronically transmit via EDI, receive and process data
from R/3 applications ‚ build cooperating groups of solutions between R/3 applications and
SAP‘s R/2 system
4.8.10 R/3 and the Internet

• The gateway to the markets of the future is the Internet. It lets us reach new customers
worldwide, shorten information paths between business partners, and involve all staff in
online communications.
• The key to all of this is R/3 with its diverse Internet applications.
• No other technological development has had such a profound impact on the business world
as the Internet. The intelligent use of Internet technology in business processes is turning into
a critical success factor for many customers. Electronic commerce means making our current
offerings available to prospective clients worldwide, around the clock, 365 days a year.
• For example, our customers can use the Internet to trigger certain business processes in your
R/3 System such as purchase orders and then immediately receive information about
availability, prices and delivery dates.

• The Internet lets us address potential customers and suppliers around the world at a
relatively low cost. In addition, direct data entry by customers or data exchange with
suppliers significantly accelerates your business processes whichever platform you may use.
• Ordering processes can even be fully automated by letting R/3 generate purchase
requisitions, delivery notes, delivery data and invoices.
• When you use Internet technology for our in-house communications, our employees benefit
in the same way as our customers and business partners.
• In addition, in local intranets, we can make selected R/3 functions available for use by all
staff.
For instance, we can move data entry and maintenance to where the data is actually
generated. • SAP‘s multimedia-enabled, user-friendly interface of R/3 Internet applications,
ensures that even untrained users have no difficulty in working with these selected functions.
• In addition to these specially designed Internet applications, R/3 offers us yet another
attractive option. We can give your staff direct access to R/3 from the Internet, using a GUI
that is already familiar to them. This is thanks to the state-of-the-art Java technology, which
means that whatever hardware and software is in use, R/3 can be accessed at any Internet
work centre, anywhere in the world.
4.9 SAP‟s Business Engineer

• For efficient implementation and use of R/3, the Business Engineer installs and customises
R/3 quickly and smoothly, at minimum cost and with maximum reliability. • Fully integrated
into the R/3 System, the Business Engineer supports in analysing, designing and configuring
business processes. As a result, one not only saves considerable time in implementing R/3
and in subsequently customising the system as business needs change, but it also greatly
reduces the cost. • The Business Engineer delivers a complete toolkit that greatly facilitates
the implementation of R/3 and the engineering of business processes. • For example, the R/3
Procedure Model guides through the different project phases step-by-step from project
generation to going live. Therefore, one can be sure that he/she is always on the right track. •
A wide range of tried-and-true, graphically portrayed business scenarios and processes are
stored in the R/ 3 Reference Model. From this wealth of experience, the best possible
processes can be chosen for the company. • At the same time, one can use the model to test
the complete suite of options ourselves in a real-world environment. The processes selects,
then automatically determine the contents of individual Implementation Guide, which leads
through all the activities, which are essential for optimum custom system configuration. • The
Business Engineer ensures quick and high-quality customisation of R/3 with the support of
the Business Engineer, project teams and external consultants will get R/3 up and running in
no time. • Easy-to-understand documentation of all the system settings is automatically
generated, so that one can access it whenever required. • If a company needs to reorganise or
enter new fields of business to seize new market opportunities, one can dynamically adapt
R/3 System to respond to such changing needs. • Without disrupting regular operations, the
Business Engineer speedily extends R/3 for new functions and likewise, makes adjusting

after an upgrade very simple. • In short, as an integral component of R/3 software, the
Business Engineer guarantees an easy and optimal customisation of R/3 system to
accommodate current business requirements.
4.9.1 SAP Advantage

• R/3 unlocks the client/server world for us. In these open architectures, applications are
distributed across a number of computers that communicate with each other through a
network. • R/3 offers integrated solutions for client server information processing that
combine a variety of products and services, to create a smoothly functioning communications
network. • R/3 incorporates not only system management, but also network administration
and backup solutions. SAP‘s partnerships with hardware manufacturers, database providers
and technology and service companies play a significant role here. • In client/server
architectures, database systems take care of managing enterprise data. They communicate
with application servers that coordinate the actual applications and control communication
with the database. • At the client level, where the end users work, the cycle of tasks is
appropriately distributed across various computers and it concludes with a presentation of the
results on the desktop. Benefits: • Cooperative client/server processing distributes
applications and computing capabilities almost at will across multiple levels, and
systematically takes advantage of the strengths of different hardware and software
components. • Whether we use R/3 in two- or three-tier client/server architectures, locally or
worldwide choose the best solution for our needs. • The number of workstations we include
with R/3 in our client/server solution is determined solely by our particular needs.
• R/3 is infinitely expandable, and can be used in client/server architectures with any-where
between 30 and 1000 end users. This scalability ensures that R/3 can always grow with our
requirements.
4.10 BAAN Company

• The company founded in the Netherlands in 1978 by Jan and Paul Baan brothers, Baan
Company has dual headquarters in Barneveld, The Netherlands and Reston, Virginia, United
States of America. Since 1995, the Company has significantly expanded its sales and service
presence in North America, Latin America, Europe and Asia. • Baan Company is a leading
global provider of enterprise business software. • Baan Company offers a comprehensive
portfolio of best-in-class component-based applications for front office, corporate office, and
back office automation. These applications are in use at over 7,000 customer sites worldwide.
Baan Company products reduce complexity and cost, improve core business processes, are
faster to implement and use, are more flexible in adapting to business changes and optimise
the management of information throughout the entire value chain. • Baan Company‘s product
family offers on-going delivery of open components for enterprise applications, including a
comprehensive and flexible suite of year 2000-compliant software solutions and best-in-class
business modelling tools. • These tools are based on a flexible, multi-tier architecture, which
can scale to meet the needs of small, medium and large enterprises. • Baan Company makes
this possible with its open architecture, which enables customers to migrate to new
technologies and product releases at their own pace. • Referred to within Baan Company as
Dynamic Enterprise Modelling Strategy Execution (Baan DEMSE), this unique approach
puts business requirements at the heart of the implementation process.
4.10.2 Technology and Products
• Over the past 14 years, Baan Company has evolved from pioneering the Enterprise
Resource Planning (ERP) software market to now offering the most complete set of single-
vendor enterprise business applications. • The foundation for Baan‘s products is
differentiated through their open component architecture and with BaanDEM. BaanDEM
provides a business view of the enterprise via graphical process/model-based views, tailored
or templated to the specific needs of industry groups or individual customers. • BaanDEM
delivers the capability to rapidly configure and re-deploy Baan Company applications from a
single view, helping to ensure that the Baan Company enterprise application accurately
reflects a company‘s most current organisational structure, business practices and operational
procedures. • Baan‘s product line features multi-tiered architecture for maximum scalability
and flexible configuration. Applications are isolated from the systems environment, enabling
support of new hardware, operating systems, databases, networks and user interfaces without
any modification to the application code.
• Baan Company supports popular UNIX platforms, as well as Microsoft NT and was the
first solution provider in its class to earn the ‗Designed for Microsoft® BackOffice‘ logo
certification. • Products also support major relational database systems (Oracle, Informix,
DB2, Sybase and Microsoft SQL Server), and are Year 2000 compliant. • Built on a
commitment to reduce the complexity of IT solutions, the Baan product portfolio assembles
best-ofclass components, keeps them ―evergreen‖ through on-going release cycles, and
enables enterprises to update their information infrastructure in manageable, incremental
initiatives. • Three advantages distinguish each component element within the Baan Series-
based family of products including, best-in-class components; evergreen delivery; and
version independent integration. • The Baan Series-based product family includes Baan
Enterprise Resource Planning (BaanERP); Baan Front Office; Baan Corporate Office
Solutions; and Baan Supply Chain Solutions.
4.10.3 Serving Vertical Industries Aerospace and Defence (AandD)
• Baan offers specific vertical industry solutions for aerospace and defence companies
engaging in multi-level projects and contracts. • Baan‘s AandD offering includes Baan
Project to enable the effective management of key functional business process areas. • This
unique, industry specific approach solves the problems faced by organisations engaged in
large, extensive projects. Today, Baan is recognised as the leader in the Aerospace and
Defence industry segment for ERP. Automotive • Baan also offers specific vertical industry
solutions for automotive companies. Many of the world‘s leading automotive companies use

Baan‘s business applications to support worldwide manufacturing, distribution and financial
operations. • Baan‘s product suite offers automotive companies next-generation information
technology across manufacturing, supply chain and front office operations. • With Baan,
businesses choose best of breed components, add functionality without complex and costly
upgrades and integrate Baan Company enterprise applications with existing and third party
applications. • The Baan Series-based family of products delivers real-time information
across the entire value chain, from engineering design to manufacturing, distribution and
financial reporting.
4.10.4 BaanERP Modules
• BaanERP, the successor to Baan IV, is a proven enterprise resource planning software
application. • It is fully integrated and provides exceptional functionality across the
enterprise. • BaanERP consists of a number of interdependent components that can be
deployed to meet business needs. • The flexibility within BaanERP allows customers to
maximise the benefits of both best-in-class solutions and a fully integrated, high-performance
system. • BaanERP includes the following components: manufacturing, finance, project and
distribution. • Manufacturing Module (includes Bills of Material, Cost Price Calculation,
Engineering ‗Change Control, Engineering Data Management, Hours Accounting, Product
Classification, Product Configuration, Production Control, Production Planning, Project
Budgeting, Project Control, Repetitive Manufacturing, Routings, Shop Floor Control, Tool
Requirements, Planning and Control, Capacity Requirements Planning, Master Production
Scheduling and Material Requirements Planning). • Finance Module (includes Accounts
Payable, Accounts Receivable, Financial Budgets System, Cash Management, Financial
Reporting System, Fixed Assets, General Ledger, Cost Accounting and Sales Invoicing). •
Project Module (includes Project Budget, Project Definition, Project Estimating, Project
Invoicing, Project Monitoring, Project Planning, Project Progress and Project Requirements
Planning). • Distribution Module (includes Sales Management, Purchase Management and
Warehouse Management).
4.10.5 BaanERP Tools
• BaanERP Tools consists of a number of software components, which together form the
technical foundation for all BaanERP components. • The BaanERP Tools can be described as
a computing platform that provides an independent, flexible, open and distributed computing
and development environment. • The open architecture of the BaanERP tools makes it
possible to: • Quickly react to new trends in the marketplace that require software or software
configuration changes. • Develop the Baan applications in such a way that they are kept
independent of third party products such as hardware, operating systems and databases. •
Easily integrate with third-party products. • Create customer-specific solutions. Run tools •
The purpose of the run-time tools is to make BaanERP packages independent from
computing-environmentspecific issues, such as platform, operating system, middleware,
databases and user interfaces. • The run-time tools are developed in C/C++ and/or Java. Run-
time tools • allows Baan application developers to focus on application-specific issues only •
removes the overhead of developing and generating a native application code for each
combination of platform, operating system, database and so on • greatly reduces the
complexity of providing and maintaining application product updates • reduces the overhead
of ensuring cross-platform compatibility by bundling and maintaining computerenvironment-
specific code separately from the BaanERP applications
4.10.6 Software Development and Administration Tools
• In addition to the application functionality, the BaanERP suite contains ERP Tools. • This
particular Tools environment contains functionality for installation, configuration,
administration, and modification of the ERP applications, or the creation of entirely new
applications based on run-time tools. A few of the key features are: • Software configuration
management offersthe ability to create, modify, and test BaanERP software components in a
run-time environment that does not affect the live environment. It includes functionality for
detailed tracking and version control of modifications. • Authorisation management system
Allows for the detailed management of user privileges, either per individual or per role. •
Database management system enables a single environment to manage database related
issues, regardless of the database(s) used. • Exchange control, a utility to exchange static or
dynamic data between BaanERP installations or between BaanERP and third party products.
• Dynamic Form Editor A Windows NT client used to create or modify BaanERP forms. The
Dynamic Form Editor allows the dragging, and dropping, of form elements and automates the
process of consistent positioning of form elements. • 4GL Program Editor Developers can
modify BaanERP or create add-ons using BaanERP 4GL development language, which is
similar to C++ in syntax and structure. • The 4GL environment automates many of the user
interface and event handling issues, which allows the developer to focus on the required
functionality. ‚ software installation maintenance ‚ application configuration ‚ device
management ‚ job management ‚ audit management • management of domains and tables •
management of labels, menus, reports and charts • Ad-hoc SQL queries • translation and
documentation facilities • desktop management • control features for distributed data
collection and OLE The Software Development and Administration Tools environment also
features: Customers and partners • Baan Company and its partners work closely with
customers to insure the success of every installation, and to enable customers to achieve the
highest level of self-reliance desired. • Baan Company is committed to providing solutions
that meet the unique needs of all major vertical markets. The company‘s blue chip customer
base includes industry leaders such as Boeing, Philips, Mercedes Benz, Nortel, Fujitsu
Network Communications and Motorola. • Baan Company aims to ensure that every
interaction its customers have, is in line with its ―Three 1‖ philosophy: ‚ Integrity: In its
interactions with its customers, colleagues, partners and shareholders ‚ Innovation: In what it
builds and how it delivers ‚ Initiative: In the speed and focus, it brings to all aspects of its
market opportunity. • Baan Company has marketing and development partnerships with
leading consulting, hardware and software companies including Microsoft, IBM Corporation,
Intel, Compaq Computer Corporation, Hewlett-Packard and Silicon Graphics. • Through its
alliances, Baan Company offers packaged, pre-tested solutions, and ensures interoperability
with optimisation for the most popular databases, middleware and hardware systems, while
accelerating the development of next-generation capabilities. • Baan Company‘s software

alliances bring added openness, robustness and flexibility to Baan Company‘s software
solutions and give Baan Company‘s customers a high level of interoperability with
complementary software applications. • The Baan Certified Applications Provider Program
provides its customers with alliance software solutions that are truly connected to the Baan
Company‘s enterprise application, are reusable, and are generally available for a wide variety
of customers. Global support, education and consulting Support • Baan Global Support is a
company‘s best source for fast, consistent problem resolution, as well as preventive technical
advice.
• Baan Global Support offers a broad range of support services, including telephone support,
Critical Incident Support, an Interactive Support Website and an on going Subscription to
Innovation. • Baan Company has closely linked Implementation Solution Centres around the
world, which support internal, and third party implementation consultants as well as
customers. • Baan Company also assists customers in establishing on-site competence centres
to manage all aspects of the implementation and ongoing systems use. Products are available
in 59 countries through both direct and indirect channels, and are translated into more than 20
languages. • Baan Education: • As a partner in lifetime learning, Baan Education helps
maximise the return on investment in people and technology.
• Baan Education addresses the education needs of everyone in an organisation from newly
hired employees to seasoned professionals who are maturing with technology. • Baan
Education offers new Internet-based learning called Virtual Campus. With Baan Education, a
partner can realise the company‘s goals of profitability, productivity and competitive
advantage. • Baan Education‘s process-based curriculum, addresses not only specific Baan
Company‘s enterprise applications, but also provides an in-depth understanding of the
business processes that its applications automate.
Thus, Baan Company extends education beyond simple functionality, taking into account the
context within which its applications are used in their manufacturing, sales, financial, and
technical environments. • This lifetime learning approach means that a company‘s workforce
is always abreast with the latest technology and business developments. Baan Consulting •
Baan Consulting is dedicated to implementing Baan Company enterprise applications around
the globe. • In addition to the thousands of customers served by its consulting partners, Baan
Consulting has a successful record of accomplishment with well over 1,000 customers
worldwide, in almost every business environment. Baan Consulting provides a wide range of
services, such as Project Management, Business Consulting, Application Consulting and
Technical Consulting. • Throughout the implementation and after a company goes live, Baan
Consulting is by its side with its Internetbased Baan Cyber Consult offering.
4.11 Oracle Corporation

• Oracle Corp. (founded in 1977) is the world‘s second largest software company and the
leading supplier of software for enterprise information management. • With annual revenues
exceeding $ 8.0 billion, the company offers its database, tools and applications products,

along with related consulting, education and support services. • Oracle employs more than
41,000 people in more than 145 countries around the world. • Headquartered in Redwood
Shores, California, Oracle is the first software company to implement the Internet computing
model for developing and deploying enterprise software across its entire product line:
databases and relational servers, application development and decision support tools and
enterprise business applications. Technology • Oracle software runs on network computers,
personal digital assistants, set-top devices, PCs, workstations, minicomputers, mainframes
and massively parallel computers. • Oracle, the latest version of Oracle industry‘s leading
database, is the database for Internet Computing. Oracle‘s family of database, networking,
and gateway products enable corporations to access any data, on any server, over any
network, from any client device. • Oracle‘s Warehouse Technology Initiative (WTI), one of
the fastest growing and most comprehensive alliance programs in the data warehousing
industry, provides customers with a complete data warehousing solution, based on the
industry-leading Oracle database and more than 60 complimentary third-party software
products and services. WTI is designed to increase the quantity and quality of Oracle-based
data warehousing solutions, provide customers with greater choice, specialised tools, Oracle-
optimised products and streamlined support as they build data warehouses. • Oracle‘s
integrated Business Intelligence solutions deliver powerful capabilities to users anywhere in
the enterprise, at any time. End users benefit from intuitive tools that provide easy access to
business data and fast answers to any question.
• Oracle‘s Business Intelligence family of products includes integrated releases of Oracle

Reports, Oracle‘s enterprise reporting tool; Oracle Discoverer, Oracle‘s award-winning ad-
hoc query and analysis tool; and Oracle Express, Oracle‘s industry-leading enterprise online
analytical processing (OLAP) engine. Oracle also offers pre-built OLAP applications - Oracle
Financial Analyser and Oracle Sales Analyser— to reduce further implementation time and
costs.
• Oracle Applications is a leading provider of packaged and integrated front office and ERP
solutions for the enterprise and a division of Oracle Corporation, the world‘s second-largest
software company and the largest supplier of software for information management. • Oracle
Applications‘ strategy is to offer all the enterprise solution components-proven applications,
advanced technologies, business expertise, and partnerships required-to enable customers to
execute strategies quickly, manage the risk of change and lead their respective industries. •
Oracle Applications is the only suite of enterprise business applications from a major
Enterprise Resource Planning (ERP) vendor that follows the Internet Computing model.
• Each of the over 45 modules for financials, human resources, manufacturing, supply chain
and front office automation is web enabled, allowing it to be deployed on corporate intranets
with no software, other than a browser, required on users‘ desktops. • This architecture allows
companies to shift the complexity of application management, maintenance and upgrading
from users‘ desktops onto centralised, professionally managed servers, thereby dramatically
reducing the cost of deploying and administering software. • By minimising network traffic,
this approach also makes it economical to deploy the applications over Wide Area Networks

(WANs) to hundreds or thousands of users, making it possible to distribute critical business
information much more broadly than is feasible in the client/server model.
• Oracle Applications further exploit the low-cost and universal access inherent in the
Internet Computing model, by providing a set of applications specifically designed for secure,
self-service business transactions across the Internet and corporate intranets. These
applications are integrated with Oracle Workflow to automate completely business processes.
• Oracle Applications comprise of 45-plus software modules, which are divided into the
following categories: ‚ Oracle Financials ‚ Oracle Human Resources ‚ Oracle Projects ‚
Oracle Manufacturing ‚ Oracle Supply Chain ‚ Oracle Front Office • More than 6,000
customers in 76 countries use Oracle Applications. • Available in 29 languages, Oracle
Applications lets companies operate in multiple currencies and languages, support local
business practices and legal requirements, and handle business-critical operations across
borders.
A brief overview of the Oracle Application categories is given below:

Financials Oracle
• Financial Applications can transform a finance organisation into a strategic force. In today‘s
fast-moving corporate arena, organisations require access to critical financial management
functions. • With Oracle Financial Applications, companies will be able to work globally,
lower their administrative costs, close their books faster and improve cash management while
providing the strategic information required for making timely and accurate decisions.
Projects Oracle
• Projects Applications improve operational efficiency by providing an integrated project

management environment that supports the full lifecycle of every project in your enterprise,
increasing top-line revenue growth and bottom-line profitability.
• As the bridge between operations systems and corporate finance, Oracle Projects
Applications provide a central repository of validated cost, revenue, and billing and
performance data associated with your business activities or projects.
Human Resource Oracle
• Human Resources Well-managed human resources directly improve the bottom-line and
contribute to competitive advantage. • The ability to hire, motivate and retain the most
capable workforce; engage employees and line managers directly in managing their skills and
careers; and provide comprehensive and up-to-date workforce information for management
on a global basis are a few of the characteristics important for success. • The Oracle Human
Resource Management System (HRMS) provides comprehensive facilities for organisations
to achieve such goals.
Manufacturing Oracle

• Manufacturing Applications are the industry-leading mixed-mode manufacturing solution
that enables companies to achieve market leadership by becoming more customer-responsive
and efficient. • This product family supports companies from small, single-facility
environments to multi-plant, global manufacturers with complex requirements. • Oracle
Manufacturing Applications help companies increase revenue, profitability and customer
loyalty by universally capturing demand, planning the extended enterprise in one rapid step
and by ensuring that the most efficient manufacturing process is used to produce each
product.
Supply Chain Oracle
• Supply Chain Management Applications simplify supply-chain processes by providing a

single, integrated environment for managing the extended enterprise. • From our suppliers‘
suppliers to our customers‘ customers, Oracle enables effective trading partner collaboration
and supply-chain optimisation capabilities that are vital to gaining and sustaining competitive
advantage. • Oracle Supply Chain Management Applications help in increasing market share
while improving customer service and minimising costs across the networked supply chain.
Front Office Oracle
• Front Office Applications provide a true customer centric approach, allowing usto better
understand our customer relationships, their value and profitability. • Oracle Front Office
Applications increase top-line revenues, decrease sales and service costs, and maintain
customer retention and satisfaction. • The sales, marketing and service solutions provide deep
integration with the entire enterprise suite of applications, and enable us to attract and retain
profitable customers through a unified set of deployment channels, including Web mobile
and call centre.
4.11.2 Vertical Solutions
Oracle also provides vertical solutions with a full line of modular product components aimed
at the unique requirements of many major industries, including automotive, aviation,
aerospace and defence, communications, consumer packaged goods, energy downstream,
energy upstream, financial services, high-tech, public sector and utilities.
4.12 PeopleSoft Incorporation

• PeopleSoft Inc. was established in 1987 to provide innovative software solutions that meet
the changing business demands of enterprises worldwide. It employs more than 7,000 people
worldwide. • The annual revenue for the year 1998 was $ 1.3 billion. PeopleSoft‘s mission is
to provide innovative software solutions that meet the changing business demands of
organisations worldwide. • PeopleSoft develops markets and supports enterprise-wide
software solutions to handle core business functions including human resources management,
accounting and control, project management, treasury management, performance
measurement and supply chain management.

• PeopleSoft provides industry-specific enterprise solutions to customers in select markets,
including communications, financial services, healthcare, manufacturing, higher education,
public sector, services, retail, transportation, US federal government and utilities. • The
company also offers PeopleSoft Select, a complete packaged solution including software,
hardware and services to address the needs of medium-sized organisations. • PeopleSoft‘s
innovative use of technology empowers individuals to make informed decisions and delivers
the flexibility that allows dynamic organisations to manage constant change
. • Based on multi-tier client/server architecture and using advanced workflow technology,

PeopleSoft products support clients running Microsoft Windows and popular Web browsers,
as well as a range of mainframe, midrange and LAN relational database server platforms. •
PeopleSoft solutions run on a variety of leading hardware and database platforms, including
Compaq, HewlettPackard, IBM, Sun Microsystems, Informix, Microsoft SQL Server,
Sybase, DB2 and others.
• PeopleSoft delivers Web-enabled applications, workflow, online analytical processing

(OLAP), etc. PeopleSoft has over 2,900 customers in nearly every industry and geographic
region in the world, including a large crosssection of the Fortune 1000. • The company‘s
products are sold through direct sales offices and distributors in the United States, Canada,
Europe, Asia/Pacific, Latin America and Africa. • With award-winning customer service,
PeopleSoft dedicates approximately 47 per cent of its staff to customer service in the areas of
account management, product support, professional services, education services and
communication services.
4.12.2 Business Management Solutions
• PeopleSoft solutions extend across the globe. The applications help in managing a broad
set of business processes, from human resources and finance to supply chain management. •
One can implement a single application, or a complete enterprise-wide solution. The flexible
design lets us tailor the applications to our specific needs.
• The PeopleSoft‘s business management solutions are in the areas given below: ‚ human
resources management ‚ accounting and control ‚ treasury management ‚ performance
measurement ‚ project management ‚ sales and logistics ‚ materials management ‚ supply
chain planning ‚ service revenue management 10 procurement
4.12.3 Commercial Solutions Supply Chain Management
• PeopleSoft has the industry‘s only complete enterprise resource planning solution that is
built around supply chain optimisation. • A Demand Planning module enables sophisticated
forecasting, using both real-time and historical information. PeopleSoft‘s complete suite of
Supply Chain Management products provides comprehensive support for any organisation
that produces or markets a physical product. Service Industry Solutions • PeopleSoft also
provides a complete commercial support solution for service industries. The Service Revenue
Management suite features modules supporting the tracking of time and labour, payroll
processing, project management and billing, as well as expense and receivables processing. •
A suite of Procurement modules is also available supporting purchasing, inventory
management, payables and expense processing, and asset management.
4.12.4 Industry Solutions
• PeopleSoft supports industry-specific market initiatives in many business sectors. The

initiatives include industry-specific products, customisation of existing applications, and sales
and marketing support through direct channels and business alliances. • PeopleSoft has 11
distinct business units, which provide software solutions specific to a broad range of public
and private sector industries. • Industry-partners help make the solutions comprehensive,
spanning the enterprise from the back office to the front lines.
• From service and manufacturing to education and government, PeopleSoft solutions are
global, enterprise-wide, and tailored to unique industry requirements. The different business
units are: • communications • federal government • financial services • healthcare • higher
education • manufacturing • public sector • retail • service industries • transportation • utilities
4.12.5 People Tools
• People Tools is an integrated set of client/server business application development and

customisation tools from PeopleSoft. • These tools enable customers to implement, tailor and
maintain PeopleSoft applications as well as to extract, analyse and manipulate data. People
Tools includes several tools for reporting, customisation, and workflow.
4.12.6 Technology
• PeopleSoft continually adds and refines technology to optimise their customers‘ information
systems. They help customers take advantage of new and emerging technologies, giving them
more choices and freedom to develop their own innovative business processes. Some of them
are given below: • Self-Service Applications to improve productivity throughout the
organisation, PeopleSoft focuses on providing the occasional user with easy access to
information and functionality specific to their role. • They have developed a set of self-
service applications to help companies quickly and cost-effectively distribute functionality
throughout the enterprise over the Internet, intranets and extranets.
• Built with an intuitive interface based on a standard Web browser such as Netscape
Navigator or Microsoft Explorer these Java-based, cross-platform applications enable
employees, customers, suppliers and other occasional users to perform self-service
administrative tasks easily. • Self-service applications are linked to PeopleSoft core product
lines, including PeopleSoft Accounting and Control, Human Resources Management and
Materials Management. • Web Client Self-service applications use the People Soft Web
Client. The Web Client is downloadable on demand and runs on a Web browser across
multiple platforms.
Its affordability, open architecture, and simplicity provide an ideal framework for delivering
enterprise solutions to a large number of people. • Applications do not need to be installed at
every desktop; they are accessed easily through a browser. In addition to supporting self-
service applications, the PeopleSoft Web Client has a Work list and Query interface to help
incorporate occasional users in the flow of a company‘s business processes and improve
access to information. Furthermore, all data transmitted between the Web Client and the
application server is encrypted for added security. Because the Web Client takes advantage of
People Tools, self-service applications can be deployed across the Internet or existing
corporate intranets with common business rules workflow logic and security features.
• Multi-tier Transaction Processing the ability to support large numbers of concurrent users,
while maintaining reliable and superior performance, is critical to enterprise-wide data
processing. • Recognising that PeopleSoft works in a variety of settings over local area
networks (LANs) and wide area networks (WANs), throughout organisations of varying sizes
there is an option of two-tier or three-tier processing. • In the latter, the application logic runs
on an application server instead of the client. The application server is designed to relieve the
client from processing intense SQL transactions, thereby reducing LAN traffic and improving
performance across WANs. • Three-tier architecture also provides increased scalability to
accommodate high volumes of concurrent users while maintaining a consistent and reliable
performance level. PeopleSoft continues to support its traditional two-tier architecture as
well.
• Online Analytical Processing companies must be able to quickly extract and analyse the
information they require for effective decision-making. OLAP or online analytical processing
is a powerful method for interactively analysing data online. • PeopleSoft integrates popular
OLAP tools - including Cognos Power Play and Arbor Essbase that enable users to easily
‗slice and dice‘ multidimensional data stored in various locations. • With the Cube Manager,
users can define the data they want to extract into an OLAP cube, enabling them to view
quickly information from all different angles to test conclusions, conduct what-if scenarios
and compare alternative strategies.
• With multidimensional information presented in quick-read formats, managers can make

better decisions, react faster to competitive threats and identify inefficiencies. • Workflow, an
essential part of our solution, PeopleSoft workflow capabilities help communications
companies achieve enterprise-wide integration of information, applications and people. •
Workflow enables a company to automate many time-consuming clerical tasks, while putting
useful data into the hands of users. With workflow, the company‘s PeopleSoft applications do
more of the work. • For example, if managerial approval is needed for a work order, the
system automatically forwards the request. Workflow can also help the company track
projects, by initiating a workflow message to the appropriate person when a project exceeds a
predetermined cost. • The company can even bring non-PeopleSoft users into the workflow
process, using e-mail systems and the Internet for collecting and distributing data.
4.12.7 Partnerships
• PeopleSoft has established global consulting agreements with Andersen Consulting,

Deloitte and Touché Consulting Group, KPMG Consulting (a part of KPMG Peat Marwick
LLP) and Price Waterhouse LLP, four of the world‘s leading consulting and systems

integration firms. • PeopleSoft also maintains relationships with more than 150 industry-
leading third-party vendors through its six Partnership Programs Application, Database,
Hardware, Implementation, System Integration and Workflow.
4.12.8 PeopleSoft Implementation Toolkit
• PeopleSoft has a modular application structure, which lends itself to the use of phasing an
incremental process by which we ‗bite off only what we can chew‘- during implementation. •
Yet it allows the riskier ‗big bang‘ approach when time-critical business needs must be
addressed quickly. A phased implementation helps to minimise risk and allows better
resource and overall project cost management.
• The PeopleSoft Implementation tool kit incorporates four phasing strategies: ‚ Geographical
- applicable when business practices and processes in various locations are independent
enough from one another to justify separate implementations. ‚ Departmental - our initial
phase is focused on full implementation for a given department; additional departments are
made operational during subsequent phases. ‚ Core and support processes - our first phase
encompasses critical, core business processes; subsequent phases focus on support processes.
‚ No phasing - some situations do not lend themselves to phasing. Examples include date
driven implementations (regulation effective dates drive action) and formation of new
business enterprises. • We can combine our phasing choice with one of these implementation
approaches: ‚ As delivered - this is the simplest approach, because we implement the
applications as delivered and adjust our business processes to match the system. ‚ By using
this approach, we are in essence reengineering our business operations, with PeopleSoft
functionality driving our requirements. ‚ Data modification approach is used when data
analysis, modification and clean-up are a primary focus of the implementation For example,
if implementation is driven by legacy data held in date storage formats that do not support the
Year 2000.
Legacy integration - useful when interfaces between legacy systems and PeopleSoft
applications are a significant factor in the implementation. This approach includes business
event analysis and early resolution of interface issues. ‚ Application sequencing - applicable
when our implementation involves multiple PeopleSoft applications. Using this approach, we
will focus initially on business processes supported by the first application we implement.
Then, as we implement other applications, we will concentrate on additional business
processes.
• Business Objectives and Events Pertinent: When in order to meet a set of business
objectives and their respective business events, our implementation also involves non-
PeopleSoft applications.
For example, to broadcast timely sales and collections information to the field, we would use
this approach to implement a sales-force automation application along with PeopleSoft
Financials. • The PeopleSoft Implementation Toolkit is engineered to support various
combinations of phasing strategies and implementation approaches, which we call routes. •
The PeopleSoft Implementation Toolkit helps in identifying the route that best suits our
implementation. Once a route is determined, it is then used to present guidance specific to our
type of implementation project. • By providing route-specific project plans and guidance, the
Implementation Toolkit gives usthe focus necessary to achieve a more rapid implementation.
4.13 System Software Associates, Inc. (SSA)

• SSA was founded in December 1981 and has its headquarters in Chicago, USA. SSA has its
presence in 91 countries and employees more than 2000 employees. • The 1998 revenues of
the company was $ 420.8 Million. The Company‘s product line, BPCS Client/Server V6, is
currently live or being implemented in more than 1,000 major industrial sector firms in over
4,000 sites worldwide. • SSA‘s vision is to be the best global partner to the world‘s industrial
sector companies. • SSA‘s mission statement, which has been the same since SSA was
founded in December 1981, is to provide competitive advantage for Clients through the
implementation of their business enterprise information system.
This mission statement is underwritten by six key goals:
1. Best client satisfaction -This means that the company wants their clients to achieve the
greatest possible business benefit from their relationship with SSA.
2. Single image worldwide - Means that the clients get the same high level of support and
expertise all around the world.
3. Enterprise solutions leadership - It means that the company is focused on building and
delivering solutions, which bring together the entire enterprise.
4. Proven leading technology - This means that every piece of technology applied by SSA
will already be proven for high transaction volume enterprise-wide applications.
5. Highly skilled and motivated professionals - It means that SSA is committed to having the
best professionals and resources in the application software business.
6. Strong financial results - This means that SSA can continue to invest in the improvement
of its software and professionals, and will be a stable partner in the long run.
4.13.2 BPCS Client/Server
• BPCS Client/Server is a comprehensive set of integrated client/server applications that

addresses the core system needs of industrial sector enterprises on a global scale. • BPCS
Client/Server covers Configurable Enterprise Financials applications, Supply Chain
Management applications, Multi-Mode Manufacturing and CIM applications, as well as
Electronic Commerce applications such as EDI. • BPCS Client/Server is based on SSA‘s
proven object technology foundation that ensures that it operates identically from an end-
user‘s perspective across any supported server, be it HP 9000, AS/400, or Windows NT.
• BPCS Client/Server products offer numerous full function applications with capabilities to
support solutions needed by the industrial sector. • Major objectives of industrial managers
have been to improve customer satisfaction, improve product quality, remain cost
competitive, and reduce the time in launching a product in the market.
• SSA‘s BPCS Client/Server products provide a wealth of features and functions enabling
industrial managers to achieve these objectives. • The Microsoft Desktop is the BPCS
Client/Server Desktop: The BPCS Client/ Server user interface is graphically and fully
compliant with Microsoft Windows 95. • The look and feel is the same as other Microsoft
desktop applications, resulting in a system that is easy to learn and use. • Examples of
Microsoft desktop functions include full use of hypertext and other point of demand
education, such as field sensitive help text, bookmarks, annotations and other Windows help
text functions. BPCS Client/ Server also includes hypertext linking related topics.
• The BPCS Client/Server graphical user interface includes icons, messages, scroll bars, tool
bars, pull-down menus, radio buttons, check boxes and other Microsoft desktop features. • In
addition, the BPCS Client/Server applications are interoperable with other Windows
compliant applications through the Windows cut-and-paste feature. • BPCS Client/Server is
used worldwide by more than 8500 companies, at 25,000 sites, and by 3,000,000 end users,
representing various vertical markets automotive, chemical, consumer goods, electronics,
fabrication and assembly, food and beverage, forest products and pharmaceuticals.
• SSA and its strategic partners provide full implementation support for BPCS Client/Server
in over 90 countries worldwide. • The BPCS Client/Server solution delivers unparalleled
agility and re-configurability to meet changing market demands, through a quantum leap
forward in ERP technology that delivers significant business benefits, including century
dating. • With BPCS Client/Server version 6.0, SSA has successfully addressed the most
crucial issues facing the ERP marketplace, the implementation and integration of package
applications.
• SSA has reduced time-to-benefit implementation cycles to 6-12 months, down from an
industry average of 1224 months. • At the core of BPCS Client/Server is its object-based
architecture, called DOCA (Distributed Object Computing Architecture), which is
specifically designed for enterprise-wide application in industrial sector companies.
• DOCA is optimised to support high transaction volumes in a functionally rich, distributed

data processing, client/server environment. • DOCA‘s object-based architecture provides
inherent flexibility, enabling the rapid reconfiguration of BPCS Client/Server applications.
This allows organisations to alter the solutions quickly and easily in response to new business
and market challenges.
4.14 QAD
• QAD was founded in 1979, and now has a presence in 21 countries and employs more than
1100 people. The company‘s products include MFG/PRO, on/Q, Service/Support
Management, Decision Support, and Qwizard. • The company‘s flagship product is its ERP

solution MFG/PRO. It is available in 26 languages and has more than 4,000 installed sites in
over 80 countries. The company got the ISO certification in 1995.
4.14.2 Products
• QAD offers a variety of supply chain and Enterprise Resource Planning (ERP) software
products to manufacturing industries within the automotive, consumer products, electronics,
food and beverage, industrial products and medical sectors. • QAD software optimises our
enterprise by increasing the speed of internal processes and by synchronising distributed
operations. • QAD‘s flagship product, MFG/PRO software, provides multinational
organisations with an integrated Global Supply Chain Management solution.

TERMINAL QUESTIONS
2 MARKS
1. What do you mean by Overhead cost controlling?

2. Define Activity Cost control
3. What is Shop floor control?
4. Define Personnel Management
5. Differentiate between Component tracking and equipment tracking
6. What is BAAN and SAP
7. What is Investment management ?
8. What is Cash management
9. What is Profit centre accounting?
10. What is Order management
4 MARKS
1. List out various ERP modules

2. What are the activities involved in Treasury module?
3. Write a brief note on Finance Module in ERP System
4. List out the advantages of Time management Module
5. Explain briefly the features of R3 application modules
6. Explain Market risk management.
7. Explain Warehouse management.
8. Give some Importance of Shop floor control
10 MARKS
1. Explain briefly the ERP systems and subsystems

2. Write a brief note on Enterprise Resource Systems
3. Compare and contrast various Finance Modules available in ERP sytems
4. Explain briefly the features of
a. SAP
b. R3
c. BAAN
d. Oracle
e. Peoplesoft
5. Describe Sales and Distribution Modules.

MODULE 5 : ERP IMPLEMENTATION LIFE CYCLE
5.1. The Implementation Challenge

There are some major challenges involved in implementing Enterprise Resource Planning
successfully. It goes like this:
1. It‟s a lot of work:

Implementing ERP as a new set of decision-making processes is a major undertaking
involving many people throughout the company, including general management. In essence,
the entire company must learn how to deal with demand and supply issues in a new way. The
speed of information flow with enterprise software combined with ERP‘s new approach to all
of the planning and execution systems represents a major shift in company thinking—and
that means a lot of work.
2. It‟s a do-it-yourself project:
Successful implementations are done internally. In other words, virtually all of the work
involved must be done by the company‘s own people. The responsibility can‘t be turned over
to outsiders, such as consultants or software suppliers. That‘s been tried repeatedly and hasn‘t
worked well at all. Consultants can have a real role in providing expertise but only company
people know the company well enough and have the authority to change how things are done.
3. It‟s not priority number one:
The problem is, the people who need to do it are already very busy with their first priority:
getting customer orders, making shipments, meeting payroll, keeping the equipment
operating, running the business. All other activities must be subordinate. Implementing ERP
can‘t be priority number one, but it does need to be pegged as a high priority within the
company, preferably the number two priority, right below running the business. Well, who
runs the business? People do. People starting with general managers1 as well as department
leaders in sales, manufacturing, finance, and marketing. Virtually everyone in the company
has a stake, including those who plan, produce, and sell the product at every level in the
business.
4. It‟s people-intensive:
ERP is commonly misperceived as a computer system. Not so. It‘s a people system made
possible by computer software and hardware.
5. It requires top management leadership and participation:

If the goal is truly to run the business better, then the general manager and staff must be
deeply involved because they and they alone have the real leverage over how the business is
to be managed. Changes made at a lower level in the organization won‘t matter much if it‘s
business as usual at the top. Bob Stahl says: ―I find that priority comes from a leader who

understands that ERP is tied to their future success. It becomes part of their defined ‗strategic
imperatives.‘‖
6. It involves virtually every department within the company:
It‘s not enough for just the manufacturing or logistics or materials departments to be on
board. Virtually all departments in the company must be deeply involved in implementing
ERP; those mentioned, plus marketing, engineering, sales, finance, and human resources.
7. It requires people to do their jobs differently:
Most companies implementing ERP must undergo massive behavior change to be successful.
ERP requires a new set of values. Many things must be done differently, and this kind of
transformation is never easy to achieve. Many people in general management will assume
that a massive software change such as an ES is sufficient to achieve major results. In fact,
this system simply moves more information faster and deeper in the company. If the actual
work processes don‘t change, then bad information moves more quickly and with dangerous
momentum across the company. ERP provides the work and people process to make sense
out of this rapid flow of data.
5.2 Pre-evaluation Screening

This is the first phase of the ERP implementation lifecycle. It is one of the most critical stages
where much attention should be given to all available options. Here, an enterprise looks at the
market to find the available vendors of the ERP system. It performs vendor evaluation and
analysis to pick the best and reliable vendor). It is the stage where a given company makes
the final decision on the package to acquire. This involves analysing all the packages
available in the market and picking the one that best fits the organization/company. The
advantage of the screening process is that it eliminates those packages that are not suitable for
the enterprise‘s business process. Selection is done on the few and best packages available
that match the business processes. An organization implementing the use of an ERP system
must perform this stage with great care to avoid problems in the proceeding stages.
Pre-evaluation Screening
• Once the company decides to go in for the ERP system— the search for the perfect package
starts. However, there are hundreds of ERP vendors of all sizes and shapes, all claiming to
have the solution that is ideal for us. Analysing all the packages before reaching a decision is
not a viable solution. It is also a very time consuming process. Therefore, it is better to limit
the number of packages that are evaluated to less than five.
• It is always better to do a thorough and detailed evaluation of a small number of packages,

than doing a superficial analysis of dozens of packages. Hence, the company should do a pre-
evaluation screening to limit the number of packages that are to be evaluated by the
committee.
• Not all packages are equal-each has its own strengths and weakness. The pre-evaluation
process should eliminate those packages that are not at all suitable for the company‘s
business processes. One can zero in on the few best packages by looking at the product
literature of the vendors, getting help from external consultants; and most importantly, by
finding out what package is used by companies, which are similar.
• It is always better to find out how the different packages are performing in environments
similar to ours. If one studies the history of the ERP packages and finds out how each
package evolved, it soon becomes evident that every ERP package grew out of the experience
or opportunity of a group of people, working in a specific business, who created systems that
could deal with certain business segments.
• It is generally accepted that most ERP packages are stronger in certain areas than in others,
and each one is madly trying to add functionality in areas where they have been lacking.
• For example, PeopleSoft is strong in HR and less so, in manufacturing, Baan, on the other
hand, is historically stronger in manufacturing than in finance and so on. As the companies
grew overtime, the ERP packages evolved.
• The experience gained from implementation, the feedback by the users, the need to enter
new markets and the pressure from competitors forced most ERP vendors to redefine and
expand the scope of the activities and functionality of their products.
• The concepts were expanded upon, new functions were introduced, and good ideas were
copied from others, and so on. But each package has a history (or origin) that determines in
which type of business it is best suited for.
• While making the analysis it would be a good idea to investigate the origins of the different
packages. Now, most packages cater to almost all business and service sectors. It would be
wrong to say that a system that was developed initially for manufacturing, is now not capable
of catering to the needs of another business sector, say, software development. The system
would have been thoroughly revamped and re-designed to cater to the needs of the diverse
business sectors that it is catering.
• However, it should be remembered that many ERP packages are still very good in some
areas, even though they are capable of catering to the needs of other sectors. Once we select a
few packages after the screening, we can start the detailed evaluation process.
5.3 Package Evaluation

• The evaluation/selection process is one of the most important phases of the ERP
implementation, because the package that we select will decide the success or failure of the
project.
• Since ERP systems involve huge investments, once a package is purchased, it is not an easy
task to switch to another one. Therefore, it is a ‗do it right the first time‘ proposition. There is
little room for error.
The most important factor that should be kept in mind when analysing the different packages
is that none of them are perfect.

• The idea that there is no perfect package needs to be understood by everyone in the
decision-making team. The objective of the selection process is not to identify a package that
covers each requirement (a perfect fit).
• The objective is to find a package that is flexible enough to meet the company‘s needs, or
in other words - software, which could be customised to obtain a ‗good fit‘.
• Once the packages to be evaluated are identified, the company needs to develop selection
criteria that will permit the evaluation of all the available packages on the same scale.
• To choose the best system, the company should identify the system that meets the business
needs, that matches the business profile and that which identifies with the business practices
of the company.
• It is impossible to get a system that will perform, exactly as the company does business, but
the aim should be to get the system that has the least number of differences.
• According to S. Shankar Narayanan, Senior Consultant with Baan Info Systems India Pvt
Ltd. (ERP Systems-Using IT to gain a competitive advantage), some important points to be
kept in mind while evaluating ERP software include:
 functional fit with the company‘s business processes

 degree of integration between the various components of the ERP system
 flexibility and scalability
 complexity
 user friendliness
 quick implementation
 ability to support multi-site planning and control
 technology-client/server capabilities, database independence, security
 availability of regular upgrades
 amount of customisation required
 local support infrastructure
 availability of reference sites
 total costs, including cost of license, training, implementation, maintenance,
customisation, and hardware requirements
• It is always better to form a selection or evaluation committee, which will do the evaluation
process.
• This committee should comprise of people from the various departments (the functional
experts), the top management (preferably the CIO or COO) and consultants (package
experts).
• The selection committee should be entrusted with the task of choosing a package for the
company. Since all business functions are represented and the management is involved, the
package that is selected will have company-wide acceptance.

• The package experts or the consultants can act as mediators or play the role of explaining
the pros and cons of each package.
Top 10 key criteria when selecting an ERP:
ERP is a software tool we all use and it is at the heart of our businesses helping us achieve
our goals. Selecting the right one for our business is one of the most important decisions we
will make. The decision has to be right. Here are some ERP system selection criteria that you
should bear in mind during your selection project.
1. Business requirements
2. Upper management support
3. User support
4. Functional requirements
5. Integration with existing systems
6. Budget and resources
7. Technology and future scalability
8. Total cost of ownership and ROI
9. Evaluate and select options
10. Necessary customization
ERP selection criteria #1: business requirements
Develop a clear and comprehensive list of your requirements for your ERP. Use every
resource available to make this list excellent. Talk to your production workers and your
purchasing manager. Listen to executive management, and your customers and
suppliers. Call in former employees and current salespeople. When every thought is written,
then prioritize the entire list. Reach a solid consensus as to which requirements are
absolutely ―must-have‖. The next priority tier includes things that are not mandatory but there
is general agreement that including them will benefit the company. Any other listed items are
in a lower category, merely ―nice to have‖.
ERP selection criteria #2: upper management support
This could seem like an obvious criterion. Too often, it is not recognized for its
importance. One can select the absolute best ERP for their organization, yet without upper
management support, the project is likely doomed. Support goes beyond simply getting
spending approval. You want your management to actively embody their support. When a
resource from another department is needed, the manager can throttle progress by providing
lukewarm support. When a choice arises to support the new ERP or use the present system,
you want confidence that the manager truly supports the ERP even if there is a short-term
cost at the point of the choice.

ERP selection criteria #3: user support
People in every functional area will be users of the new ERP. Gain their support by ensuring
their needs and desires are included in the requirements list. Those users, wherever they
work, will have much to gain through the success of your ERP implementation. Let those
users know they will have the support they need such as training and equipment they need to
use the ERP and receive value for them as well as for the overall organization. Make certain
they know they will have support helping them through the needed changes. In return, they
will support your efforts to use and benefit from your new ERP. Make sure here that the
documentation users will need is available when and where needed by users and is of
sufficient quality to meet their needs.
ERP selection criteria #4: functional requirements
Your business has certain functional requirements that must be satisfied even before your
change and update requirements. Does this ERP support sales orders that include both
physical products related and services? If that is what your business sells, it has to. Your
business operates in multiple countries around the globe. Do the accounting components of
ERP include multiple currencies and the ability to work with the variety of tax systems in
those countries?
Think about any ERP components not required by your business. If your business is
distribution and you perform no manufacturing, can you easily work around any work-in-
process demands made by an integrated inventory system included in some ERPs?
ERP selection criteria #5: integration with existing systems
Most businesses considering an ERP selection have other systems that are quite adequate for
their purpose and the business is not interested in changing multiple systems along with their
ERP. The question now to be asked: how will those systems integrate with ERP? Almost
always, there are common data elements. Can ERP read and use the existing data in that
other system? Will you allow the same data to exist and how will you keep those separately
updated data elements compatible? Will you be better served by changing the other system
to use that data from ERP?
What integration tools come with this ERP? It should have simple integration such as .csv
files for occasional data updates. That type of update is inefficient and likely too slow for
everyday use. Web services and XML files that allow different systems to quickly transfer
data between systems are a more modern way to work.
Many customers and suppliers use EDI (electronic data interface) to share data between
companies. If this is needed, be sure your ERP supports that need.

ERP selection criteria #6: budget and resources
How much money is available for an ERP system? If you only have $10, then you have to
have a very strict selection criterion. A 2019 Software Path report stated that on average you
can expect to spend about $7,200 on each user of your system - that's a big investment and a
reminder that ERP selection is a long-term consideration. Most ERP systems will be used for
a decade or longer so ongoing maintenance and support for the ERP as well as the
infrastructure related are a budget concern. Your choice today will lock costs into future
budgets.
Who is going to take the time and perform the work involved in selecting and implementing
ERP? Ideally, you can devote full-time resources to the project but many businesses will
want to use part-time resources. You need to plan who will perform the necessary work
those resources perform now while they devote time toward ERP.
ERP selection criteria #7: technology and future scalability
These concerns apply to the software used to develop your ERP system and to the hardware
required to use that ERP. We know there will be ongoing developments and improvements
in both domains. We might not want either to perform on the bleeding edge of technology but
neither do we want either one to use obsolete technology today. At the same time, we want
to buy our ERP from a provider that has a good record of accomplishment of keeping up with
technology developments and who promises to maintain that strategy.
ERP selection criteria #8: total cost of ownership and ROI
Add up all the incremental costs you will incur due to this ERP. There will be the initial
purchase amount and some initial consulting expense. You might need some updates to your
servers and networks immediately. You will spend money on training and temporary labor
while your people are implementing ERP. You will have support and maintenance costs
every year while you use the ERP.
At the same time, you will benefit from improvements in the cost to perform work. You
might see additional revenue because you now can provide services and products to your
customers that were not possible without this ERP.
Spread those costs and benefits over time and calculate your return on investment. Most
businesses have a threshold return needed before making an investment. Ensure that this ERP
passes your business ROI threshold.
ERP selection criteria #9: evaluate and select options
The traditional ERP system running on an on-premises server and supported by an in-house
IT staff is not the only choice today. Many businesses choose an ERP that runs in the cloud
using a SaaS framework. The initial investment is reduced in favours of monthly ―rental‖
payments that include the software and most support needs.
You can choose a hybrid approach where your business owns the ERP but operates it in the
cloud running on shared servers.
Many ERP systems today are developed using open-source software too. These benefit from
free or very low cost to acquire the software. You have the source code for open-source so
you have the power for complete customizations. Users everywhere update open-source
ERP and they find and fix bugs. Those improvements are available to all users immediately
with no need to wait for a development company to issue a new revision.
If you have concerns related to these options, your choice will point to what ERP system
selection criteria are essential for your business.
ERP selection criteria #10: necessary customization
The perfect ERP will never require any customization. Since none are likely to be perfect,
any customization will be a selection criterion. Understand among your team what
customization is desired and whether it truly is essential. Today‘s ERP systems use
knowledge gained from thousands of customers. Is there some component of your business
that is unique among every other business around the world? Not likely. If your desired
customization can be worked around easily using an existing ERP, that customization is not a
selection criterion. If that customization can be deferred while you use an existing ERP and
evaluated later, it is not immediately a criterion, but the ability to implement that
customization later is a criterion.
5.4 Project Planning Phase

• This is the phase, which designs the implementation process. It is in this phase that the
details of how to go about the implementation are decided.
• Time schedules, deadlines, etc. for the project are arrived at. The project plan is developed.
Roles are identified and responsibilities are assigned.
• The organizational resources, which will be used for the implementation effort, are decided
and the people who are supposed to head the implementation are identified.
• The implementation team members are selected, and task allocation is done. This phase will
decide when to begin the project, how to do it, and when the project is supposed to be
completed.
• This is the phase that will plan the ‗what to do in case of contingencies; how to monitor the
progress of the implementation; what control measures should be installed and what
corrective actions should be taken when things get out of control.
• The project planning is usually done by a committee constituted by the team leaders of each
implementation group. The committee will be headed by the ERP in-charge (usually the CIO
or COO). • The committee will meet periodically (during the entire implementation lifecycle)
to review the progress and chart the future course of actions.

5.5 Gap Analysis
• This is the most crucial phase for the success of the ERP implementation. Put very simply,
this is the process through which companies create a complete model of where they are now,
and in which direction they want to head in the future.
• The trick is to design a model, which both anticipates and covers any functional gaps. It has
been estimated that even the best ERP package, custom tailored to a company‘s needs, meets
only 80% of the company‘s functional requirements.
• The remaining 20% of these requirements present a problematic issue for the company‘s
BPR (business process re-engineering).
• One of the most affordable, albeit painful, solutions entail altering the business to ‗fit‘ the
ERP package, Of course, a company can simply agree to live without a particular function
(the cheap but annoying solution).
• Other solutions include:
 pinning our hopes on an upgrade (low cost but risky)

 identifying a third-party product that might fill the gap (hopefully it also partners with
the ERP packages, keeping interfacing to a minimum)
 designing a custom program
 altering the ERP source code, (the most expensive alternative; usually reserved for
mission-critical installations)
Importance of Gap Analysis in ERP Implementations
In today‘s competitive world, organizations need to continuously improve their processes and
streamline their operations to reduce costs and increase productivity. Manual systems can be
time-consuming and slow down the business processes due to rekey of information into
multiple systems. Furthermore, to add to the trouble, there are a lot of inaccuracies as well.
With the increasingly competitive market, it is essential that your company has all the
required info to guide you in making the right strategic decisions. When data is spread across
various systems and spreadsheets, it becomes increasingly difficult and time-consuming to
create reports that are needed to support key decisions.
ERP is one of the most important Business software which requires a proper planning and
GAP analysis for a proper and successful ERP implementation. This is the step which cannot
be skipped as this might result in unwanted results and failures.

What do we mean by Gap Analysis?
A gap analysis is the process of reviewing your current state and determining what you need
to do to move into your future state. In an ERP implementation, this means taking a close
look at the software you are using or plan to use.
During this process, you will ask questions like what needs to be added to or changed in
our ERP solution to help it fully meet our ongoing business needs.
Implementing software and hoping it works for years to come is wishful thinking. Regular
improvements are required to keep your system aligned with your business. Not only will this
reveal potential technical issues or shortcomings, but it gives you the opportunity to
reengineer business processes to stay productive, profitable, and competitive.
Gap analysis is done to know the business processes and working which help to implement
ERP system as per the requirement. After gap analysis is done then only a company can able
to find out the best and the easiest way to make changes in the practices or existing Business
processes to improve the day to day business activities.
In short, is can be said that gap analysis is just a comparison between the current business
processes and future improved business processes.
Some of the common issues in ERP Gap Analysis that companies normally need to look
into are:
 Streamlining day to day operations so as to improve productivity and profitability

 Recognize the need for collaborating with business partners
 Generate more insights for decision making
 Meeting regulatory requirements
 Adapting and scaling the business
What are the steps to perform an ERP Gap Analysis?

Step1 – Review your current workflows
Before you can reach your future state, you must understand your current state.
We recommend beginning a gap analysis by evaluating your current workflows. To do so,
you should identify all the processes within and between each department. Then, note how
each department interfaces with your current ERP software in the daily tasks they perform.
While it‘s easy to assume everything is working as it should, this exercise often reveals pain
points and workarounds that are impeding your company‘s progress.
Step 2 – Define objectives
Once you have gathered the details on your current state, it‘s time to define your top business
objectives. These objectives might be sales-related, service-centric, or growth-based. Often,
they relate to data visibility.
Note that these will likely differ from the goals you set when you first selected the ERP
system, and that‘s absolutely fine. In fact, it‘s to be expected.
Step 3 – Plan your next steps

This is where you will identify the missing pieces and determine your plan of action. You
might choose to optimize your system or supplement it with point solutions.
Before doing so, ask yourself what capabilities would help you achieve your goals and derive
continuous business value from your IT investments. It‘s easy to get carried away with
unnecessary change requests, so it‘s important to have strong change control in place to
ensure your implementation stays on-time and on-budget.
The gap analysis will give a complete overview of the system. It will inform the organization
or business, how much value the ERP system will precisely bring into the various business
processes. Even still, by completing the gap analysis, upper officials within the organization
can determine the most viable solutions to the company‘s needs. Considering the costs
involved with putting together an ERP system, running a gap analysis prior to doing so is
well worth both the time and energy involved.

What are the Gaps you may need to address?
The three-step process above can help you understand the areas in which your ERP software
could be improved or enhanced to propel your business forward.
However, it can be difficult to identify these gaps from the inside. When you work closely
with a system, its shortcomings often elude you.
That‘s why we have outlined some common gaps to get you started:
 Key Features or Functions Missing

Your business needs have evolved since your initial ERP selection. Now, there might be
important features and functions you need that weren‘t in your original requirements.
Take customer service, for instance. If you originally focused on sales and marketing
functions, you might have skimmed over service-related functions. Now, you‘re left with
lackluster tools unable to help your team track:
 Client complaints
 Warranty claims
 Service issues
Most organizations have at least one functional gap even if they conducted thorough software
requirements gathering sessions.
 Areas of Redundancy
At its core, an ERP system is meant to automate, streamline, and simplify your workflows.
However, if your employees are required to enter the same data into the same fields multiple
times, then you may need to go back to the drawing board.
In many cases, you may need to consider adjustments or integrations to ensure the seamless
flow of data among your various systems.
 Lack of Flexibility
If your ERP system isn‘t agile enough to keep up with evolving business needs, it could be
holding you back. This will especially be true if your organization undergoes a significant
shift, such as a global expansion or operational restructuring.

This also applies to more nuanced, granular adjustments.
For example, say you combine two positions from your accounting team into one position.
Internally, your employees should be able to adapt to the new workflows and changes to their
roles. However, your ERP system may not be designed to take advantage of this
organizational efficiency.
Some systems are too rigid and won‘t allow you to adjust workflows or change role-based
tasks as required. Built-in flexibility is a feature to prioritize if you decide to reconsider your
software selection decisions.
 Lack of Preventive Maintenance

Does your ERP system include preventative maintenance? If not, you not only risk
experiencing downtime, but you are more vulnerable to data breaches.
In your gap analysis, you can determine if your vendor has included preventative
maintenance as part of your plan. If not, then it‘s time to add it.
Conversely, you may find that you have a maintenance plan, but you aren‘t making use of it.
In that case, speak to your ERP vendor to schedule regular preventative services at a
convenient time that will minimize downtime.
5.6 Re-engineering
• It is in this phase that the human factors are considered. In ERP implementation settings, re-
engineering has two different connotations.
• The first connotation is the controversial one, involving the use of ERP to aid in downsizing
efforts and there have been occasions where high-level executives have invoked the re-
engineering slogan, and purchased an ERP package with the aim of reducing significant
numbers of employees.
• While every implementation is going to involve some change in job responsibilities, as

processes become more automated and efficient, it is best to treat ERP as an investment as
well as a cost-cutting measure, rather than as a downsizing tool.
• ‗Downsizing‘ is a business practice that may have its place, but it should not be cloaked
within the glossier slogan of ‗reengineering‘ or justified by the purchase of an ERP package.
• ERP should engender business change but should not endanger the jobs of thousands of
employees.
• The second use of the word re-engineering in the ERP field (or business process
reengineering (BPR) as it is usually called), refers to an ERP implementation model initially
designed and used with much success by the ‗Big Six‘ consulting firms.
• The BPR approach to an ERP implementation implies that there are really two separate, but
closely linked implementations involved on an ERP site: a technical implementation and a
business process implementation.

• The BPR approach emphasises the human element of necessary change within
organisations. This approach is generally more time consuming, and has received its share of
criticism for creating bloated budgets and extended projects.
• However, adherents of the BPR approach to ERP would argue that there is no way that we
can ignore the human element in an implementation that involves significant changes in
responsibilities.
• As the ERP market shifts to a mid-market focus, and as all implementations are becoming
more cost-sensitive, the BPR approach has come under some real scrutiny.
What is Business Process Re-engineering
According to Dr. Michael Hammer,

“Business Process Re-engineering is the fundamental rethinking and radical design of
business processes to achieve dramatic improvements in critical, contemporary measures of
performance such as cost, quality, service and speed.”
Business process re-engineering is not just a change, but actually it is a dramatic change and
dramatic improvements. This is only achieved through overhaul the organization structures,
job descriptions, performance management, training and the most importantly, the use of IT
i.e. Information Technology.
Figure : Business Process Re-engineering
BPR projects have failed sometimes to meet high expectations. Many unsuccessful BPR
attempts are due to the confusion surrounding BPR and how it should be performed. It
becomes the process of trial and error.
Phases of BPR :
According to Peter F. Drucker, ‖ Re-engineering is new, and it has to be done.‖ There are 7
different phases for BPR. All the projects for BPR begin with the most critical requirement
i.e. communication throughout the organization.
 Begin organizational change.

 Build the re-engineering organization.

 Identify BPR opportunities.
 Understand the existing process.
 Reengineer the process
 Blueprint the new business system.
 Perform the transformation.
Objectives of BPR :
Following are the objectives of the BPR :
 To dramatically reduce cost.
 To reduce time requirements.
 To improve customer services dramatically.
 To reinvent the basic rules of the business e.g. The airline industry.
 Customer satisfaction.
 Organizational learning.
Challenges faced by BPR process :
All the BPR processes are not as successful as described. The companies that have start the
use of BPR projects face many of the following challenges :
 Resistance
 Tradition
 Time requirements
 Cost
 Job losses
Advantages of BPR :
Following are the advantages of BPR :
 BPR offers tight integration among different modules.
 It offers same views for the business i.e. same database, consistent reporting and analysis.
 It offers process orientation facility i.e. streamline processes.
 It offers rich functionality like templates and reference models.
 It is flexible.
 It is scalable.
 It is expandable.
Disadvantages of BPR :
Following are the advantages of BPR :
 It depends on various factors like size and availability of resources. So, it will not fit for
every business.
 It is not capable of providing an immediate resolution.
5.7 Configuration
• This is the main functional area of the ERP implementation. There is a bit of mystique
around the configuration process and for good reason: the Holy Grail or unwritten rule of
ERP implementation is, synchronising existing company practices with the ERP package
rather than changing the source code and customising it to suit the company.

• In order to do so, business processes have to be understood and mapped in such a way that
the arrived at solutions match up with the overall goals of the company.
• However, companies cannot just shut down their operations while the mapping processes
take place.
• Hence the prototype a simulation of the actual ‗business processes of the company will be
used. The prototype allows for thorough testing of the ―to be‖ model in a controlled
environment.
• As the ERP consultants configure and test the prototype, they attempt to solve any logistical
problems inherent in the BPR before the actual go-live implementation.
• Configuring a company‘s‘system reveals not only the strengths of a company‘s business

process but also and perhaps more importantly its weaknesses.
• It is vital to the health of the company and to the success of the ERP implementation that
those configuring the system are able to explain what will not fit into the package, and where
the gaps in functionality occur. For example, a company might have an accounting practice
that cannot be configured into the system or some shipping process that will not conform to
the package.
• The company obviously needs to know which processes have to change in the process of
implementation. Finding out what will work and what will not requires knowledge of the
business process itself, and an ability to work with people throughout the company. So,
people with such skills should be assigned to these tasks.
• As a rule, in most large implementations, the functional configurations are split between the
different areas within the company, so some will attend to HR; some will be involved in
financials and so forth.
• ERP vendors are constantly striving to lower configuration costs. Strategies currently being
pursued include automation and pre-configuration.
• Baan for instance, has developed Orgware, an automated configuration tool, while SAP has
pre-configured industry-specific templates that can be tweaked for each individual company
(Accelerated SAP Solutions).
• The current ERP industry push towards developing the mid-range market in turn creates an
added incentive to reduce costs, encouraging the sought-after mid-range companies to feel
they can afford to implement a top-of -the-line ERP package.
• By creating a custom pre-configured ERP module for a particular industry-say a shoe

software manufacturing prototype created for a shoe manufacturer, the need for hands-on
custom configuration is reduced, thereby keeping the costs down.
• It is hoped that a kind of ―question and answer‖ format can be used to find out the kinds of
business process information hitherto addressed through the hands-on configuration process.
• In theory, these pre-configured tools should save time and money, but every business is
unique and at least some configuration is unique to each project.
What is configuration?
Configuration of an ERP system deals with handling of numerous usage controls, which can
be switched off or switched on, so as to balance its functionalities to extant needs. First thing
to happen is to install specific modules needed and configuring these modules, as per the
scope of the project. Thousands of configuration tables are present, which define how the
system should operate, how the data entry screen will look like, how the signals and
massages will appear etc.
The above process is extremely complex, particularly for tier 1 vendors like SAP and Oracle.
To alleviate this complexity, ERP vendors are creating pre configured modules suitable for a
particular business vertical. ERP vendors are also developing automated pre configuration
tools such as Orgware from BaaN. SAP has also brought out ―Accelerated SAP Solution‖
containing industry specific templates which can be tweaked for an individual company.
General Mode of Configuration:
1. A function can be turned on or turned off or made optional.

2. XOR i.e.to chooses only one flow that fulfills the specified condition.
3. OR where a configuration supports optional activities or flow requiring all, none or
some of the activities.
4. AND - indicate mandatory parallel flows.
Some configuration choices are irreversible e.g. if ―negative inventory allowed‖ option is
chosen, it can not be reversed at a latter stage. Some configurations are reversible e.g.
purchase order quantity may exceed blanket order quantity or not. In some case if a specific
choice is not made, configurable function can be switched on or off by default.
Setting up of basic system: Some important activities related to setting up of base system,
having impact on all modules, are given below:
1. Creation of a company: This is basically to create a data base. A number of data

bases can be created of which one may be for actual transactions where as the others
may be for used for testing and training. A Company may different hierarchies such
as single logistics / single finance, multi logistics /single finance, multi logistics /
multi finance etc.
2. Setting up of currency: Currencies need to be configured as i) base currency which
is the legal currency of the country where the organization is operating ii) Alternate
reporting currencies, iii) transaction currencies used for transaction with vendors and
customers who may be spread over a number of countries.

3. Setting up of calendar and periods: Calendars are used to record information on the
availability of resources. Periods are time intervals that can be utilized for statistical,
financial, planning and cost control purpose.
4. Units of Measure: Base units of length, surface area, weight, time and their
conversation factors for transactional purpose.
5. Integration between finance and logistic: Setting up of inter company relations,
mode of updating finance tables either in real time or in batch mode, mode of
inventory valuation such as LIFO, FIFO, Standard Costing or Weighted Average,
treatment of finalized and non finalized transactions on financial ledger etc.
6. Defining number group, series type and series length: To be used as ID of a unique
transaction like purchase orders, sales order, production order etc.
7. Defining Countries: Customers and vendors are located in various countries for
which country code need to be defined. This is very important due to necessity of tax
calculation and reporting.
8. Assigning Tax codes: Needed to be defined for sales, purchase, service, project
transactions.
Conclusion
Even if a pre-configured package for a specific vertical is chosen, the base configurations as
mentioned above is needed to be done with extreme care, during implementation. This base
configuration affects all the modules which form part of the implementation.
5.8 Implementation Team Training

• Around the same time that the configuration is taking place, the implementation team is
being trained, not so much how to use the system, but how to implement it.
• This is the phase where the company trains its employees to implement and later, run the
system. The ERP vendors and the hired consultants will leave after the implementation is
over.
• However, for the company to be self-sufficient in running the ERP system, it should have a
good in-house team that can handle the various situations.
• Thus, it is very vital that the company recognises the importance of this phase and selects
those employees who have the right attitude-people who are willing to change, learn new
things and are not afraid of technology-and good functional knowledge.
What is an ERP Implementation Team?

Taking on an ERP project is one that requires skill, experience, and in-depth knowledge.
However, first and foremost it is vital to have key players in any ERP implementation. How
your team will be arranged varies based on a number of factors: the size of your organization,
project expectations, and specific customizations.
Your ERP team structure should have a representative from each of your organization‘s
departments to help the ERP implementation team members understand and adapt to your

current business processes. When it comes to finding the right people, look for those who
excel not only in their own department, but who also have a comprehensive understanding of
the business goals and objectives.
What does an ERP Implementation Team do?
The roles and responsibilities of the project implementation team are focused on ensuring the
project is a success and managing any hiccups along the way. From the very beginning, when
business goals are discussed, to even after the ERP has gone live, an implementation team is
crucial in securing operational results.
It is therefore very important to put together the ideal team from the start, this way all
stakeholders have the opportunity to provide influential feedback throughout each phase.
One thing to note is that there are many competitors out there and not all of them will align
with your vision for the future of your company‘s infrastructure. Choosing the wrong
implementation partner is one of the main reasons why implementations fail. That‘s why you
need an ERP team leader who knows about your company‘s needs and the best way to
integrate your new ERP to meet those needs.
Who Should be on an ERP Implementation Team?

When it comes to assembling an ERP implementation team, there are certain people that must
be included. Typically a team structure has an Executive, Project Manager, End-User, Core
Members, and the Implementation Partner (if your company goes in that direction). Let‘s take
a look below at the roles of users in an ERP implementation.
1. Executives
Every successful ERP project needs an engaged and committed executive team to readily
make big decisions and answer important questions. As leaders of the company, executives
must be willing to adopt the new ERP platform and stay involved throughout the
implementation period.
Depending on the functionality of your business, the executive(s) will be the top decision-
maker and provide guidance on the ERP requirements list.
2. Project Managers
As stated within their role, Project Managers manage projects. Their ability to communicate
and oversee all business goals and processes is fundamental in ERP implementation phases,
especially after the system is live.
One of their top responsibilities will be to lead the project on budget, resources, scope, and
more. Their guidance and influence throughout the implementation will be important should
there be any mishaps or issues.
3. End-Users

End-Users are representatives of their departments who champion the adoption of an ERP
platform within the organization. Their strong leadership and communication skills will be
essential when it comes to relaying concerns and helping others understand the new system.
Their non-technical background will challenge the team with knowing what ERP
implementation questions to ask.
For example, someone from the Human Resources department would be a key contributor to
the ERP project team structure. They will often know about the roadblocks employees
encounter when dealing with company-wide changes.
4. Core Members
Your core members will need to be technical experts, who in this case, will typically be IT
and finance professionals. As a core member, they will need to have knowledge or learn
aspects of the ERP system. They will support business processes and be responsible to
address business needs and users with technical issues.
Your IT team will need to understand and learn the skills or knowledge necessary to handle
the ongoing process of maintaining your ERP software. Additional training opportunities can
also bring your IT team up to speed to navigate the ERP tasks given to them.
Your ERP system is going to be used by your company‘s finance department for planning
and budgeting, payroll, and more. So it‘s a great asset to have the people actually using the
software involved in the process of installing it.
5. Implementation Partner
Your implementation partner is chosen by you to represent your company‘s needs and wants
through the process of implementing your ERP software. As an ERP implementation
executive on your team, your partner will provide personalized instruction, coaching, and
guidance.
Most importantly, implementation partners have decades of experience in ERP

implementation and know how to tackle complex issues. They will ensure that your project is
a success and help your employees maintain software intricacies.
If you decide to work with a skilled ERP implementation partner, they will discuss the need
for ERP training with your specialists, and any other required users, to ensure strategic use of
the platform.
How to Build The Perfect Implementation Team
Every implementation project needs its own Justice League. And now that you know which
superheroes you need, you can start building it.
Building the perfect team requires:
1. Support from Executives

Executives are the top decision-makers of a business, and when it comes to implementing an
ERP, they have the most influence. It‘s therefore no surprise that having their support is
necessary to move forward with the project.
2. Strong Communication
Communication is essential throughout the whole project - from beginning to end. Having the
right team ensures that all department voices are heard throughout the implementation and
that everyone‘s needs are being met.
3. Prioritization
Project Managers and Executives need to set the tone - to ensure that the ERP project team
roles and responsibilities are allocated properly.
When it comes to ERP tasks it‘s important to prioritize. Provide your team with the right
resources, external or internal, to provide the knowledge and expertise required in order to
prepare for the ERP implementation. Also, assign specific responsibilities to each team
member and continue to communicate throughout the process.
An ERP implementation can be extremely overwhelming, so make sure to provide support

and limit tasks should anyone feel swamped with work.
4. Roles & Responsibilities
After you have structured your ERP team, don‘t forget to list off everyone‘s tasks based on
their expertise, experience, and time.
Key roles and responsibilities can be defined as anything involving process definition to end-
user training. Knowing who should be doing what from the beginning avoids any confusion
down the road.
5.9 Testing
• This is the phase where we try to break the system.
• We have reached a point where we are testing real case scenarios. The system is configured
and now we must come up with extreme-case scenarios system overloads, multiple users
logging on at the same time with the same query, users entering invalid data, hackers trying
to access restricted areas and so on.
• The test cases must be designed specifically to find the weak links in the system and these
bugs should be fixed before going live.
What is ERP Testing?
ERP testing is a specialized form of manual or automation test done on the ERP software to
ensure that it is working as expected. The reason why ERP testing is so important is that each
company had the option to customize the rules in ERP software as per their policies.
This calls in for extensive integration testing to validate that the ERP system is set up in line
with the company‘s needs.
In most cases, ERP testing can be considered as the testing of any other application software
apart from the difference that for better testing the ERP system it is important for the user to
understand how and where the data flows and which are the different sub-systems where the
data is saved. This is the most critical aspect of ERP testing. Domain knowledge is very
important to get good results.
Different Types of ERP Testing

Just like any other testing, there are different types of testing that ERP software goes through
different types of testing phases to make sure it is reliable, stable and scalable too. Here are
some of the most commonly used testing for ERP.
1. Functional Testing: It is done to ensure that each module performs each function as
expected once the organization related customizations are done.
2. Integration Testing: This is the most critical part of any ERP testing and needs in-
depth functional and domain knowledge in the software as well as the company
policies. In integration testing, one needs to focus on data and information flow across
the different modules of the ERP system. The accuracy of the data needs to be
validated along with modules where all it gets impacted.
3. Performance testing: based on the size of the organization a performance testing
may be needed to see how the software performs under load and what is the TPS
(transactions per second) supported by the software. While is most cases in the load
on the system would be negligible since people may not log in regularly but there can
be a significant load during situations like when the hike letters are released, the last
day of investment declarations, last day of proof submissions, etc.
4. Security Testing: ERP solution contains end-to-end employee and employer data. It
is thus, very important that only the authorized personnel are given access to sensitive
data that too on need basis. This is will also help to minimize the chances of data
theft.
5. Most companies would do a phased rollout of the ERP software modules. This calls
for a regression testing each time a new suite or module is launched after
customizations.
Why Automated ERP testing is effective?
 Reduces implementation time to a great extent
 There are many processes and sub-processes involved in ERP. Software with
such complexity requires test automation to discover bugs as quickly as
possible.
 Test automation ensures that all the processes involved in the implementation
of ERP in your organization happen in the correct manner.
 Verification of a centralized data source is cardinal for any ERP application.
Test automation helps you test data process and security.
Tips for quick and effective testing of ERP

 Make sure that everything has been tested before implementation
 There are no such things as too much testing. Test the ERP application with
as much as scenario possible
 Do not rush others into production and implementation
 A designated test manager has to be assigned to the project
Market Leaders in ERP Solutions
The use of ERP solutions is on the rise. Many companies are looking to make the switch and
those who are already there are trying to take more benefits from the implementation. It is
important thus to choose your ERP software provider wisely. Always keep in mind the
quality and scalability of the software before buying it.
Here is the list of top 10 ERP product developers in the market today:
1. SAP – the undoubted leader in ERP Solutions.
2. Oracle – A close second with traditional PeopleSoft as the base.
3. Microsoft Dynamics
4. IFS Applications
5. Inuit QuickBooks
6. FIS Global
7. Fiserv
8. Cerner Corporation
9. Constellation Software Inc.
10. Infor
What is SAP ERP testing?
It‘s similar to testing any other ERP software testing. Here the only difference is SAP is the
provider. Whatever changes you make on SAP ERP has to be tested to ensure that the entire
system is working fine.
Those who test the ERP system must have impeccable knowledge in it.
Phases involved in SAP ERP testing
Test preparation phase
 identification of the business model
 automated + manual test case development
 test suites creation
 Test system set up
 Test data creation
Test execution phase
Execution of tests, reporting and defect handling happens in this phase.
Test evaluation phase
Analysis of test plans, defect analysis, process documentation happens in this, phase.
How to make ERP testing successful
ERP testing can be successful only with a certain level of business logic and understanding of
the inter-relation between the different sub-systems or modules. Read on as we share some
pointers to make your testing activity more fruitful and the application more robust.
1. Spend time on UAT: the testing done by real users is very important for the success
of ERP products. This is because they will be aware of the nitty-gritty of the system

and how it interacts with other modules. They are the best people to find out issues
and suggest enhancements to the software.
2. Test as much as you can: While it may sound lame when it comes to testing ERP
solution, no amount of testing can be enough. The complexity would keep growing
based on the number of modules that are implemented and the number of inter-related
data points.
3. Drive the implementation professionally: Have a project plan, a project manager,
identify the risks, have a mitigation plan ready, create a backup plan and so on. This
will ensure better tracking of the implementation as well as the enhancements.
4. Automate: Automation comes in very handy for most testing activities. It is a boon
for ERP testing. Go for it. The main advantage of automation in the case of ERP
solutions is to help validate the functionality and the data points after every module is
released. Manually it can be a very cumbersome and error-prone process.
5. Follow the process: Being an in-house implementation, people tend to overlook the
importance of following the right standards and processes. Do not make this mistake.
Stick the test plan and follow every bit judiciously for the best results.
Challenges in ERP Testing
ERP testing is a special niche and not all functional testers can be ERP testers. This creates
some challenges when it comes to ERP testing. Here we talk about some of the most obvious
challenges:
1. Getting the right testers: Testers with extensive experience in ERP testing are hard to
find. The success of the ERP testing would depend on their expertise and the amount
of domain knowledge they have.
2. Integration with other systems: ERP solutions are like a single store of data and
information. There can be to and fro data communication from the ERP software to
other third-party tools. Establishing and testing this integration is still an open
challenge.
3. Dealing with complex business rules: the customization if the ERP system is
governed by business rules that drive the flow of information and data from one
module to another. Setting up and testing these complex business rules thoroughly can
be quite challenging.
4. Performance Issues: Adhering to SLA‘s and performance standards can become
challenging for big sized organizations if a proper load and performance testing are
not performed.
ERP Domain Knowledge for Software Testers

Conclusion
While it is true that the ERP system makes the life of the people in the organization much
easier after its implementation. The customization, implementation and testing phases would
need a lot of planning too. It is thus important to plan the ERP testing well with proper
resources and budget.
Rest assured that once the testing is completed successfully, there will be no looking back to
the manual ways of capturing and reporting data.
5.10 Going Live

• From technical point of view, the work is almost complete data conversion is done,
databases are up and running; and on the functional side, the prototype is fully configured and
tested, and ready to go operational.
• The system is officially proclaimed operational, even though the implementation team must
have been testing it and running it successfully for some time, but once the system is ‗live‘,
the old system is removed, and the new system is used for the business.
Some Important points for Successful Go-Live
Is there a way to guarantee ERP implementation success? When it‘s time to go live, there‘s
no turning back. You just spent a lot of money on a new enterprise software system, so it
better work. When your organization has invested time and money on an ERP
implementation, you need to make sure your go-live goes as smoothly as possible.
There are several ways that a go-live can go wrong. But we have found that proper
preparation and planning can mitigate the risks and facilitate the transition to a new ERP
system.
1. Be Ready for the Unknown
Often there can be a bit of fear of the unknown when organizations are stepping into a go-live
for the first time. Even if this isn‘t your first ERP software update, you can still experience
the unknown of what will happen with this particular project. Each ERP implementation will
have its own peculiar idiosyncrasies and the best you can do to ensure a smooth
implementation is to be prepared for just about anything.
2. Know Your Risks and Mitigate Them
Knowing the risks of a project and preparing for them is vital before a go-live. Inevitably
there are risks in any project, and while testing helps to minimize them, even that is not a
guarantee. You can often gauge the likelihood of a good implementation based on the
involvement of the end users and subject matter experts during user acceptance testing
(UAT). If there's a ton of people involved in user acceptance testing, you have a good chance
at a successful go-live. If there aren't that many people involved in UAT, you might have a
nightmare as your go-live basically becomes the testing phase. If that does happen, it‘s still
possible to go live successfully. You can set up mitigation such as ensuring developers are on
site, ready to immediately start editing the product in real time and fixing issues as they
become apparent.
3. Successful Go-Lives are Created Months Before the Cutover
If you want your go-live to be trouble-free, remember that success is made well before the
switch is flipped and the new software is running. Going live is like many other big events in
life and the easiest way to ensure that it will go well is to be ready. A successful go-live
doesn‘t just happen naturally on its own, it often takes months and months of hard work
behind the scenes.
4. Get Your Best Resources Lined Up Ahead of Time
Another way to ensure your go-live is as smooth as it can be is to round up your resources
and have them standing by before the big day. As much as you prepare, there‘s never a
guarantee that things won‘t pop up once the new software is live. But if you have people
ready to handle these hurdles in real time, it won‘t feel like an emergency. If something such
as a billing error happens, having competent people on hand to jump in and start making
corrections will help keep everyone calm, cool and collected.
5. Rehearse, Rehearse, Rehearse
A go-live can be a bit like a big musical production. You get everything set up behind the
scenes, everyone knows what roles they have to play, and then it‘s showtime. To make it all
go as effortlessly as possible, the best thing you can do for you and your team is to rehearse.
This means testing, testing and more testing. Do trial runs and have your staff go through
every scenario to see what issues might happen. Also have your programming team run
through every way that they might fix any problems if they should occur. Once all of this has
been done, your go-live should be calm and carefree.

6. Be Ready for the Long Haul
Everything in your ERP project plan may seem to be gearing up for just one thing: Go-live.
But don‘t forget that there‘s more to it than just those first days, or even the first week. Once
the ―opening night‖ is over, success will come from how you handle what happens after that.
Again, similar to a Broadway show, you will need to make adjustments and improvements as
the system is used and people find problems or discover ways to make it better. A successful
go-live depends on the long-term.
7. Think Outside the Box
Creating a successful go-live isn‘t only about the project plan and the rehearsals, it‘s also
about the people. After all, they are the ones who will make those plans come to life.
Sometimes the best thing you can do for your project is take care of your staff. At ERP
Advisors Group, we‘ve worked with many clients and one of our most successful go-lives
featured a secret ingredient: massage therapists. Having them on hand helped calm nerves
and led to a successful go-live at a time when people were stressed about a particularly
complicated project. Think of ways to keep staff relaxed during your implementation and you
might find your own secret ingredient for a smooth project.
8. Extend Your Timeline if Needed
The best-case scenario is that a go-live will go off without a hitch, but that‘s not always the
reality. Sometimes, no matter how much preparation you‘ve done, things will come up that
cause problems. When this happens, there‘s nothing wrong with extending your timeline. At
the end of the day, the only thing that really matters is that you have a system with features
that allow your staff to function effectively, and your organization to expand. If this takes a
month or two longer than the original timeline, but you end up with a system that is solid and
working well, then it is still a success.
9. Emphasize User Acceptance Testing
User Acceptance Testing isn‘t just about making sure that the software works. More
importantly it‘s about ensuring that the users will accept and work with the new system. You
can put your ERP through dozens of tests but if employees aren‘t able to use it in the end,
your project will still be a failure. Also be careful of users who report that all is well, but who
haven‘t adequately tested the software. Make sure that what they asked for is what they
received and if they discover they need something different from the system, make sure they
get that. You don‘t want to get to the end of the project and find the users aren‘t using the
product, otherwise the entire project would have been a waste.
10. Data, Data, Data, Data
When it comes to the success of your go-live, data is so important we truly can‘t emphasize it
enough. Data is the overall reason why organizations implement new software. Of course,
there are other issues to be handled like process automation, new user interfaces and

technology legacy. But ultimately, the reason we need new systems is that we want
information about the organization that we can‘t get currently. Getting your data cleaned
up as best as you can during the conversion process, and at go-live, is vital. One secret to
ensuring that happens is doing a dress rehearsal, where you implement multiple go-live
cutovers early in the project to test that you have all the data, everyone knows what they‘re
doing, users know where to go and the data can be validated.
11. Set Realistic Expectations
This is a factor that a lot of people miss, but it is also very important. You must set realistic
expectations about your project. Don‘t rely on luck or hope that your go-live will be
absolutely perfect and happen without a single problem. Even if your implementation goes
well overall, you still want to set those expectations for the cutover. Start talking to your
bank, your company‘s stakeholders, and anyone else that could be affected by the software
update. Let people know that you‘re switching systems, what day it will happen, and that
there‘s a possibility reports could be delayed. Hopefully, no delays will occur, but it is better
to set expectations low and then work like mad to exceed them.
12. Give Incentives and Acknowledgements
People work hard during a software implementation. They usually come in early, stay late,
put in time on the weekends – while still doing their day job. Even if you bring in help to
backfill some positions, there‘s no doubt that good staff will bend over backwards to make
sure your go-live is a success. One of the best things you can do for your project is to do
something for your people to incentivize them or reward them when everything is completed.
It can be something as simple as an email acknowledging specific people and thanking them
for their commitment and contribution to the project. You could even send gifts to an
employee‘s family thanking them for putting up with having their family member missing all
those extra nights and weekends during the project. Whatever way you choose, it‘s important
to let your people know how much you appreciate what they did.
13. Trust Your Intuition
Another important thing to know about these types of projects is that all indications for a bad
go-live happen early. It‘s not as if the project will be going along just fine and then suddenly
at the cutover everything becomes a terrible mess. Projects just don‘t work that way. If you
start to see things going wrong, trust your intuition and do something about it. For instance, if
you see that the Project Manager your implementation partner put on your project is
disorganized, let the project sponsor on the implementation side know about it. Don‘t be
afraid to speak up, but also remember to escalate appropriately and give them ample
opportunity to fix the situation.
14. Know When to Ignore (or Listen) to Naysayers
On every project you‘re bound to have a person who might not be entirely on board. A
successful go-live will depend on knowing when to ignore them and when to listen.
Truthfully, most of the time you can ignore the naysayers, especially if they don‘t have a lot
of importance in regard to the project. If you‘re confident that everything is fine and you‘ve
got your checklist and mitigation in place, listening to them could just slow down the project
if you try to handle their imagined issues. On the other hand, if the person is higher in the
company and pointing out reasonable concerns such as they don‘t believe enough testing
occurred in a specific area, then you may want to listen. They could find a problem you
weren‘t aware of and lead you to a resolution before it affects the go-live.
15. Remember: A Bad Go-Live Can Turn into a Success
On some projects it‘s not possible to do all the preparation and testing needed because staff
are simply too busy. While this proposition can make the go-live more complicated, you can
still do the project and be fine in the end. If you know extensive testing isn‘t an option, be
sure to have mitigation in place for anything that might go wrong. If people can‘t test
beforehand, you will essentially turn the go-live into the testing phase. This is not the most
ideal way to go live, but if you are prepared for it and have staff ready to do fixes, it can
work.
16. Don‟t Forget to Create a Go-Live Checklist
Having a go-live checklist is vital to your success, and yet it can be one of the most
overlooked factors in a project. This may be because many people assume that the checklist
will be created by the implementation partner and that it will contain everything that needs to
be done to go live. While your vendor should have a cutover checklist, it may not have every
necessary step on it. Each organization should create their own list of actions to accomplish,
and items that are needed for the go-live to work.
Here are some examples of things that should be included in a go-live checklist:
 Job aids to show employees the steps to take to log into the new system, do simple
steps, etc. These can be laminated hard copy documents or virtual documents, either
way they should be simple and easy to understand.
 A schedule of stop dates for the old system showing exactly when the new system
will be online and when the old one will no longer be active. This could be one date
or a series of dates if you are rolling out the new system in segments. It should start at
least one to two weeks out from the stop date.
 Tasks to be done before the old system is turned off, such as cutting checks to help
make AP simpler after the go-live. You can also list out when you will let customers
and vendors know about the update and how this will affect their interactions with
your site, including any new links they will need.
 A timeline of all tasks, including testing and training, as well as vital integrations and
data migration. Be sure that important tasks such as data transfers to your bank and
other integrations are set up before shutting down your old system.

5.11 End-user Training
• This is the phase where the actual users of the system will be given training on how to use
the system. This phase starts much before the system goes live.
• The employees who are going to use the new system are identified. Their current skills are
noted and based on the current skill levels; they are divided into groups.
• Then each group is given training on the new system. This training is very important as the
success of the ERP system is in the hands of the end-users.
• Therefore, these training sessions should give the participants an overall view of the system
and how individual actions would affect the entire system.
• In addition to these general topics, each employee is trained on the job or task that he/she is
supposed to perform once the system goes live.
• It is human nature to resist change and also many people are afraid of computers and other
new technologies. So there will be resistance to change. Another factor is that not all people
will be successful in making the changeover.
• The company management should address these concerns and take necessary actions to
avoid failure. The end-user training is much more important and much more difficult (since
most end-users are not thrilled at having to change) than the implementation team training.
• Companies are beginning to take this phase seriously, as there is statistical evidence now,
which shows that most implementations fail because of a lack of end-user training.
Importance of End-user Training for Successful ERP Implementation

Implementing Enterprise Resource Planning (ERP) software is one of the best ways to
streamline internal processes and improve the efficiency of your organization. An ERP can
streamline the workload of your organization, reduce complexity of tasks and automate
several routine tasks. All of this can ultimately translate to improved revenue productivity of
your organization.
However, the extent to which your ERP software is actually effective depends upon how well
your employees are trained in it. End-user training refers to the process of ensuring that the
final users of the ERP software are well-versed in it and are able to utilize it to its fullest
potential. After all, what is ERP implementation without proper training in the software?
But before we list out the importance of end-user training, here‘s a quick breakdown of what
is ERP implementation in an organization.
What is ERP implementation?
ERP implementation involves a complete overhaul of your company‘s existing processes and
moving them to a single holistic dashboard. ERP software brings together several disparate
elements in an organization, such as customer relations, admin, finance, marketing, etc. and
streamlines them for better visibility and efficiency.
Importance of end-user training
Here are the main reasons why following end-user training best practices is critical for the
successful implementation of ERP software.
1. Improves the productivity of your organization
The end-goal of any ERP implementation is to improve the efficiency of your company‘s
bottom line. Successful utilization of ERP software can help your employees automate
several routine processes, reduce the total time spent on tasks and even reduce the costs
associated with certain tasks. However, these benefits can be realized only when they are able
to utilize the software properly. Without proper training, you might actually notice the exact
opposite happen in your company. There could be time lags in tasks and even several errors
since your employees are unfamiliar with the software. To avoid this, end-user training is
essential.
2. Prevents your organization from incurring losses
ERP implementation is usually a significant investment for any company. However, the
investment can potentially pay for itself since productivity and profitability are two sides of
the same coin. An ERP software can also free up your employees‘ time from routine tasks,
allowing them to spend more time on higher-value tasks that can contribute to the growth of
your organization. If the end-users of the software are not adequately trained in how to use it,
then your organization will be unable to reap these benefits. In fact, you might actually see
the exact opposite happen as the investment paid might now pay off in terms of results.

3. Improves accuracy of work
Uniform end-user training in ERP software ensures that all your employees are using the
exact same processes for their tasks. This ensures that exchange in data and other work-
related processes occur in a standardized way. Ensuring this happens can go a long way in
improving the accuracy of work within your organization. For instance, by ensuring all work
is done on a single platform, loss of data or transmission of incorrect data can be avoided.
Following the correct processes on the ERP can also streamline your employee turnover
process as all data is stored on a single system. This way, even if one employee leaves your
organization, it won‘t affect the accuracy and continuity of the work being done.
4. It can prevent demotivation of employees
While ERP implementation can offer several benefits to an organization and its employees,
it‘s not always seen as a welcome change. Because this software can automate several
processes previously being done by humans, a common misconception is that it is used to
replace employees in an organization. This can interfere with your employees adopting the
software as they might be insecure about their role once the software is in use.
End-user training can educate employees that ERP software can improve the quality of work
of all employees. Rather than replacing them, it can free up their time from routine tasks,
allowing them to focus on higher-value tasks that can scale up your organization. This
ensures that all your employees are on the same page and can utilize the software to its fullest
capacity.
5. An ERP usually requires role-based training
The versatility of ERP implementation means that it‘s usage can be customized for every
single role within your organization. The access and functions of an ERP can be segregated
by seniority as well as by function. For example, a junior-level software developer will have
different uses for the ERP than a senior manager of marketing. Because of this, end-user
training best practices involve not just general training on how to use the ERP, but also more
specific training on how employees in various roles can and should use it.
The more personalized the training is, the higher is the chance of your employees actually
using it in the best way possible. Role-based training also ensures that each employee only
learns the aspects of the software that will be of use to them and avoid unnecessary
information which can serve to confuse more than help.
When used right by every user, an ERP is one of the most powerful tools at your company‘s
disposal to improve profitability and improve performance of the organization as a whole. In
order to reap the many benefits that an ERP software promises, proper end-user training best
practices need to be followed. While there will definitely be a transition period during which
your employees need to switch from old processes to new ones, the advantages of doing so
make it well worth the effort.

5.12 Post-implementation (Maintenance Mode)
• One important factor that should be kept in mind is that the post-implementation phase is
very critical. Once the implementation is over, the vendors and the hired consultants will go.
• To reap the full benefits of the ERP system, it is very important that the system should get
enterprise-wide acceptance.
• There should be good strength of employees who should be trained to handle the problems,
which might crop-up. There should be people, within the company, who have the technical
prowess to make the necessary enhancements to the system as and when required.
• The system must be upgraded as and when new versions or new technologies are
introduced. Here the organisation should think in terms of the incremental benefits of the new
enhancements. Because with any up-gradation or enhancements, there will be many other
aspects like user training that have to be considered. Therefore, instead of going in for up-
gradation as and when a new version is announced by the vendor, the organisation should
first analyse the costs and benefits.
• The post-ERP organisation will need a different set of roles and skills than those with less
integrated kinds of systems.
• At a minimum, everyone who uses these systems needs to be trained on how they work,
how they relate to the business process and how a transaction ripples through the entire
company whenever they press a key.
• The training will never end; it is an ongoing process; new people will always be coming in,
and new functionality will always be entering the organisation. Just as courtships and
honeymoons are different from marriages, living with ERP systems will be different from
installing them.
• Projects for implementing the ERP systems get a lot of resources and attention. However,
an organisation can only get the maximum value of these inputs if it successfully adopts and
effectively uses the system.
Essential ERP Post-implementation Activities
Finally, the day has come – you‘ve gone live with your new ERP system! Now the project‘s
done and it‘s time to get back to the day-to-day, right? Not quite.
Think about how long it took to implement your system – probably a few months. Plan on
dedicating time to post-implementation activities for at least the same length of time. You‘ve
made the investment, so it‘s worth putting in the effort to get the most out of it.
A couple tips before we dig into the specifics:
 Keep your ERP project team together for the first six months or so after go-live. The
demand on their time will be less than it was during selection and implementation, but
they should continue owning the project through post-implementation. They know the
ins and outs of the project, so they‘re best equipped to manage these activities.
 Start creating your post-implementation strategy around the time you‘re doing user
testing. This will ease the transition from go-live because you already have a plan in
place.
1. Conduct an ERP post-implementation review
Once you go-live, spend a few months living in the system before you do a post-
implementation review. This will give your people time to learn the new processes, adjust to
the system and give you a feel for how well it‘s working relative to your requirements.
Together with your project team, the goal of this review is to identify:
 What was successful – Talk about what went well in the project, where your people
are seeing improvements in their day-to-day, etc. Refer to your ERP project
objectives to see if you‘ve achieved what you set out to.
 What was challenging – Discuss areas that are falling short of expectations, teams
that still need more training, etc.
 What you would change – Typically, this will include aspects of the project that
could have been managed better. These are important insights to feed into future
phases.
 What still needs to be addressed – During the implementation, you may have re-
prioritized your requirements, so make a list of features or functionality you still want
to implement in a future phase.
As you have these discussions, include feedback you‘ve received from your employees about
their experience during go-live, requests for extra training or any roadblocks they‘re facing.
This is also a good opportunity to validate your processes. Your project team should gather
input from key users to make sure the system is working as expected and uncover any
bottlenecks. Make a running list of issues that come up and create a plan to fix them as soon
as possible. Finally, include your ERP partner in your post-implementation review. This
should be part of their process already and it‘s more productive to have these conversations
together.
2. Document your business processes
Documentation is often put on the back burner because it takes time. But it‘s an important
activity for a couple reasons.

1. Having clear and complete process documentation will prevent you from backsliding
into the old way of doing things. Remember, where every person had their own way
of doing the same task, which meant your data was inconsistent and unreliable?
Standardizing processes is one benefit of your new ERP system. But to truly get the
value, you need to document those processes so everyone on your team is working the
same way.
2. Even more important – you want to protect the knowledge within your company. If
you haven‘t already done it as part of your implementation project, commit time and
effort to it now. If you don‘t document your new processes, you risk losing that
knowledge if an employee leaves the company. The loss in time and productivity can
be significant – how do you train someone new when no one knows what the process
is?
Some tips as you‘re creating your process documentation:
 Cover all areas of the system.
 Document why important decisions were made during implementation.

Understanding why a task is done a certain way will provide context for users.
 Update your documentation over time as your processes change. They will continue
to evolve as your business does, so make documentation a requirement for each
employee.
3. Create an ongoing training plan
During implementation, you‘ll do an intensive round of ERP training with your team before
go-live. But the training shouldn‘t end there. In the months after go-live, schedule refresher
sessions with each team to reinforce new processes and give people an opportunity to ask
questions. As time goes on, you can go into deeper functionality beyond the essential features
they need to know. The goal is to continually improve the knowledge and understanding of
the system so you can leverage it to it‘s full potential.
4. Align with your ERP partner
Having worked side-by-side throughout implementation, hopefully you and your partner will
already have a close partnership. You want to develop a plan to maintain and continually
strengthen the relationship as you move into post-implementation and then into support
mode. Your partner should have a process for transitioning you from the implementation
consulting team to customer success (or support), but make sure you‘re clear on what that
looks like.
You‘ll want to discuss what the maintenance plan looks like for your company. How often do
you want to upgrade to new versions? Will your partner notify you when a new version is
available or does that information come direct from the software publisher? How will you
communicate new features and train your team on them?
You should also decide how you want to manage interactions between your team and your
partner. Some companies prefer to funnel requests and support issues through one person in
their organization (usually a super user), who then communicates with the partner. Others
give their employees the authority to reach out to the partner directly in certain cases, usually
for support issues. Think about what makes sense for your company, communicate the
expectations clearly with your team and let them know how to contact your partner.
Most partners provide value added content to their customers – things like webinars, training
videos and help center articles. Find out what your partner's training options look like and get
your users on their email list. This way your team has easy access to the training content,
instead of funneling that information through one person in your organization.
5. Develop a process for continuous improvement
Chances are that not every item on your original requirements list was addressed in the initial
implementation. But those items that were deemed ‗nice to have‘ don‘t just disappear. They
become the roadmap for future development. And you‘ll continue adding to this list as your
company evolves.
To manage this effectively, you need a process for capturing, prioritizing and executing
changes to your system. And you need a team of people to manage your ERP continuous
improvement efforts. We recommend establishing a cross-functional committee to evaluate
changes to business process, their impact on your people and the technology changes required
to achieve the result. Be careful not to focus this group on the ERP system alone – think
process first, then consider how that changes your ERP system and any other aspects of your
technology stack.
Here are a few questions your continuous improvement committee should answer to get
started:
 Where should change requests be sent?

 How will we track them?
 How often will we meet to review and discuss our continuous improvement plan?
 How will we prioritize requests?
 Who needs to provide approval for changes to the ERP system?

Terminal Questions:
2 Marks:
1. Define Pre-Evaluation Screening
2. Define Project Planning Phase.
3. Define Gap Analysis.
4. Define ERP Configuration.
5. Define Business Process Reengineering.
6. Define ERP Testing.
7. Define Go-Live.
8. Define End-User Training.
4 marks:
1. What are the steps involved in Package evaluation?
2. What are the importance of Gap Analysis?
3. Give some general mode of configuration.
4. What are the importance of Business Process Reengineering?
5. How to build perfect Implementation Team?
6. What are the different types of Testing?
7. Importance of End-User Training.
10 Marks
1.What are challenges there faced during the implementation of ERP?
2. Explain Pre-Evaluation.
3. What are the steps involved in steps of Gap Analysis?
4. Explain the different phases of BPR.
5. Who should be on an ERP implementation team?
6. Explain some difficulties faced during ERP testing.
7. Describe some important points for successful Go-live.

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ENTERPRISE RESOURCE PLANNING

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Module Module Content

 Introduction, SAP AG,

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1.2 Evolution of ERP

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1.4 Reasons for growth of ERP

1.5 Scenario and Justification of ERP In India

Moreover, larger companies as well as major internationally operating companies may be

The scenario of ERP In India

1.6 Evaluation of ERP

 Formation of an evaluation committee: An ERP implementation is not an IT project but a

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 Must have Distribution Requirement Planning (DRP) functionality.

1. Shortlisting of vendors: Hundreds of ERP packages are available in the market,

1.7 ERP Evaluation Criteria

 Customer Relationship/Account Management

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1.6 Various Modules of ERP

Sales and Distribution Modules

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Plant Maintenance Modules

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Quality Management Modules

1.7 Advantages of ERP

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d. Improved Resource Utilisation

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g. Reduced Quality Cost

1.8 Over-view of Enterprise

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The Integration of Management Information System

Modeling Business with Information Systems

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1. Write note on evolution of ERP.

1. Explain any two modules of ERP.

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 The enterprise acts as a single entity.

 This view of a company or organisation is drastically different from the traditional

 This phenomenon is commonly known as the „silo effect‘ because employees

2.2 Integrated Management Information

 In today‘s world, an information system is an organized combination of people,

 MIS (management Information System), also called information reporting

 Efficient, integrated information systems are very important for companies to be

 An Enterprise Resource Planning (ERP) system can help integrate a company‘s

Integrated Information System

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Elements of Integrated Information System

2.3. Business Modelling

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 Business modelling is a precursor to business process reengineering, ERP

 A business model in other words , is a diagrammatic representation of different business

 The purpose of business modelling is to provide a general overview of the operations of a

 Every Business Model consists of various business processes that needs to be