Slides # 8 Erp

Introduction to
Enterprise Resource
Planning
Enterprise resource planning (ERP)
History: (Detail)
The term ERP was coined in 1990 by
Gartner group (is an American information technology research and advisory
firm), but its roots date to the 1960s. The concept
ERP applied to inventory management and control

in the manufacturing sector. Software engineers
create different programs or softwares to monitor
inventory, reconcile balances, and report on status.
By the 1970s, this had evolved into Material

Requirements Planning (MRP) systems for
scheduling production processes.
In the 1980s, MRP grew to encompass

more manufacturing processes, prompting many to
call it MRP-II or Manufacturing Resource Planning.
History: (Detail)
History: (Detail)
By 1990, these systems had expanded
beyond inventory control and other operational
processes (MRP, MRP II etc) to other functions like
accounting and human resources, setting the
stage for ERP as we have come to know it.
Today, ERP has expanded even more to
encompass business intelligence (BI) while also
handling sales force automation (SFA), marketing
automation etc.
With these advancements and the success
stories coming out of these software systems,
companies in a broad range of industries—from
wholesale distribution to ecommerce—use ERP
solutions.
History: (Detail)
Moreover, even though the "e" in ERP
stands for "enterprise," high-growth and mid-size
companies are now rapidly adopting ERP systems.
Software-as-a-Service (SaaS) solutions—also
referred to as "cloud computing"—have helped fuel
this growth. Cloud-based solutions not only make
ERP software more affordable, they also make
these systems easier to implement and manage.
Perhaps even more importantly, cloud ERP
enables real-time reporting and BI, making them
even valuable to executives, management and
staff. As a result, companies of all sizes and a wide
range of industries are transitioning to cloud ERP
systems. In fact, IT community predicts that SaaS-
based ERP adoption will rise 21 percent annually
Summing Up History:
In 1990 Gartner Group first use the word
ERP as an extension of material requirements
planning (MRP), later for manufacturing resource
planning. However ERP came to represent a larger
thing than MRP and its now far beyond
manufacturing.
Not all ERP packages were just developed

from a manufacturing core. Vendors might began
(or go just) with accounting, maintenance and
human resources. By the mid–1990s ERP systems
addressed all core functions of an enterprise.
Enterprises that is corporations,

governments bodies and non–profit organizations
also began to employ (purchase) ERP systems.
ERP systems are now also available as a service.
Definitions:
“Enterprise resource planning (ERP)

systems integrate internal and
external management information across an entire
organization, ERP systems actually automate
different activities with an
integrated software application.”
The purpose of ERP is to facilitate the flow

of information between all business functions
inside the boundaries of the organization and
manage the connections to outside stakeholders.
Definition:
“Enterprise resource planning (ERP) is

business management software that allows an
organization to use a system
of integrated applications to manage the business.
ERP software integrates all parts of an operation,
including development, manufacturing, sales and
marketing.”
“An integrated information system that

serves all departments within an enterprise.”
Enterprise resource planning:(ERP)
Definition:
“A process by which a company (often a
manufacturer) manages and integrates
the important parts of its business. An
ERP management information
system integrates areas such as planning,
purchasing, inventory, sales, marketing, finance,
human resources, etc.”
It provides the business management

executives with a comprehensive overview of
the complete business execution which in turn
influences their decisions in a productive way.
Explanation:
At the core of ERP is a well managed

centralized data repository (Database) which
acquires information from and supply
information into the applications (ERP).
Information in large business organizations

is accumulated on various servers across many
functional units and sometimes separated by
geographical boundaries. Such information can
possibly service individual organizational units.
ERP System gather and streamline distributed
information at a centralized database.
Explanation:
The term ERP originally referred to the way

a large organization planned to use its
organizational wide resources. Formerly, ERP
systems were used in larger and more industrial
types of companies. However, the use of ERP
has changed drastically over a period of few
years. Today the term can be applied to any
type of company, operating in any kind of field
and of any magnitude (Size).
Explanation:
Today’s ERP software architecture can

possibly envelop a broad range of enterprise
wide functions and integrate them into a single
unified database repository. For example,
functions such as Human Resources, Supply
Chain Management, Customer Relationship
Management, Finance and Manufacturing
Warehouse Management, etc were all
previously stand alone software applications,
generally housed with their own applications,
database and network, but today, they can all
work under a single umbrella – the ERP
architecture.
ERP Architecture:
Summing Up:-
Definition:
“ Enterprise resource planning (ERP)
is business management software that allows an
organization to use the system of integrated
applications to manage the business by integrating
all modules of an enterprise. ”
ERP software consists of many enterprise
software modules that are individually purchased,
based on what best meets the specific needs and
technical capabilities of the organization. Each
ERP module is focused on one area of business
processes, such as product development or
marketing. Some of the more common ERP
modules include product planning, material
purchasing, inventory control, distribution,
Summing up:-
As the ERP methodology has become more
popular, software applications have emerged to
help business managers implement ERP in
other business activities and may also
incorporate modules for CRM and business
intelligence -- and present them as a
single unified package.
As a result one central repository i.e.
database for all information that is shared by the
various ERP modules in order to smooth the
flow of data across the organization.
Integration is Key to ERP Systems
Integration is an exceptionally significant
ingredient to ERP systems. The integration
between business processes helps develop
communication and information distribution,
leading to remarkable increase in productivity,
speed and performance.
The key objective of an ERP system is to
integrate information and processes from all
functional divisions of an organization and
merge it for effortless access. The integration is
typically accomplished by constructing a single
database repository that communicates with
ERP software/ applications providing different
divisions of an organization with various
business statistics and information.
Many larger organizations usually deploy a
single functional system and slowly interface it
with other functional divisions. This type of
deployment of ERP can really be time-
consuming and expensive.
An ERP system integrates/chains all the

below organizational processes together with a
central database repository.
Advantages:
There are many advantages of implementing an
EPR system. A few of them are listed below:
• A perfectly integrated system chaining all the

functional areas together
• The capability to streamline different
organizational processes and workflows
• Sales forecasting, which allows inventory
optimization
• Order tracking, from acceptance through
fulfillment
• Revenue tracking, from invoice through cash
receipt
Advantages:
• Matching Purchase order (what was ordered),

inventory receipts (what arrived), and Costing
(what the vendor or seller invoiced)
• Provides comprehensive enterprise view. Makes
real–time information available to management
anywhere, anytime to make proper decisions
across various departments
• Improved efficiency, performance and
productivity levels
• Protects sensitive data by consolidating data
into a single database structure
• Improved customer service and satisfaction
Disadvantages:
While advantages outweigh disadvantages for

most organizations implementing an ERP
system, Here are some of the most common
obstacles experienced while developing or
implementing an ERP.
• The scope of customization is limited in several
circumstances.
• The present business processes have to be
rethought to make them synchronize with the
ERP .
• ERP systems can be extremely expensive to
implement.
• Extensive training requirements take resources
from daily operations.
Disadvantages:
• There could be lack of continuous technical

support.
• ERP can cost more than less integrated and/or
less comprehensive solutions.
• ERP systems may be too rigid for specific
organizations that are either new or want to
move in a new direction in near future.
• SAP stands for “Systems Applications and
Products.” SAP is the 4th largest software
company in the world. It ranks after Microsoft,
IBM and Oracle.
• SAP Head quarters are in Walldorf, Germany.
SAP was founded in 1972 by five former IBM
engineers.
• SAP offers ERP solution for various industries to
integrate information from various functions of
that industry under one system. SAP ERP is an
integrated software solution that incorporates
the key business functions of the organization.
• There are over 100,800 installations at more
than 28,000 companies. SAP products are used
by 12 million people in more than 120 countries.
END

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Slides # 8 Erp

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Introduction to

ERP applied to inventory management and control

By the 1970s, this had evolved into Material

In the 1980s, MRP grew to encompass

Not all ERP packages were just developed

Enterprises that is corporations,

“Enterprise resource planning (ERP)

The purpose of ERP is to facilitate the flow

“Enterprise resource planning (ERP) is

“An integrated information system that

It provides the business management

At the core of ERP is a well managed

Information in large business organizations

The term ERP originally referred to the way

Today’s ERP software architecture can

An ERP system integrates/chains all the

• A perfectly integrated system chaining all the

• Matching Purchase order (what was ordered),

While advantages outweigh disadvantages for

• There could be lack of continuous technical

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