Enterprise Resource Planning

Learning Advisor
Prof Jyotiranjan Hota,
KSOM,Bhubaneswar
Click to add text
 Evolution of Enterprise Application
A method of using computer technology to plan for the
raw materials required for production in line with the
expected demand was developed(MRP) in Mid 1960s

A number of businesses had started using this method to

manage their inventory effectively by mid 1970s

Many companies realized the need for automation in their

capacity planning, production scheduling and shop floor control
functions in the 1980s which gives rise to MRP II with a central
database which recorded,generated and managed reports on
various activities

In late 1980s ,MRP II transformed into ERP where HR,Financial

accounting etc were integrated with MRP II
2000s Extended ERP
1990s

Enterprise Resource Planning

(ERP)
1980s

Manufacturing Resources Planning (MRP II)

1970s

Material Requirements Planning (MRP)

1960s

Inventory Control Packages

 ERP : An Overview

ERP is a software application that helps an organization

integrate various functions, make optimum utilization of
management resources and improve it’s process efficiency

Data entered in any one module is available to other

modules that need the data(Proves consistency and
Integrity of data)
 ERP Requires

 Strong executive support to implement

 Process approach rather than “silos”
 Change in business procedures (BPR)
 Change in organizational structure, culture, strategy
 Technology change
 ERP

 Difficult to install
 Very large and complex software
 Provides info about all aspects of the business --
worldwide
 Reduces inventory, waste
 Easy communication with customers, suppliers
 Before ERP

 Multiple systems, different interfaces, difficult to

extract info about customers, sales,...
 Hard to maintain, many languages, databases,
inconsistencies
 Can take weeks or months to obtain info about
customers, or where systems changes are needed
 After ERP

 Integrated systems
 Consistent interface
 One database
 Access to current data
 Improved planning capabilities
 Multinational capabilities
 System automatically:

 Schedules shipping
 Reserves material
 Orders parts from suppliers
 Schedules assembly
 Checks customer credit limit
 Updates sales & production forecasts
 Creates MRP & bill-of-material lists
 System automatically:

 Updates salesperson's payroll

 commission
 travel account
 Calculates product cost & profitability
 Updates accounting, financial records
 ERP Implementation

“As-is” Process Study

 “To-Be” Process Design
 Simulation
 Actual Implementation
 Factors responsible for successful ERP
Ipmlementation

 Understanding Corporate needs and Culture

 Complete Business Process Changes
 Communicate Across the Organization
 Strong Project Leadership
 Efficient and Capable Project Leader
 Balanced Teams
 Operational Advantages of ERP
Implementation

 Lead time Reduction

 Punctuality in Shipment
 Reduction in Cycle Time
 Improved Supplier Performance
 Flexibility and Reduction in Quality Cost
 Improved resource utility
 Reasons for Failure

 Cultural
 Lack of commitment of top management
 Political
 Failure to follow “proper” system selection
methodology
 Lack of sufficient implementation planning/ project
management
 Next Generation ERP…
 Provides IDSS and Integration capabilities
 Supported by SCP Systems
 SCP systems extracts data from each component
of supply chain & present it in a proper format that
helps the management understand the entire market
scenario & get a clear picture of where the
organization is heading
 Management can develop a production plan and
review it with the help of the SCP system
 SCP helps management to analyze the impact of a
plan across the supply chain as well as on the
customer demand
Thank You