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˜ Not just buildings, machinery or money.
˜ Business is people who voluntarily come together because
they can do much more working together than they could
work alone.
˜ There are also people who work on their own known as
Entrepreneurs.
˜ Land, labor and capital when combined in a rational way
becomes productive.
˜ ERP Systems help the management by making the planning
process more productive and efficient.
0 


˜ ERP packages contain different modules.
˜ In this chapter we will see some of the most common
available in almost all packages.
˜ ERP is different and capable of producing dramatic results in
the integration and automation of various business functions.
˜ They send and receive data across departmental barriers.
˜ ERP reduces response and reaction times which is
automation of various procedures and tasks.

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Natural Resources + Human Resources+ Financial Resources

Management

Production Process

Product And Services

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˜ 0ompany receives a purchase order
˜ Order entry clerk enter the order details
˜ Order details passed on to the finished goods inventory
section
˜ Inventory clerk will check whether the items ordered are
available or not.
˜ If items are available, the distribution department is notified,
they will pack the item and send it to the customer.
˜ If the item is not in stock then the production planning
department is notified, which in turn schedules the item for
production.
˜ The manufacturing department receives the production plan
and checks whether all the items required to make the in the
inventory.
˜ If not, the purchasing department is asked to procure raw
materials.
˜ If the materials are available, then the production department
in association with the plant maintenance sets up the
machines for production.
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Order processing in an
ERP System



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˜ Same activities happens differently in an ERP System.
˜ As soon as order entry clerk, enters the order into the
system, the system clerk checks the inventory records, and
finds out whether the items are availaible or not.
˜ If the items are available, procedures are triggered
automatically that will inform the people in the sales and
distribution department and finance department.
˜ The information will contain the details of the items shipped,
the most economic route to the customer and so on.
˜ System will trigger the procedures in the financial module so
that invoices are sent to the customer.
˜ The information is transferred electronically through
electronic data transfer and payments received through
Electronic Funds transfer.
˜ If items are not available, then the production planning
module makes a production schedule which is available to the
production, material management and plant maintenance so
that everybody is prepared to start the production schedule.
Π  
 

 

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HR
Management

Financial Production
Management Planning

Manufacturing
ERP Plant
Maintenance
System

Quality Sales and

management Distribution

Materials
Management
  

˜ All ERP packages contain many modules. The number and
features of the modules vary with the ERP packages. Some of
the most common modules available in almost all packages
are:
˜ ] Finance
˜ 2 Plant Maintenance
˜ 3 Quality Management
˜ 4 Material Management, etc
˜ 5 Inventory Management
˜ 6 Manufacturing and production planning
˜ 7 Sales and distribution
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˜ The entire concept of information technology is based on the premise 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.
˜ You need a set of processes and views of your data that provided up-to-the
minute financial information in exactly the form you need it to make that
critical difference and help with that critical decision.
˜ Accounting software needs access to information in each area of organization,
from R&D and market research through manufacturing, distribution and sales.
Financial solution must provide the management with information that can be
leveraged for strategic decisions, in order to achieve comprehensive advantage.
˜ This section provides an overview of the financial solutions in most the ERP
packages. In today·s business enterprise, you need to know that your financial
decisions are based on today·s data, not numbers from records closed a month
ago, or even a week ago.
˜ And you need to know that this same ¶today·s· data represents every segment of
your organization's activities, whether your enterprise stretches across a room
or around the globe. This is essential, because the most efficient way to get our
enterprise to where you want it tomorrow is to know exactly where it is today.
˜ What ever be 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 functioning 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 recourses to
logistics.
˜ The Finance modules of the most ERP systems provide financial functionality
and analysis support to thousands of businesses in many countries across the
globe. These ERP systems include not only financial application components,
but also Human resources, Logistics, Business workflow and links to the
internet.
  
˜ The achievement of world class performance demands
delivery of quality products expeditiously and economically.
Organizations simply cannot achieve excellence with
unreliable equipment. The attitude towards maintenance
management has changed as a result 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.

ë e major subsystems of a plant Maintenance module are:

˜ Preventive Maintenance 0ontrol
˜ Equipment Tracking
˜ 0omponent Tracking
˜ Plant Maintenance 0alibration Tracking
˜ Plant Maintenance Warranty 0laims Tracking

 
˜ The Material Management module optimizes all purchasing processes
with workflow-driven processing functions, enables automated supplier
evaluations, lower procurement and warehousing costs with accurate
inventory and warehouse management and integrates invoice
verification. The main modules of the Material Management module are:

˜ 1. Pre-purchasing Activities
˜ 2. Purchasing
˜ 3. Vendor Evaluation
˜ 4. Inventory Management
˜ 5. Invoice Verification and Material Inspection.
˜ Pre-purchasing Activities
˜ This system supports the complete cycle of bid invitation,
award of contract and acceptance of services. The pre-
purchasing activities include maintaining a service master
database, in which the descriptions of all services that are to
be procured can be stored. The system also keeps a separate
set of service specifications that can be created for each
concrete procurement project or proposed procurement in
the purchasing document. Sets of service specifications may
include both items with services and items with materials.
˜ When creating such specifications, the user does not have to
list individual services manually. Instead, the data is simply
copied from the master data. Use of this technique means
that data only has to be entered once. The manual entry
effort is reduced to a minimum.
˜ There are two ways of entering service specifications-planned
and unplanned. Planned service specifications mean that
service whose precise nature and intended scope are already
known at the beginning of a procurement project.
˜ Purchasing - Purchasing is a very important component of
the Material Management module. The Material Management
module is fully integrated with other modules in the system.
It supports all phases of material management: materials
planning and control, purchasing, goods receiving, inventory
management and invoice verification. Good communication
between all participants in the procurement process is
necessary for purchasing to function smoothly.
˜ Purchasing communicates with other modules in the system
to ensure a constant flow of information.
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˜ Human resource management is an essential factor of any
successful business. The competitive environment of the next
millennium, with its economic and technological challenges,
with effect the HR department in the same way it wills all
the other areas of your enterprise. In short HR manager must
continually review and optimize their business process.
˜ The human resource management system has to be
adaptable to company ² specific requirements, and should
constantly grow with increasing HR requirement. It should
cover all the function required in business practice.
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˜ 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 module 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
Requirement Planning (DPR) 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.
  
 
˜ It enables a company to make the correct purchase decision 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 on-line requisitioning, 0entralized contract
management, just-in-time schedules and vendor management.
˜ 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 of
time. The system will have facility to generate purchase contracts.
Sophisticated vendor management tools allow companies to check
the reliability and performances of vendors.
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Supply chain
management
0ustomer
Supply chain
Relationship
execution
Management

Service
Management ERP Supplier
relationship

Systems Extended
Project
Financial
Management
Management

Business Business
Analytics Intelligence
%
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˜ SAP offers the various functions as shown in the diagram.
˜ Similarly almost all the major vendors offer the host of
technologies of the organization to their ERP offerings.