Professional Documents
Culture Documents
Business Processes
In Classical / Functional / Hierarchical organizations business processes exist but
No single point of accountability No single source of consistent, timely, information about a process
Multiple incompatible systems poorly connected via multiple expensive interfaces
Evolution to ERP
MRP - Material Requirements Planning
what material needed? when & how purchased? how managed? maximize efficiency of physical, financial assets
MRP 1960's
master production schedule material requirements planning capacity requirements planning
MRPII 1970's
sales & operations planning simulation forecasting
ERP 1990's
sales and distribution material management plant maintenance quality management financial accounting controlling investment management human resource management ...
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
ERP Modules
Figure 12.1
ERP Implementation
Need business exec in charge, not IT Make a business case
long term benefits
inventory reduction, customer service,.
Costs
software hardware people (by far the most expensive)
ERP Implementation
Software
ERP, database licenses maintenance support fees add-on packages
Hardware
new client/server architecture network capability backup multiple servers -operations, testing
ERP Implementation
People - for system configuration
internal, consultants
Managers
can require time commitment for several years
ERP Implementation
ERP system configuration
thousands of parameters to set
Need stability, but business constantly changes Difficult to implement, difficult to change
but is a non ERP collection of poorly integrated systems & databases any easier?
ERP Implementation
Training needed
technical staff business staff
20-50% of project budget on educational and skills development Results in less people needed, but more skills, understanding of the organization 4 months to 5 + years to implement
ERP Implementation
Options:
add-on systems where ERP is lacking? keep good legacy systems, build interfaces to good legacy systems? more than one ERP instance?
different divisions, subsidiaries but more than one increases complexity, reduces benefits
PeopleSoft - strong in HR SAP - financial, supply chain Baan - flexible manufacturing software
J.D.Edwards - smaller firms Oracle, PeopleSoft, - middle Baan - mostly middle customers
R/3 Logistics
Sales and Distribution
Production Planning
Materials Management
Plant Maintenance Quality Management Procurement
R/3 Financials
Financial Accounting
general ledger, accounts receivable, payable,...
Controlling
costing, profitability, planning,
Treasury
Cash, funds management,
Capital Investments
Training
Recruitment
Personal management
Presentation
Application
Database
Electronic Marketplace
Internet Buying
Search
Select
Register
Offer
Internet Selling
Buyer
Sell Collect
Seller
Other systems
Operational Systems (Financials & Logistics)