Resource planning

System
Resource
Planning
Systems ■ MRP
■ Closed loop MRP
■ MRP II
■ ERP
■ SCM
■ Next emphasis > E-commerce
Enterprise resource planning (ERP) is defined as the ability to deliver an integrated
suite of business applications. ERP tools share a common process and data model,
covering broad and deep operational end-to-end processes, such as those found in
finance, HR, distribution, manufacturing, service and the supply chain.

Material requirements planning (MRP) is a production planning, scheduling, and

inventory control system used to manage manufacturing processes. Most
MRP systems are software-based, but it is possible to conduct MRP by hand as well.
... Plan manufacturing activities, delivery schedules and purchasing activities.

Manufacturing resource planning is defined as a method for the effective planning of

all resources of a manufacturing company. Ideally, it addresses operational planning in
units, financial planning, and has a simulation capability to answer "what-if" questions
and extension of closed-loop MRP.
What is
ERP? 3

× The practice of consolidating an enterprise’s

planning, manufacturing, sales and marketing efforts
into one management system.

× Combines all databases across departments into a

single database that can be accessed by all
employees.

× ERP automates the tasks involved in performing a

business process.
4 Before ERP example

Order
parts

Check for parts

Ship pa

Call back “not in stock”

rts.

We ordered parts
Sales dept.
Sends report Demographic Files
Sh
ip
pa
rts
.

Ship parts.
Vendor
Accounting dept.
Warehouse

“we ordered parts”

Accounting Files Inventory Files

“we need parts”

Place order

Sends report

Purchasing dept.
Purchasing Files
5 Typical Business Process :
Key observation

× A typical enterprise has many Departments/ Business

units(BU).
×
These Departments/ BU continuously communicate and
exchange data with each other.
× The success of any organization is in effective
communication and data exchange within the
Departments/ BU as well as associated third party such
as Vendors, Outsourcers and Costumers.

× Also known as Decentralized System.

 Problems with Decentralized
6
System
• Numerous separate information system are developed
individually over the time.
• Integrating the data becomes time and money consuming.

• Inconsistences and duplication of data.

• High inventory, material and human resource cost.

7 Centralized System :
ERP example
Orde
r parts

Sales Dept. Inv Accounting

ent
ory
ata
dat ld
a ia e
anc n g
Fin che
ex
a ta
gd
s ni

Bo
ch a

ok
r Database
Pu

sI
nv n
e to
Order is placed

ry
Vendor
Purchasing Dept.
Ship parts
Warehouse
Invoice Accounting
8 Centralized System :
Key observation

•Data is maintained at a central location and is shared

with various Departments.
•Departments have access information/ data of the other
Departments/ BU/
 Benefits of Centralized System
9

• Eliminates the duplication, discontinuity and

redundancy in data.
• Provides information across departments in
real time. Provides control over various
business processes.

• Increase Productivity, better inventory management,

promotes quality, reduced material cost, boosts profits.
• Better Customers interaction, increased throughput,
improves customer services.
ERP Application
Components
 11 ERP Components

Financial Management
At the core of ERP are the financial modules,
including general ledger, accounts receivable, accounts payable, billing and fixed
asset management. If your organization is considering the move to an ERP
system to support expansion into global markets, make sure that multiple
currencies and languages are supported.
Other functionality in the financial management modules will include budgets,
cash-flow, expense and tax reporting. The evaluation team should focus on areas
that are most important to support the strategic plans for your organization.
12 ERP Components

Business Intelligence
Business Intelligence (BI) has become a standard component of
most ERP packages. In general, BI tools allow users to share and
analyse the data collected across the enterprise and centralized in
the ERP database. BI can come in the form of dashboards,
automated reporting and analysis tools used to monitor the
organizational business performance. BI supports informed
decision making by everyone, from executives to line managers
and accountants.
13 ERP Components

Supply Chain Management

Supply Chain Management (SCM), sometimes referred to as logistics, improves

the flow of materials through an organization by managing planning,
scheduling, procurement, and fulfillment, to maximize customer satisfaction
and profitability. Sub modules in SCM often include production scheduling,
demand management, distribution management, inventory management,
warehouse management, procurement and order management..
14 ERP Components
Human Resource Management

Human resource management ERP modules should enhance the employee

experience – from initial recruitment to time tracking. Â Sub modules can
include payroll, performance management, time tracking, benefits,
compensation and workforce planning. Self-service tools that allow
managers and employees to enter time and attendance, choose benefits
and manage PTO are available in many ERP solutions.
 ERP Components
15 • Manufacturing modules make manufacturing
operations more efficient through product
configuration, job costing and bill of materials
management. ERP manufacturing modules
often include Capacity Requirements Planning,
Materials Requirements Planning, forecasting,
Master
Production Scheduling, work-order management and shop- floor
control
Integration
Key to the value of an ERP package is the integration between
modules, so that all of the core business functions are connected.
Information should flow across the organization so that BI reports on
organization-wide results.
16
ERP Evolution
From manufacturing co-ordination to
enterprise wide backend solutions.
Costs of ERP
Hidden 24

Costs of ERP
× Training
× Integration and testing
Data conversion
×
Data analysis
×
Consultants
×
Replacing best and brightest staff after implementation
×
Implementation teams can never stop
×
× Waiting for ROI
× Post-ERP depression
Benefits of
ERP
Systems 25

× Improving integration, flexibility

× Fewer errors
× Improved speed and efficiency
× More complete access to information
Lower total costs in the complete supply chain
×
Shorten throughput times
×
× Sustained involvement and commitment of the top management
 26 Benefits of ERP Systems

• Reduce stock to minimum

• Enlarge product assortment Improve product quality

•Provide more reliable delivery dates and higher service to the customer

•Efficiently coordinate global demand, supply and production

• Provides integration of the supply chain, production, and administration

• Creates commonality of databases

• Can incorporate improved best processes

• Increases communication and collaboration between business units and sites

• Has an off-the-shelf software database
• May provide a strategic advantage
 Disadvantages

• Is very expensive to purchase and even

more so to customize
• Implementation may require major changes in
the company and its processes
• Is so complex that many companies cannot
adjust to it
• Involves an ongoing, possibly never
completed, process for implementation
• Expertise is limited with ongoing staffing
problems
 ERP
Implementation
Phases

4 Major Phases:
Concept/initiation
×
Development
×
Implementation
×
× Closeout/Operation and maintenance
29

× Expensive (can costs 100 thousands to millions of dollars)

× Time-consuming (can take months to years)

× Great risk for the organization

× Transfer of Knowledge

× Acceptance with the company

Risks with ERP

Implementation
30 Causes of ERP Failures

•Business mangers and IT professionals underestimate the complexity of the

planning, development, and training needed

•Failure to involve affected employees in the planning and development phases

•Trying to do too much too fast in the conversion process

•Failure to do enough data conversion and testing

Best Practices of
ERP
Implementation

• Change Management
• Extensive Education and
Training
• Data Clean up and Data
Integrity
• Implementation is
viewed as an ongoing
process
Best
36
Practices of ERP Implementation

× Implementation is viewed as an ongoing process

× Ongoing need for training and software support
after implementation.
× Ongoing need to keep in contact with all system
users and monitor the use of the new system.
× Ongoing process of learning and adaptation that
continually evolves over time.
31

The benefits of a properly selected and implemented ERP system

can be significant.
× An average, 25 to 30% reduction on inventory costs; 25%
reduction on raw material costs.
× Lead-time for customers, production time, and production
costs can be reduced.
× BUT cost of implementing can be quite high and risks are great.

Conclusion