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Introduction: ERP- Enterprise resource planning, a business management system that integrates all functional units of the business, including planning, manufacturing, sales, marketing and finance, through a common corporate database. In short ERP systems integrate all data and processes of an organization into a unified system.

The term ERP originally implied systems designed to plan the use of enterprise-wide resources. Although initially ERP originated in the manufacturing environment, today's use of the term ERP systems has much broader scope. ERP systems typically attempt to cover all basic functions of an organization, regardless of the organization's business or charter. Businesses, non-profit organizations, non-governmental organizations, governments, and other large organizations are using ERP systems.

An organization may already have two or more independent applications. These applications would require some interfaces for extracting data. (Using interface, one system can communicate with other system and exchange data). If these applications are replaced by an ERP system, it would eliminate the need for external interfaces previously required between systems, and provides additional benefits that range from standardization and lower maintenance (one system instead of two or more) to easier and greater reporting capabilities (as all data is typically kept in one database).

Examples of modules in an ERP, which formerly would have been stand-alone applications include: Manufacturing, supply Chain, Financials, Customer Relationship Management (CRM), Human Resources, Water house Management and Decision Support System.

MRP vs. ERP Manufacturing management systems have evolved in stages over the past 30 years from a simple means of calculating materials requirements to the automation of an entire enterprise. Around 1980, over-frequent changes in sales forecasts, entailing continual readjustments in production, as well as the unsuitability of the parameters fixed by the system, led MRP (material Requirement Planning) to evolve into a new concept : Manufacturing Resource Planning (or MRP2) and finally the generic concept Enterprise Resource Planning (ERP).

Major ERP vendors:

Overview: Some organizations implement only portions of an ERP system and develop an interface to other stand-alone systems for their other application needs. For example, the PeopleSoft HRMS and financials system may be perceived to be better than SAP's HRMS solution. And likewise, some may perceive SAP's manufacturing and CRM systems as better than PeopleSoft's equivalents. In this case these organizations may choose to purchase the PeopleSoft's HRMS and financial modules from Oracle, and their remaining applications from SAP.

Ideally, ERP delivers a single database that contains all data for the software modules, which would include:

Manufacturing: Engineering, Bills of Material, Scheduling, Capacity, Workflow Management, Quality Control, Cost Management, Manufacturing Process, Manufacturing Projects, Manufacturing Flow.

Supply Chain Management: Inventory, Order Entry, Purchasing, Supply Chain Planning, Supplier Scheduling, Inspection of goods, Claim Processing, Commission Calculation.

Financials: General Ledger, Cash Management, Accounts Payable, Accounts Receivable, Fixed Assets

Projects: Costing, Billing, Time and Expense, Activity Management.

Human Resources: Human Resources, Payroll, Training, Time & Attendance Benefits.

Customer Relationship Management: Sales and Marketing, Commissions, Service, Customer Contact and Call Centre support.

Enterprise Resource Planning is a term originally derived from manufacturing resource planning (MRP II) that followed material requirements planning (MRP). It further evolved into ERP. ERP systems typically handle the manufacturing, logistics, distribution, inventory, shipping, invoicing, and accounting for a company. Enterprise Resource Planning or ERP software can aid in the control of many business activities, like sales, marketing, delivery, billing, production, inventory management, quality management, and human resource management.

ERPs are cross-functional and enterprise wide. All functional departments that are involved in operations or production are integrated in one system. In addition to manufacturing, warehousing, logistics, and information technology, this would include accounting, human resource, marketing, and strategic management.

Before

Prior to the concept of ERP, various departments within an organization (for example, HR department, the payroll department) would have their own computer systems. The HR computer system (often called HRMS or HRIS) would typically contain information on the department, reporting structure, and personal details of employees. The payroll department would typically calculate and store paycheck information. Each system would have to rely on a set of common data to communicate with each other. For the HRIS to send salary information to the payroll system, an employee number would need to be assigned and remain static between the two systems to accurately identify an employee. There were complications with these separate systems. For instance, a person could not be paid in the payroll system without an employee number.

After

ERP software, among other things, combined the data of formerly separate applications. This made the worry of keeping numbers in synchronization across multiple systems disappear.

Implementation

Implementing ERP software is typically not an “in-house” skill, so even smaller projects are more cost effective if specialist ERP implementation consultants are employed. The length of time to implement an ERP system depends on the size of the business and the scope of the change. A small project (e.g., a company of less than 100 staff) may be planned and delivered within 3 months; however, a large, multi-site or multi-country implementation may take years.

Consulting Services: The consulting team is typically responsible for your initial ERP implementation and subsequent delivery of work to tailor the system beyond “go live”. Typically such tailoring includes additional product training; creation of process triggers and workflow; specialist advice to improve how the ERP is used in the business; system optimization; and assistance writing reports, complex data extracts or implementing Business Intelligence. The consulting team is also responsible for planning and jointly testing the implementation. This is a critical part of the project, and one that is often overlooked.

Consulting for a large ERP project involves three levels; systems architecture, business process consulting (primarily re-engineering) and technical consulting (primarily programming and tool configuration activity). A systems architect designs the overall dataflow for the enterprise including the future dataflow plan. A business consultant studies an organization's current business processes and matches them to the corresponding processes in the ERP system, thus 'configuring' the ERP system to the organization's needs. Technical consulting often involves programming. Most ERP vendors allow modification of their software to suit the business needs of their customer.

Customization Services: Customization is the process of extending or changing how the system works by writing new user interfaces and underlying application code. Customizing an ERP package can be very expensive and complicated, because many ERP packages are not designed to support customization, so most businesses implement the best practices embedded in the acquired ERP system.

One often-neglected aspect of customization is the associated documentation. While it can seem like a considerable and expensive overhead to the customization project, it is critical that someone is responsible for the creation and user testing of the documentation. Without the description on how to use the customization, the effort is largely wasted as it becomes difficult to train new staff in the work practice that the customization delivers.

Maintenance and Support Services: Once your system has been implemented, the consulting company will typically enter into a Support Agreement to assist your staff to keep the ERP software running in an optimal way. To minimize additional costs and provide more realism into the needs of the units to be affected by ERP (as an added service to customers), the option of creating a committee headed by the consultant using participative management approach during the design state with the client's heads of departments (no substitutes allowed) to be affected by the changes in ERP's to provide hands on management control requirements planning. This would allow direct long-term projections into the client's needs, thus minimizing future conversion patches (at least for the 1st 5 years operation unless there is a corporate-wide organizational structural change involving operational systems) on a more dedicated approach to initial conversion.

Key Benefits :

In the absence of an ERP system, a large manufacturer may find itself with many software applications that do not talk to each other and do not effectively interface. Tasks that need to interface with one another may involve:

Change how a products is made, in the engineering details, and that is how it will now be made. Effective dates can be used to control when the switch over will occur from an old version to the next one, both the date that some ingredients go into effect, and date that some are discontinued. Part of the change can include labeling to identify version numbers.

Computer security is included within an ERP to protect against both outsider crime, such as industrial espionage, and insider crime, such as embezzlement. ERP security helps to prevent abuse as well.

Financial and Public Services:

Manufacturing:

Service:

Featured Institutes : Delphi Computech, Pune

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