Enterprise Resource Planning (ERP) System

An ERP system is a commercial software package that enables a company to integrate the data used throughout the entire organization.

May be the most important development in the corporate use of information technology in the 90s.

(Source: Davenport, 1998)

Information Fragmentation

Information is typically spread across numerous separate computer systems, each housed in individual function, business unit, region, factory or office.

This results in redundant data, need for reentering or reformatting data, etc.

Interoperability problems exist between individual systems.(Source: Davenport, 1998)

Information Integration

At the core of an ERP software system is a single comprehensive database, which streamlines the flow of information throughout a business.

The database collects data from and feeds data into modular applications supporting virtually all of a company’s business activities.(Source: Davenport, 1998)

ERP Software Modules

FinancialsHuman Resources and Pay RollDistribution/LogisticsSales & MarketingManufacturing

Product Data Management Material Planning Resource & Capacity Planning Shop Floor Management Quality Management, etc.

(Source: Davenport, 1998)

AN ERP SYSTEMAN ERP SYSTEM

Centraldatabase

Financial

Manufac-turing

Inventory and Supply

Back-OfficeAd and

Workers

SUPPLIERS

HumanResource

Mgmt

Reporting

Managers and

Stakeholders

Employees

Service

Sales &Delivery

SalesForce

&CustomerService

Rep

Customers

(Source: Davenport, 1998)

Big Five - JBOPS

OneWorld (www.jdedwards.com) BaanERP (www.baan.com) Oracle (www.oracle.com)PeopleSoft (www.peoplesoft.com) SAP’s R/3 (www.sap.com)

ERP Implementation

ERP systems require a major commitment and

investment,often require companies to modify

some of their processes to accommodate the software, and

can take a long time to implement.

(Source: Davenport, 1998)

ERP & Business Processes

A company often has to modify some of its business processes to accommodate the ERP software system.

The organizational changes resulting from these modifications could easily overwhelm a company.

Furthermore, some of these modifications may not be acceptable to the company. (Source: Davenport, 1998)

Benefits of ERP Systems

Automated update of related information when new information is entered in one module.

Direct access to a wealth of real-time operating information.

These benefits could translate into dramatic gains in productivity and speed.

(Source: Davenport, 1998)

Current Trends in ERP Software

Easy-to-install and relatively inexpensive ERP modules.

Enterprise extension software that plugs “holes” within the factory expands ERP-style benefits beyond the

factory.

(Source: Bylinsky, 1999)

ERP Modules vs ERP Systems

ERP modules designed specifically for manufacturers using newer concepts. For example, Pivot.Man from Pivotpoint.

In many cases they don’t force a company to change its operations to suit the software.

(Source: Bylinsky, 1999)

Enterprise Extension Software

These hook on to traditional ERP systems as well as to the newer ERP modules.

Within the factory, Manufacturing Execution Systems (MES) bridge the gap between the plant and ERP programs. For example, Dynamic Performance Monitoring (DPM) software from Foxboro.

(Source: Bylinsky, 1999)

Enterprise Extension Software (continued)

Front-office and back-office software that extends ERP-style benefits beyond the factory.

An example of a back-office software is CSM (Component and Supplier Management) software from Aspect Development Corporation, for the in-bound supply chain.

(Source: Bylinsky, 1999)

Enterprise Extension Software (continued)

On the front-office side, customer relationship management (CRM) is the hottest area.

Siebel systems is a leading manufacturer of CRM software.

The Big Five are also developing CRM extensions for their ERP systems.

(Source: Bylinsky, 1999)

e-Commerce

Using the Web and other electronic means for buying, selling and distributing goods and services

(Source: Alter, 1999)

Electronic Data Interchange (EDI)

Allows companies to exchange documents in a structured and computer-processable format.

Helps to automate and streamline a business by eliminating or simplifying clerical tasks, speeding information transfer, reducing data errors, and eliminating business processes.

(Source: Fu et al., 1999)

e-Commerce

Evolution from VAN-based EDI to Web-based EDI.

Web-based EDI addresses the needs of small and medium-sized firms.

Business-to-consumer and business-to-business.

(Source: Fu et al., 1999)

Evolution of e-Commerce

VAN-based EDI needs considerable infrastructure application, translation software and

communication network over private VANs

Web-based EDI low-cost transport mechanism world-wide connections XML documents

(Source: Fu et al., 1999)