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ERP: An Overview
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MRP (Material Requirements Planning) becamefundamental concept of production
management and control in mid 1970s.
BOM (Bill of Materials) was used.
Then MRP-II (Manufacturing Resource
Planning) included inventory mgmt as well as
plant, personnel planning and distribution
planning.Eventually came ERP which included financial
accounting, HRM, Distribution mgmt etc.
Introduction
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What is ERP?
ERP covers the techniques and conceptsemployed for the integrated management of businesses as a whole, from the viewpoint of the effective use of management resources,
to improve the efficiency of an enterprise.
ERP packages are integrated (covering allbusiness functions) software packages that
support the above ERP concepts.
Initially ERP packages targeted Mfg industry.Now, used in diverse types of industry.
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What is ERP?
ERP software is designed to model andautomate many of the basic processes of acompany with the goal of integratinginformation across the company and
eliminating complex, expensive links betweencomputer systems that were never meant totalk to each other .
ERP software is a mirror image of the major
business processes of an orgn, such ascustomer order fulfillment andmanufacturing.
Its success depends upon reach.
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Reasons for t he Growt h of ERP M arket
To enable improved business performanceTo support business growth requirements
To provide flexible, integrated, real-time decision
support
To eliminate limitation in legacy systems
To take advantage of the untapped mid-market
(medium size organizations)
Future will see fierce battle for market size and
mergers and acquisitions for strategic and
competitive advantage.
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T he Adv ant ag es of ERP
Business Integration ± Automatic data updation,one is able to grasp business details in real time
and carry out various decisions in timely manner.
Flexibility support business growth requirements
± different languages, currencies, accountingstandards covered in one system, Manage
multiple locations of a company.
Better analysis and planning capabilities ±
Becomes possible to fully utilize many types of DSS and Simulation functions
Use of latest technology ± Client/Server
technology, Intranet/Internet, e-Commerce
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Why are ERP P ack ag es being used now?
ERP packages cannot only handle individualbusiness functions but also the entire range of
business functions necessary for the company¶s
operations.
They are targeted at everything from small
businesses to the largest organizations and
composed of a highly flexible decentralized
database and an IS cluster linked by a network.
Global adaptation, represented by ERP
packages¶ multilingual and multi-currency
capacity.
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Problem Areas in ERP Implement ation
The most important thing while installing an ERP
system in a company is the attitude reform of the
employees at all levels of that company.
Companies where the speed of change is fast,have a greater chance of surviving and growing
in this age of intense competition.
Questions like, ³By when and in what way do we
want to do such-and-such?´ or ³How shouldsuch-and-such a thing be achieved?´ and so on
should be answered.
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Time schedules and deadlines are to be set andadhered to.
There are many misunderstandings caused by
wrong estimates i.e. company does not have anyprevious experience in estimating the cost of such a massive project.
In ERP implementation, there are substantialadditional costs that are necessary, such asconsultation, customization, training andeducation.
Problem Areas in ERP Implement ation
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Roadmap for successful ERP Implement ation
Effective to invite outside consultants with wideexperience in package implementation to the user side.
This consultant can act as a neutral person to resolve
conflicts and can push the project ahead.
Clearly identifying company objectives and targets and
making these known and recognized throughout the
entire company.
The manner in which the company management is
involved in the project and the speed of decision-making
is important.Selection of experienced consultants and integrators.
Company should focus on in-house consultants and
integrators.
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T he Role of EDP
EDP professionals and System Analysts constructssystems that are tailor-made for the orgn. These systems
are designed to cater to the current needs of the
company. So, no scope for growth or scalability.
Gaining the approval of the company mgmt to eliminate
the unwanted and redundant business processes, tointegrate the various business functions and to ensure
effective information flow between various business
functions decides the success or failure of the ERP
implementation.Information systems must become CENTRAL ± as a
strategic weapon ± to business reform, be designed from
a managerial perspective and have persuasiveness in
respect to business areas.
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T he Future of ERP P ack ag es
There are still many problems with ERP packages, butthey are fit to be rapidly utilized in the future.
In terms of package selection, competition among
vendors increases the options for users, and will be
advantageous in terms of function expansion and
services.
The most important point in favour of using these
packages, is their ability to adapt to version upgrades of
the packages themselves.
The selection of packages that are constructed so as torequire minimum customization and whose customised
portions are guaranteed also for new versions is
important in this respect.
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