1 ERP: Enterprise Resource Planning CK Farn Tel: (03) mailto:

2 Meaning of ERP A term coined in the 1980’s Just like other terms, “ERP” was soon abused Today, many basic business systems with internal financial management, inventory management and operations control systems are referred to as ERP But, we have to accept the wrong usage

3 Business Operations: Very Early Stage One man show, everything is connected Procurement Inventory Production Sales Delivery

4 Business Operations: Early Stage, with independent functions Barrier Procurement Inventory Production Sales Delivery

5 ERP: Pre-installation No integration across functions Sales Production Delivery Input Output

6 ERP: Objective Functional integration Input Output Sales Production Delivery

7 Internal Functional Integration Production Management Logistics Management Material Management Barrier

8 Logistics Management ERP Ideal: Internal Integration Production Management Material Management Barrier

9 Supply Chain Management Sales Force Automation Internet Integration Business Intelligent Customer Relationship Management Knowledge Management Electronic Commerce ERP II ERP Enterprise Resource Planning (+BPR ， HR Logistics Service..) MRP II Manufacturing Resource Planning (+Cash flow) MRP Manufacturing Resource Planning (+Capacity) mrp Material Requirement Planning Evolution of ERP

MRP: Material Requirement Planning MRP: Material Requirement Planning Payroll GL: General Ledger AP: Accounts Payable AR: A/C Receivable EDI-Electronic Data Interchange EDI-Electronic Data Interchange Planning Scheduling Distribution MRP Ⅱ :Mfg Requirement Planning MRP Ⅱ :Mfg Requirement Planning HR: Human Resource FMIS: Financial Mgmt Information Systems FMIS: Financial Mgmt Information Systems E-Commerce SFA: Sales Force Automation SFA: Sales Force Automation CRM: Customer Relationship Mgmt CRM: Customer Relationship Mgmt SCM Supply Chain Management SCM Supply Chain Management ERP Enterprise Resource Planning ERP Enterprise Resource Planning E-Business ESCM Extended SCM EERP Extended ERP *source: HP Evolution of Business Systems

11 ERP Packages Large systems SAP R/3, Oracle Costs above NT$100 Mil, before year 2000 Including license fee, business process consultant, systems modifications, installation etc. Middle level systems DSC( 鼎新 )Tiptop, DSC WorkFlow ERP, FAST Technologies ( 漢康 ) NT$ Mil Small Systems DSC SmartERP ，正航，高格，鼎盛

12 ERP Integration: SAP Sales Production Sales order SOP MPS MRP Planned order Produc- tion order Delivery Customer Billing Shop floor control Requi- sition Vendor selection Purchase order Goods receipt Invoice verifi- cation Financial controlling Resource controlling Logistics controlling Sales, Production, Purchasing, Warehouse Customer Order Customer Payment Vendor Payment Inventory Sourcing Presales Activity Purchasing Mat.mgt

13 Invoices AR ENG BOM WIP Bills and Routings Shipments ECOS Work Orders GL AP Planning (MRP) PO Material Requirements Enterprise Demand Vendor PO Interplant PO Receipts Work Orders Customers Journal Entries Journal Entries Vendor Invoices Vendor Payments Transportation Information Bills Items OM INV Internal Payments Corporate Journal Entries Shipments Orders FA Mass Addition Journal Entries COST Receipts Financial Sales HR Payroll Workflow ProductionHR. ERP Integration: Oracle

14 Customers Post ERP: Supply Chain Integration Internal Supply Chain Suppliers 夥伴關係 Integration of Supply and Demand Chains

15 Implementation of ERP After much hardwork, the system is functioning smoothly Question: Are the business operations integrated? Has the inter-functional barriers been removed?

16 Driving a Car You bought a 400 horse-power Ferrari How fast can you drive? Routes? Freeway Dirt road Weather? Clear sky Misty Traffic? Light Congested

17 However, you can be sure… In an era of ox- and mule-carts … Your driving speed will be slow There won’t be freeways, it is useless even if there is The Same goes with ERP No integration without ERP Barriers cannot be removed Even with ERP, integration is not automatic

18 Successful ERP Implementation Success System installation Daily operational usage Benefits realized BPR is essential Business Process Reengineering

19 Business Process Reengineering The fundamental rethinking and radical redesign of core business processes to achieve dramatic improvements in critical performance measures such as quality, cost, and cycle time. Source: Adapted from Hammer and Champy, Reengineering the Corporation, 1993

20 BPR Example Which is shorter?

21 New Process Major Concepts: Multiple servers, one queue Multiple services per server

Ford Accounts Payable Process* Accounts Payable Accounts Payable Vendor Goods Receiving Payment Invoice Receiving document Purchasing Purchase order Copy of purchase order *Source: Adapted from Hammer and Champy, 1993

Ford Procurement Process Accounts Payable Accounts Payable Vendor Goods Receiving Payment Goods received Purchasing Purchase order Purchase order Data base

24 Express Mail in the US Traditional Express service Point to point Complicated network and routing 3 days Around $10

25 Air Force base in Memphis Computerized operations Centralized dispatch Guaranteed 24 hour delivery Noon-to-noon 3 times the price Number 1 within 3 years The Rise of FedEx