Enterprise Resource planning

Example Imagine that you organize a party by next month to celebrate your birthday, and analyze the things you do for that. 1.Make a list of guests –suppose 40 people 2.Arrange food and beverage list 3. check what you have and list what you have to buy 4. invite people 5.Order for decoration 6.Music The situation explained above is similar in any business. Here all these information is vital for the production and satisfaction of customers.

What is ERP ? ERP means a software system that manages all information in an organization. Such as: Internal information – HR, Finance, Manufacturing information, capability information, Inventory information, sales information e.t.c External information – CRM, Supplier information

Why do we use ERP in business? Or importance of ERP ERP changes the company information system into a smooth running integrated (connected) machine. It is important because it brings all relevant information together. It helps for planning and control. It helps in decision making. It helps to decide when an activity should take place. It helps to understand, how much capacity needed.

Definition of ERP The integration of all important resource planning systems in an organization, that integrates planning and control with other function of business.

The origin of ERP or how ERP developed over the years? 1970 MRP system came into action. Material Requirement Planning. It also was operated via computer. MRP system was a system to make volume and timing calculations. ( how many should be made, and when to be made ) 1980 MRP II - It was expansion of MRP, but was sophisticated, where solutions were provided to handle changes in the operation. It also used computers and moreover desktop computers and LANs. ERP Integrated all functions in business together. Made information available between all functions. Web-based ERP Integrated ERP planning with customers and suppliers via internet.

I.Material Requirement Planning MRP is a system to make volume and timing calculations. It uses two important data for the operation: 1.Customer orders 2.Forecast demands This includes 4steps: 1.Demand management - management of customer orders and sales forecast. Manage the changes in customer orders time-to-time and forecast the applicable demand. Again, combine both the customer orders and forecasts. This will help to understand what should happen.

2. Master Production Schedule After the first stage we have the information of the volume(quantity) and timing (when) of the end product to be made available. This information is known as Master Production Schedule. Now this will help to understand: What is assembled ? What is manufactured ? What is bought ?

3.BOM – bill of materials and inventory checks Now, we have Master Production Schedule which gives information as how many needed and when. Now BOM or bill of materials used for the production of goods and services. BOM is the list of requirements for the production of goods and services. When using BOM check the inventory record to understand the stock. Now use MRP netting to find the total requirements. MRP Netting means the calculation using Master Production Schedule and BOM.

4. Closed-Loop MRP system Finally check, the capacity levels to make sure whether plans are practical to operate.

MRP II MRP ii combines all information such as manufacturing, marketing, finance, engineering as together to help to change according to situations.

ERP ERP is considered to be a complete business solution that includes: 1.Sales information 2.Marketing information 3.Field service information 4.Product design and development information 5.Production and inventory information 6.Procurement information 7.Distribution information 8.Industrial facility management information 9.Process design and development information 10.Manufacturing information 11.Quality information 12. HR information 13. Finance information 14. Accounting Information 15.Information of services

Benefits of ERP Because of software application, the communication becomes highly visible. It forces business process – based changes. Gives better control for operation. Gives accurate and timely information Integrates all supply chain.

Web-based ERP This is the latest development, where web- integrated information management is undertaken. This is integrating or linking both external and internal information via internet. It includes both customer and supplier information.

Optimized Production Technology This is another information management software that developed to compete with ERP. This software uses the theory of constraints or bottleneck capacity for smooth operation. Here the application is to find out the constraints and removing them.