1. Enterprise Resource Planning
IST 421
Spring 2007

2. ERP Evolution Integrated applications seem obvious today
Complex hardware and software system not feasible until the 1990’s
ERP systems evolved as a result
Development of hardware & software technology
Development of a vision of integrated information systems

3. ERP Evolution Integrated Vision: Electronic Data Interchange (EDI)
Materials Requirements Planning (MRP) used for inventory tracking
Electronic Data Interchange (EDI)
enabled processing of purchases
avoided paper purchase orders & invoicing systems
Start of Supply-Chain Management

4. ERP Evolution
Business model started in 1930’s by Alfred P. Sloan – Functional Model of Business Organization
During economic problems of 1980’s and 1990’s, view changed to cross-functional processes.
Michael Hammer’s 1993 book, Reengineering the Corporation: A Manifesto for Business Revolution

5. ERP Evolution ERP software was seen as a solution to business problems
Number of ERP vendors:
SAP (Systems, Applications, and Products in Data Processing )
PeopleSoft
Oracle
Baan
J.D. Edwards

6. ERP Applications Best-of-Breed approach
Each ERP vendor had perceived specialty
SAP – Production Planning & Materials Management
PeopleSoft – Human Resources
As is install or customize?

7. ERP Applications Failed package installation projects
Dell Computers cancelled implementation
Owens-Corning lengthy implementation
FoxMeyer drug company (bankrupt) lawsuit
In a fortune 500 company, software, hardware and consulting fees exceed $100 million and take years to fully implement

8. ERP Applications Most use three-tier architecture
Presentation layer
Application server layer
Database layer
Various integration techniques
Proprietary
EDI, COM, CORBA, Java

9. ERP Applications
Business Vision – What business problem is being addressed?
Adopt “best practices” addressed by software vs. customization?

10. ERP Applications Returns expected? Realized returns?
33% of companies saw a cost savings in sales order management
34% reduced personnel needs
More sales can be generated through streamlined process
Reduced frustration
Realized returns?

11. Supply Chain Management

12. Supply Chain Management
Supply chains support the flow of goods and services from their origin to their endpoint – the customer.

13. Supply Chain Management

14. Supply Chain Management
Supply Chain Management (SCM) comprises
business-management applications that provide guidance on which products to manufacture,
when,
and where they should be distributed.

15. Supply Chain Management
The category includes software that:
manages plant scheduling,
demand forecasting,
ordering raw materials and
related functions

16. Supply Chain Management
Plant automation applications are involved in the actual manufacturing processes, such as:
machining,
material movement,
blending,
heating,
cooling, etc.

17. Supply Chain Management
These applications are generally hosted on small, independent controllers, on Supervisory Control and Data Acquisition systems running on PCs, or on complex and elaborate distributed control systems.

18. Supply Chain Management
Prior to 1999, most companies were looking at the supply chain from an internal perspective.
The emphasis was on bringing together the operations of manufacturing, planning and scheduling with sales and marketing.
Many companies turned to Enterprise Resource Planning (ERP) and advance planning and scheduling systems to bring together the procurement process internally.

19. Integrated Supply Chain
Step 1: automate and optimize major business processes within each member organization.
Step 2: Extend the enterprise to all members in the supply chain

20. Integrated Supply Chain
Standards:
Process-based standards:
ebXML & RosettaNet
Create common processes that span enterprises
Provide common metadata
Information exchange infrastructures

21. Integrated Supply Chain
Service-based standards:
Common services to support trading community
Example: web service globally accessible to calculate shipping costs
Share common processes and application services span multiple companies
Services need to be accessible and neutral

22. Integrated Supply Chain
Message-based standards:
Focus on exchange of information between organizations
EDI example of format
Easy to implement
Doesn’t address common processes

23. EDI

24. EDI Short for Electronic Data Interchange
the transfer of data between different companies using networks, such as the Internet.
ANSI has approved a set of EDI standards known as the X12 standards.
Source: k - Sep 14, 2005

25. EDI Business Transaction Cycle
Here is a typical EDI business transaction cycle using a dial-up or network connection to a Value-Added Network (VAN):
Customer sends a purchase order (EDI 850)
Supplier sends an acknowledgement notice (EDI 997)
Supplier sends an advance shipping notice (EDI 856)
Customer sends an acknowledgement notice (EDI 997)
Supplier sends an electronic invoice (EDI 810)
Customer sends another acknowledgement notice (EDI 997)
Customer sends an Electronic Funds Transfer (EFT) payment
Source:

26. Sample