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Enterprise ResourcePlanning
An Overview
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Agenda
Appreciating ERPWhat is ERP ?
Why is it important ?
Oracle and ERP
Oracle Applications - Functional
Overview
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What is ERP ?
MRP was all about accounting forwhat happened in the past while ERPis all about tying people together to
co-ordinate the future.
In a nutshell ERP is MRP-II tying upall the links in the supply chain.
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Functions covered by typicalERP software packages
SALES FINANCE OPERATIONSEstimation & Quotation General Ledger Bill of Resources
Product Configurator Accounts Payable Inventory Management
Sales Order Management Accounts Receivable Purchasing
Invoicing Fixed Assets Shopfloor ControlSales Analysis Costing Project Management
Contract Accounting Repetitive / JIT
Financial Analysis Maintenance Mgmt.
PLANNING HRD SYSTEM ADMIN.Forecasting Human Resource Mgmt Installation
Distribution Resource Planning Training Upgradation
Sales & Operations Planning Recruitment/Appraisals Parameterisation
Master Production Scheduling Payroll Security/Authorisation
Material Requirement Planning Backup / Recover
Capacity Requirement Planning
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Other Features of ERP Systems
Electronic Commerce
CAD
Data Collection Devices /MES
Imaging Systems
EIS / PC-based tools
SPC / SQC
WarehouseMgmt Systems Internet / Intranet
Multi - Currency Universal Tax Structures Localisation
Multi - Lingual Multi - Company Multi - Location Document Approval Transaction History
Workflow
INTERFACES GENERALFEATURES
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Agenda
Appreciating ERPWhat is ERP ?
Why is it important ?
Business benefits of ERP
Implementing ERP
Oracle and ERP
Oracle Applications - FunctionalOverview
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History of the ManufacturingIndustry
Work done byspecialists - potters,blacksmiths, etc.
Home & Family wasthe centre of activity
Managing / Co-ordinating work wasnot difficult
Factories to producegoods.
People were broughtto the factories
Concepts of shifts &standardisation
Managing becameimportant
EARLY ORGANISATIONS INDUSTRIAL REVOLUTION
( 1800s )
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History of the ManufacturingIndustry contd.
Standards & DivisionofLabour
Demand of goodsgreater than supply
Mass production
Supervision becameimportant
Customers demandflexibility
ComplexOrganisations
Time-basedcompetition
Need to co-ordinateactivities rigorously
SCIENTIFIC MANAGEMENT TODAYS ENVIRONMENT
( early 1900s - F.W.TAYLOR )
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One Thing is very certain intodays business world ,
and that is UNCERTAINTYTOM PETERS
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Examples ofCo-ordination
The customer selectscloth and givesmeasurements at
Bond Street, London
The suit is stitched ata low cost country likeIndia or Korea
Delivered in 5 days tothe customer
Customer selectsoptions in showroom
Right items arrive atthe right time on ass-embly line of manf.
Car shipped out in 3-4days
Componentinventoriesreplenished every2/4/8 hours (av. 120inventory turns)
DESIGNER SUIT MAKER TYPICAL CAR MANUFACTURER
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Business Reality is ...
Continuous change is key to yoursurvival in the future competitiveworld.
Leaders initiate change. Others,who want to survive, are forced tofollow ...
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Domestic Global Operations
Standard ProductsM
ass CustomizationWork Orders Flow Production
Vertical Integration Outsourcing
Disparate Virtual Corporations
Disconnected Networked
Forecast Driven Customer Driven
Transformation to BestPractices
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Challenges in Todaysenvironment
Complexity - number of products, Rawmaterials, intermediates, processes etc
Size ofO
rganisation - people, sites etcDemanding Customers - buyers market
Competition - local and Global
Rapid rate of change in technology andproducts
Departmental & Hierarchical structures
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The Fact is ...
New problems require newsolutions.
If you continue to do what youhavebeen doing - you will continue to getwhat youhave been getting ...
1 1 3 !
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Some Common BusinessProblems
Material Shortages
High Inventory
Poor qualityPoor Customer Service
Poor Productivity
Poor Cash management
CONFUSION !!
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Some root causes for theseproblems
Incorrect information on the material requirements Lack of visibility into stock on hand Inability to identify substitute materials
Delayed reporting of obsolete material, lost material etc. Inability to trackand control purchases Unable to control vendor shipments Improper inspection instructions
No audittrail of incoming material inspection Inability to determine shelf life and expired material Inability to optimise lot/batch sizes
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Some root causes for theseproblems contd.
Bill OfMaterials, not structured and properly maintained
Delays in implementing Engineering change orders
No provision to maintain aMaster Production Schedule
Inability to schedule operations
Notable to maintain shop floor routings and alternates
No established work centres and check points for quality
Delay in translating customer order into production order
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Some root causes for theseproblems contd.
Missed shipments Inability to provide customers with timely and accurate
informationon order status
Inability to implement ATP Inability to manage payment cycles No information on cash requirements Inability to prevent duplicate payments to vendors Incorrect pricing of customer orders Loss in transaction maintenance Duplication of data entry Lack ofan integrated information system
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Why is this happening ?
What is to be manufactured ?
What resources are needed tomanufacture ?
What resources are currently availableand hence ?
What is the balance that is required ?
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When do you need ERP ?
When you have co-ordination problems
Customer service is of concern
Non-uniform daily schedules
Lead times are more than a day Lot size is greater than 1
You want to re-engineeryou organisation andgain control ofyour business
ERP is the vision
of the Champion !!
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ERP is a tool to ..
Address the confusion element of cost
Orchestrate all business activities by topdown planning
Improve Customer service
Reduce time spent by material in waiting
Provide basis for performancemeasurement
Gain control over business, and accurateinformation
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What is ERP ?
Resource availability check at each step:material, capacity, finance, manpower, suppliers,information, & time
What-if simulation capability at each step
Provide Plan vs Actual comparisions
Uses computers to : Break down the business plan to various levels of detail
Simulate resource loads
Communicate & co-ordinate results and operatinginformation
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The Business Planning/ControlCycle
BUSINESS PLANNING
SALES & OPS PLANNING
MASTER PROD SCHED.
MATL. REQ. PLANNING
DEMAND MANAGEMENT RESOURCE PLANNING
ROUGH-CUT CAP. PLNG.
CAPACITY REQ. PLNG.
PURCHASING SHOPFLOOR CONTROL
PERFORMANCE MEASUREMENT
BUSINESS PROCESS IMPROVEMENT
FORECAST ORDERS
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Supply Chain Management
SUPPLIERS CUSTOMERS
PLANTS CENTRAL
PLANTS
DISTRIBUTIONCENTERS
DISTRIBUTIONCENTERS
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At the heart of the ERP :MRP II Systems
Planning
Manufacturing
Distribution
Financial
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The Planning Modules
PRODUCT LINE
PLANNING
MASTER
SCHEDULE
PLANNING
MATERIAL
REQUIREMENTS
PLANNING
CAPACITY
REQUIREMENTS
PLANNING
RESOURCE
PLANNING
FORECASTING
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The Manufacturing Modules
PRODUCT
STRUCTURES
ROUTINGS
FORMULA/
PROCESS
SHOP FLOOR
CONTROL
WORK ORDERS
REPETITIVE
REPETITIVE
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The Distribution Modules
CONFIGURED
PRODUCTS
SALES
QUOTATIONS
SALES
ANALYSIS
CUSTOMER
SCHEDULES
SALES
ORDERSPURCHASING
SUPPLIER
SCHEDULES
INVENTORY
CONTROL
PHYSICAL
INVENTORY
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The Financial Modules
INVENTORY
CONTROL
ACCOUNTS
RECEIVABLE
CASH
MANAGEMENT
ACCOUNTS
PAYABLE
COST
MANAGEMENT
GENERAL
LEDGER PAYROLL
MULTIPLE
CURRENCY
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Typical System Overview
Invoice
Post
Sales
Shipments
Inventory
Adjustments
Standard Cost
Charges
Purchase
Receipts
Repetitive
Shop Floor
Control
Work
Orders
Accounts
Receivable
Accounts
Payable
GeneralLedger
Multi-Company
Consolidation
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Agenda
Appreciating ERPWhat is ERP ?
Why is it important ?
Business benefits of ERP
Implementing ERP
Oracle and ERP
Oracle Applications - FunctionalOverview
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Typical Business PerformanceMeasures
Market share performance
ROI performance
Sales Plan performance
Production Plan performanceMaster Schedule preformance
Purchasing performance
Manufacturing Schedule performance
Order Fill Rate performance
Order Due date performance
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Typical Business PerformanceMeasures
DeliveryLead Time performance
Product Quality performance
Service performance
Inventory Turnover
Inventory Record Accuracy
Productivity performance
CapacityUtilisation performance
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Tangible Benefits
Inventory Reduction 20% - 40% 16% - 30%
( matched sets, valid schedules )
Purchased Cost Reduction 2% - 10% 7% - 13%( more time for sourcing )
Mfg. Productivity Increase 10% - 30% 11% - 20%
( matched sets, red. followup, overtime )
Dist./Freight Expense Reduction 10% - 30% 5% - 16%
( from Better Planning )
Sales Increase 5% - 20% 15% - 26%
( from timely delivery & reduced returns )
Quantifiable Benefit WW Stat Indian Stat
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Intangible Benefits
Increased Market share
Improved Customer satisfaction
Improved Vendor performance
Reduced obsolescence Increased flexibility
Reduced premium freight
Elimination of annual stock taking
Floor space reduction
Reduced quality costs
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Intangible Benefits contd.
Improved Resource utilisation
Improved information accuracy
Improved Decision Making Capability
Better Cost Visibility Improved co-ordination between all departments
Reduced expediting
Improved morale
Power savings
Reduction in stationary and supplies
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Why ERP Fails ?
ERP does not fail - people fail toimplement ERP successfully
Top Management does not grasp thebenefits and does not participate
Inadequate planning - lack ofvision
ABC Classification of success criteria :A : People 60 %
B : Business Processes & Data 30 %
C : Technology 10 %
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Why ERP Projects fail
This is an I.T. department project
We dont have time
This technique is not suitable for usOur problems cannot be addressed
Our business is different
OurOrganisation is different
Our people are different
This is India
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Implementation Methodology
ImplementationStrategy
OperationsAnalysis
SolutionDesign
BuildCustom
Documentation
Transition
Production
Implementation Strategy Document
Work Plan
Installed Software
Project Team Workshop
Prototype models
Application Setup Document
List of Policies & Procedures
List of Issues
System Test Plans
Procedure Content & Format
Document
Live System
Business requirements
DocumentFit Analysis
Proposed Flow
Conference Room Pilot
Test Results
Certified System
Production Environment
Cutover Plan
Enduser Training
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Typical Project Schedules
Implementation
Strategy
OperationsAnalysis
Solution Design
Build
Transition
Production
PHASE M1 M2 M3 M4 M5 M6 M7 M8 M9 M10
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Project Structure
Project Team Organization Chart
Functional Consultant
Technical Consultant
Project Manager Quality Manager
Consultant Project Director
Key Users
IS Staff
Project Manager
Client Project Director
Steering Committee