Enterprise Resource Planning (ERP) software supports the distribution of information between various functional departments and geographic locations of a company.

ERP systems currently exist in many different forms and offer many different features. Various businesses, large and small, have implemented ERP systems. Implementing an ERP system can be a daunting and expensive undertaking. A business seeking to purchase and implement an ERP system should perform extensive due diligence on the available systems and suppliers.

Major Reason for adapting ERP:

  • Integrate financial information
  • Integrate customer order information
  • Standardize and speed up operations processes
  • Reduce inventory
  • Standardize Human Resource Information

How do ERP system work?


Components of ERP System:

Finance: Financial modules for bookkeeping and making assure the bills are paid on time. Examples are like:

  • ⦁ General leader
  • ⦁ Accounts Receivable
  • ⦁ Accounts payroll

HR: Software for handling personnel-related tasks for corporate managers and individual employees. Examples are like

  • ⦁ HR administration
  • ⦁ Payroll
  • ⦁ Self-service HR

An ERP Example of Before & After


Potential Benefits of ERP:

  • ⦁ improve efficiency
  • ⦁ information integration for better decision making
  • ⦁ Faster response time to customer queries

Risks with ERP Implementation:

  • ⦁ Expensive
  • ⦁ Time-consuming
  • ⦁ Greater risk for organization
  • ⦁ Acceptance with the company

Modules of ERP:

  • ⦁ Finance
  • ⦁ Material
  • ⦁ Sales
  • ⦁ Marketing
  • ⦁ Personnel

ERP Finance Module: An ERP finance module gathers function data and turns them into reports including quarterly financial statements, ledgers, profit tracking, and balance sheets.

ERP HR: Module routinely maintain a complete employee database including contact information, Salary details attendance, Promotion of all employees.

  • ⦁ Produce paycheck reports.
  • ⦁ Maintain personnel record.
  • ⦁ Training
  • ⦁ Time and attendance benefits

ERP Purchasing Module: Purchasing module is tightly integrated with inventory control and production planning modules.

ERP Inventory Module: Inventory module facilities processes of maintaining the appropriate level of stock in a warehouse.

Implementation of ERP


ERP Implementation Approaches:

  • ⦁ The big bang - install a single ERP system across the entire organization.
  • ⦁ Franchising - Independent ERP systems are installed in different units linked by common processes, such as bookkeeping.
  • ⦁ Slam dunk – Install one or several ERP modules for phased implementation of key business processes.

Major Phases of ERP Implementation:

  • ⦁ Initiation – Develop business case, project scope and implementation strategy.
  • ⦁ Planning – Establish implementation team, determine goals and objectives, establish metrics
  • ⦁ Analysis and process design – Analyze and improve existing processes, map new processes to be adopted by system.
  • ⦁ Realization – Install a base system, customization and test the system.
  • ⦁ Transition – Replace the formal system with the new system, data conversion.
  • ⦁ Operation – Monitor and improve system performance, provide continued training and technical supports.

ERP Implementation Approaches:

  • ⦁ Education and training
  • ⦁ Availability of internal technical knowledge and resources
  • ⦁ Implementation timelines
  • ⦁ Flexibility of software system upgrades
  • ⦁ Changes in employee responsibilities
  • ⦁ Costs – Implementation (hardware, software, training, consulting) and maintenance
  • ⦁ Inconsistency with existing business processes
  • ⦁ Limitations of ERP technical capabilities
  • ⦁ Implementation strategy and execution
  • ⦁ Resistance to change

Advantages of ERP:

  • ⦁ Quicker completion of processes
  • ⦁ Single software
  • ⦁ Database
  • ⦁ Easier to track various tasks
  • ⦁ Manage globally Data

Disadvantages of ERP:

  • ⦁ Cost
  • ⦁ Time Consuming
  • ⦁ Training to employees

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