SAQC Technical Meeting

Enterprise Resource Planning :

THE WAY FORWARD
By
Peter Polet & Philip Tapper
30 September, 2002 at
The Institute of Public Administration
Habit Consulting

Contents:
¾ Corporate Requirements
¾ Implementation Methodology
¾ Functionality
¾ A bit about MRP
Networks
Orders
Capacities
¾ The Way Forward
Who uses ERP ?

¾ SAP is used by more than half of the world’s

top 500 companies
¾ SAP is used by over 10 Million users in more
than 13,500 companies of all sizes &
industries, eg:
9 Aramco
9 SABIC
9 ABB Saudi Arabia (ABB)
9 Kraft
9 BP, Shell, Exxon, Mobil
9 Rolls Royce
9 Unilever
 Jargon Buster
Enterprise Resource Planning
Manufacturing Resource Planning plus resource planning for the non-
manufacturing areas such as plant maintenance, human resource planning
etc..
Material Requirements Planning
The time phased Explosion of the material requirements based on the Bill Of
Materials, Lead Times, Order Quantities and Safety Stocks to determine
what to make or buy and when

Manufacturing Resource Planning

The integrated planning of a company’s material,
equipment and people to meet the Business Plan

Master Production Schedule

The planning of production (usually End Item Production) to
satisfy current and forecast orders
 Why ERP

Bottomline Goals Operational Goals System Goals

Increased : Improved:
Market Share Integration
Responsiveness
Sales Automation
Efficiency
Margins Consolidation
Quality Control Rationalisation
Service Standardisation

Change driven by people

 Corporate Requirements

….. In order of importance

1 Management Commitment

2 Management Commitment

3 Management Commitment
 Corporate Requirements

1 Recognition of the need for change

2 A clear vision
3 A good implementation partner
4 A dedicated team
5 Commitment
6 Very strong Change Management
 The “Old Chestnuts”

… ERP is fine for other companies, but

we’re unique
… We’ve been doing it this way for 100
years, why change?
… We’ll do it ourselves

… We can’t afford it

… We haven’t got the time

The Starting Point
Implementation Methodology

< Investigate & Plan

Business Solution Design

Assess available Develop business case

Review business technology & perform outlining key benefit's and
core requirements
model & feasibility study the total solution cost

Solution Architecture Design

Design

System landscape Key integration points with Initial solution sizing carried
determined. trading partners identified out.
<

Implementation Strategy & Execution

Execute & Deliver

Program Management: Org. Change Mgt: Develop Project Auditing: Project

Scope, Change & Project training strategy to align controls and standards
planning & measurements roles with processes. established

Project Final Go-live &

Blueprint Realisation
Preparation Preparation Support
Improve/Optimise <

Support & Continuous Improvement

Business Performance
Competancy Centre Upgrade & Solution
Improvement Unit
Establishment Development Strategy
established
Implementation Methodology

01/05/02
31/05/02 01/12/02- 31/12/02 –
30/12/02 30/03/03

01/06/02 01/08/02
31/07/02 30/11/02
 Implementation Methodology

G o-Live
B luep rin t R ea liza tio n G o -L ive B en efits
& S u ppo rt
(D e sign ) (D evelo pm en t) P rep aratio n R e aliza tio n
M od el

CHANGE MANAGEMENT
B a se line F in al
C on figu ratio n B aselin e F ina l
C o nfigu ra tion S yste m D e velop m e nt
P la nn ing S ystem D evelo pm en t
P lan nin g D e velo pm e nt & Integ ra tion
D e ve lop m en t & In te gration U se r
U se r
A cce ptan ce
A ccepta nce
T e stin g
D evelo pm en t A B A P D vlp T esting
D e ve lop m e nt A B A P D vlp
P la ns R ep ortin g/D ata M igration
P lan s R e po rting /D a ta M ig ra tio n

D ata
D ata M igration D a ta D ata D a ta
C o nve rsion D a ta C o nve rsion
P la nn ing M od ellin g M a pp ing C le an sing
T esting

Le vel
K e y/E n d U ser T ra ining
T rain ing III T rain ing
P la ns TNA
K ey/S up er T rainin g
U se r T rain ing M a te ria l D e ve lop m e nt

F ina l
C u t-O ve r Initial C u to ve r C u t o ve r F ina l
C ut over
P la nn ing P lan R e fin em en t C u t ove r pla nn ing
pla nn ing

P o st F in alize Im ple m e nt
Im ple m e ntatio n S u pp ort S u pp ort
P la nn ing S tructure P lan
 Implementation Methodology
Successful implementation of any ERP system demands an
integrated approach across 3 dimensions

Design
TECHNICAL DIMENSION

People & Business Rules

Operating & Practices
Structure
PROCESS
ORGANISATION DIMENSION
DIMENSION
Functionality
SEM

Human
Resources
Sales and
Material
Distribution Management

Project
Systems
Production
Finance
Planning
 Typical Order Cycle
Finish Start

Prepare Quote
Close Project 1
10

Invoice 2 Create Sales

9
Order

3
Site Work 8 Plan
Production

4
Dispatch 7 Order
Materials
6 5 Production
Collate Order
MRP – its not Rocket Science!

Finance

Material
Customer Project BOM
Master

Purchase Vendor
Route
Order Data

Material
Dispatch & Production Production
Receipt
Distribution Control Order
 Typical Process Flow
Engineering Enquiry Customer Dispatch

V 4
E
N Ready
Zinc Individual
D
O
Storage Galvanise Q.C. Marks Packing Q.C. For
Dispatch
R

Q.C
Finish
V
E
N Flux Weld 4
D Storage
O
R Assembly

Cutting Shop 2

V
E
Raw Materials
N
Warehouse
D
O
Storage Location 1
R
 Networks - Activities

Activity No Duration Work Breakdown

Structure

1 20 WBS

Description Cut Steel

St 01/10/02 21/10/02
Fn 21/10/02 10/11/02
Late Start

Early Start

Late Finish
Early Finish
 Networks - Links

2 10 WBS 1
Plan Production
St 21/10/02 20/11/02
Fn 31/10/02 30/11/02
1 20 WBS 1 4 50 WBS 1
Prepare Drawings Start Production
St 01/10/02 01/10/02 St 30/11/02 30/11/02
Fn 21/10/02 21/10/02 Fn 19/01/03 19/01/03
3 40 WBS 1
Order Material
St 21/10/02 21/10/02
Fn 30/11/02 30/11/02
 Networks – Work Breakdown Structures

WBS 10.01.01
Fabrication

1 5 WBS 10.01.01 1 10 WBS 10.01.01 1 10 WBS 10.01.01

Cut Steel Drill Weld
St 01/10/02 01/10/02 St 06/10/02 06/10/02 St 16/10/02 16/10/02
Fn 06/10/02 06/10/02 Fn 16/10/02 16/10/02 Fn 26/10/02 26/10/02
Production Orders
1 50 1
Mark 10.02.05
St 30/11/02 30/11/02
Fn 19/01/03 19/01/03
P/ order : 215509
Material
P/ order: 215506
: 215508
Qty Material
: 20P/ order
: 215506
: 215507
Required: : 2010/09/02
Qty Material : 215506
P/ order : 215506
Required:
Drill Qty Material
: 2010/09/02
: 215506
Cut DrillRequired:
Qty : 2010/09/02
Weld Cut DrillRequired: 10/09/02
Galvanise
WeldCut
Drill
Galvanise
WeldCut
Galvanise
Weld
Galvanise
Production Orders
Works order : 215506
Material : 215506
Qty : 20 Material Required Here
Required: 10/09/02

Activity Start End Qty Name

Drill

Cut

Weld

...
Galvanise

...
..
 MRP – what do we need?
What do we
already have?
What does it
take to make it?
What must
What are we we get?
going to make?

Where & When

we will make it ?

These are questions of priority and capacity

Basic MRP

What do we need ?

When do we need it?

What have we already got?

What do we need to order?

From whom do we order it?

Basic MRP

What do we need ?

When do we need it?

What have we already got?

What do we need to order?

From whom do we order it?

 Capacities

1 20 WBS1.1 1 40 WBS1.2 1 50 WBS1.3

Engineering Design Planning Fabrication
St 01/10/02 01/10/02 St 21/10/02 21/10/02 St 30/11/02 30/11/02
Fn 21/10/02 21/10/02 Fn 30/11/02 30/11/02 Fn 19/01/03 19/01/03
Capacities

What are we making ?

How long will it take ?

What resources do we need ?

What resources have we got ?

What else are we making ?

 Capacities – Activity Level
1 10 WBS 1.3.1
Mark 10.02.05
St 01/10/02 01/10/02
Fn 11/10/02 11/10/02

1 1 1 6 1 1
Set up Processing Tear Down
St 01/10/02 01/10/02 St 02/10/02 02/10/02 St 08/10/02 08/10/02
Fn 02/10/02 02/10/02 Fn 08/10/02 08/10/02 Fn 09/10/02 09/10/02

1 2
Queue
St 09/10/02 09/10/02
Fn 11/10/02 11/10/02
 Capacities - Options

1 10 1
Processing
St 01/10/02 01/10/02
Fn 11/10/02 11/10/02

Calculates the processing time based on:

Standard Values * Quantity
OR
Calculated Values from Individual Activities*Quantity
Capacities – At work Centre

Available Capacity

Week 41 Week 42
 Evolution Of Business

Enterprise Resource Inter-Enterprise Collaborative

Planning Co-operation Business
E-Community

Cost reduction Improved Value creation

and efficiency through effectiveness through through collaboration
integration of business cooperation along the within business
processes supply chain communities
 Business Need

Enterprise Resource Inter-Enterprise Collaborative

Planning Co-operation Business

Functionality
E- Business solution
New Dimensions &
Industry Components

ERP
What A Company Needs

Enterprise Portal

Human
Resources
Supply Chain
Management
Financials
Procurement CRM
Industry
Functions
Product Business
Management Intelligence

Marketplace
 Solutions

Cross-Industry Solutions Industry Solutions

z mySAP Workplace
z mySAP CRM
z mySAP SCM
z mySAP Marketplace*
z mySAP E-Procurement
z mySAP BI
z mySAP PLM
z mySAP HR
z mySAP Financials
z mySAP Mobile Business
z mySAP Aerospace & Defense
z mySAP Automotive
z mySAP Banking
z mySAP Chemicals
z mySAP Consumer Products
z mySAP Engineering &
Construction
z mySAP Financial Service Provider z
z mySAP Healthcare
z mySAP High Tech
z mySAP Higher Education &
Research
z mySAP Insurance
z mySAP Media
z mySAP Mill Products
z mySAP Mining
z mySAP Oil & Gas
z mySAP Pharmaceuticals
z mySAP Public Sector
mySAP Retail
z mySAP Service Providers
z mySAP Telecommunications
z mySAP Utilities

Infrastructure and Services

z mySAP Technology z mySAP Services z mySAP Hosted Solutions

*mySAP Marketplace is delivered through MarketSet™,

a joint solution from SAPMarkets & Commerce One.
 Cross-Industry and Industry Solutions
Industry Solutions
Financial Discrete Process Con- Service Financial Public
sumer
Services Industries Industries Indus- Industries Services Services
tries

mySAP Financial Service Prov.

mySAP Higher Ed. & Research

mySAP Aerospace & Defense

mySAP Telecommunications
mySAP Service Providers
mySAP Pharmaceuticals

mySAP Public Sector

mySAP Mill Products
mySAP Automotive

mySAP Healthcare
mySAP Chemicals
mySAP High Tech

mySAP Insurance
mySAP Oil & Gas

mySAP Banking
mySAP Utilities
mySAP Mining

mySAP Media
mySAP Retail
mySAP E&C

mySAP CP
Cross-Industry
Solutions
z mySAP Workplace
z mySAP CRM
z mySAP SCM best-of-breed
z mySAP BI solutions
z mySAP Marketplace
in dedicated
z mySAP E-Procurement
z mySAP PLM
industries
z mySAP HR
z mySAP Financials
z mySAP Mobile Business
CRM
Customer Relationship Management provides companies
with solutions they need to plan, build, and maintain
profitable customer relationships through all phases of
the relationship lifecycle – engage, transact, fulfill, and
service, and through all relevant channels – mobile,
telephony, and Internet
SCM
Supply Chain Management enables companies to capitalize
on their ERP investment, break new ground in e-trading
processes including eMarketplace integration, and profit
from a sustainable competitive advantage by fulfilling
customer requirements optimally while maximizing ROI.
 The way Forward

“Extension” product, providing additional

functionality
PM
Plant Maintenance
¾ “MRP2” for Plant and Equipment

APO
Advanced Planning and Optimisation
¾ “Super MRP”
 The way Forward

“ENTERPRISE MANAGEMENT” products,

SEM
Strategic Enterprise Management
¾ The “Corporate” View – eg. Balanced Scorecard

IM
Investment Management
¾ Optimising Investments
 The way Forward

… and of particular interest…..

QM
Quality Management
¾ Covering most Quality Control requirements, from
Pharmaceuticals to Airlines
Thank you

Thank You !
… any questions ?