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ERP and SCM

Topics Covered
Enterprise Resource Planning
Software Vendor Selection
Business Process Re-engineering
Supply Chain Management
ERP in Context of SCM
How ERP can improve the performance of SCM

Enterprise Resource Planning


ERP is a solution which

facilitates company-wide integrated information systems,


covering all functional areas

performs core Corporate activities and increases customer


service augmenting Corporate Image

Enterprise Resource Planning

Definition
Software solution that addresses the Enterprise needs,
taking a process view of the overall organization to meet
the goals, by tightly integrating all functions and under a
common software platform

Evolution of ERP

1960s - Systems Just for Inventory Control

1970s - MRP Material Requirement Planning (Inventory with material


planning & procurement)

1980s - MRP II Manufacturing Resources Planning (Extended MRP to


shop floor & distribution Management.)

Mid 1990s - ERP Enterprise Resource Planning (Covering all the activities
of an Enterprise)

2000 onwards ERP II Collaborative Commerce (Extending ERP to


external business entities)

ERP II

ERP II, a term coined in the early 2000s


This new generation of software is web-based
Allows real-time access to the data stored within the system.
Software can be made to fit the business, instead of the
business being made to fit the ERP software.
As of 2009, many ERP solution providers have incorporated
these features into their current offerings.

SaaS (software as a Service) ERP


In this, one need not deal with the software and have it hosted
somewhere else ("Software As A Service" or "SaaS").
Some of the benefits of SaaS ERP
Easy use and set-up
Predictable monthly ongoing expense
Mobility in it web-based applications
The vendor manages the servers, backs up the data and updates
the application for customers
Less upfront costs and many times long-term as well

The Past Scenario

Difficult to get timely & accurate information


Islands of Information
Heterogeneous Hardware & Software platforms & practices
Poor connectivity between different organizational locations
Sticking with obsolete technology
Resist to change
Lack of proven man-power to develop integrated software

Why ERP?

For Management to know what is happening in the company


One solution for better Management
For cycle time reduction
To achieve cost control & low working capital
To marry latest technologies
To shun the geographical gaps
To satisfy the customers with high expectations
To be Competitive & for survival

ERP-Expectations

Integrating all the functions


Integrating the systems running in all the locations
Transparency of information using a single data source across
the organization
Software must be responsive
Modular
Flexible
Easy to add functionalities
Provide growth path

The Business Value of ERP


Distribution
Planning

Order
Entry

Enterprise Resource Planning


Purchasing
& Accounts
Payable

MRP
Manufacturing Inventory Distribution
Inbound
& Production Control & & Accounts
Inventory
Scheduling Warehousing Receivable
Plant Mgmt.

Finance and Accounting


Human Resources

Customers

Suppliers

Demand Manufacturing Logistics


Planning
Planning
Planning

BPR
Business Process Re-engineering [BPR] brings out the

deficiencies of the existing setup

BPR and ERP will give way to implement new


systems and the long pending improvements in the
existing systems

BPR may be time consuming but the scope can be


restricted & controlled by the Management

ERP-Options

OPTION 1 MAKE [Using Internal resources]


Developing a custom-built ERP package, specific to the
requirements of the organization, with the help of the in-house IT
department

OPTION 2 - BUY
Going for Tailor-made ERP packages available in the market like
SAP, Oracle applications, Baan, PeopleSoft etc.

OPTION 3 MAKE [using External resources]


Developing a custom-built ERP package, specific to the
requirements of the organization, with the help of a software solution
provider

Product Selection Criteria


Goal:
To select the
Most Suitable Software
Package Solution

Functionality

5 Strategic
Requirement
Levels

Technology

Vendor

Support

Costs

Software Vendor Selection

The following traits should be considered while selecting the


software vendor for building the ERP application
Technical expertise
Domain knowledge
Adequate manpower
Project management skills
Long existence in the field
Extra skills [e-biz & workflow]

Leading ERP Vendors in the world


Rank

Vendor

Market Share

SAP

30.33

Oracle Applications

21.38

The Sage Group

17.44

Microsoft Dynamics

14.25

ERP Software Packages

Free and Open Packages: Adempiere , BlueErp PHP ,


Compiere , ERP5 SQL-Ledger

Proprietary Packages : Business ByDesign from SAP, Business


One from SAP, Microsoft Dynamics AX,
Microsoft Dynamics GP ,Oracle e-Business Suite from Oracle

The Critical Success Factors


Clear Vision & support of the Management

Capabilities of the software development vendor

Scope & Expectations finalization towards meeting the ERP


concepts

Strict implementation schedules & periodical monitoring

The involvement of the IT & functional teams

Beyond ERP
Supplier
Supplier
Collaboration
Collaboration

Supply
Supply Chain
Chain
Management
Management

Product
Product
Lifecycle
Lifecycle
Management
Management

Design
Design
Partners
Partners

Key
Key Process
Process
Integration
Integration
via
via ERP
ERP

Customer
Customer
Management
Management

Consumers
Consumers
and
and Channels
Channels

Benefits of ERP

Quality and Efficiency

Decreased Costs

Decision Support

Enterprise Agility

Disadvantages

Customization of the ERP software is limited.

Re-engineering of business processes to fit the "industry


standard" prescribed by the ERP system may lead to a loss of
competitive advantage.

ERP systems can be very expensive (This has led to a new


category of "ERP light" {Expand section} solutions)

ERPs are often seen as too rigid and too difficult to adapt to the
specific workflow and business process of some companiesthis
is cited as one of the main causes of their failure.

Why ERP Fail?

Under-estimating the complexity of planning ,development,


training
Failure to involve affected employees in planning and
development
Trying to do too much too fast
Insufficient Training
Insufficient data conversion and testing
Over-reliance on ERP vendor or consultants

Supply Chain Management (SCM)


Supply chain management is a set of approaches used to
efficiently integrate suppliers, manufacturers,
warehouses, and customers so that merchandise is
produced and distributed at the right quantities, to the
right locations, and at the right time in order to minimize
system wide costs while satisfying service-level
requirements.

Supply Chain Management

Objectives

The Right Products

The Right Place

The Right Time

In the Proper Quantity

At an Acceptable Cost

Achieves these objectives by

Forecasting Demand

Controlling Inventory

Enhancing Business Relationships

Receiving Feedback and Status of Every Link of the


Chain

Information Passing in SCM

ERP in context of SCM

Integration Era in SCM Development

This era of supply chain management studies was


highlighted with the development of Electronic Data
Interchange (EDI) systems in the 1960s and developed
through the 1990s by the introduction of Enterprise
Resource Planning (ERP) systems.

This era has continued to develop into the 21st century with
the expansion of internet-based collaborative systems. This
era of supply chain evolution is characterized by both
increasing value-adding and cost reductions through
integration.

How an ERP system can improve Supply Chain Performance


Develop better customer insight and interaction
Achieve global visibility in a demand-driven supply chain
Lean manufacturing, global sourcing, and supplier integration
Identify mistakes
Assistance and results

ITC

Improved
information helps
enterprises to plan
ahead and be more
competitive
Information

Demand forecasts
Customer delivery
requirements
Inputs supply markets
Supply chain services

Financial Planning & acquisition of


physical assets
and
Physical Cash flow impact and
Assets
financial risks in the supply

chain
Enterprise

Management:
Planning
Executing
Monitoring

Human
Resources

Securing & developing


SCM expertise
Supplier development
programs

Networks
and
Relation- Strategic supply chain
ships

alliances

Enterprise Application Integration

Front-Office
CRM Applications
Customer Service
Field Service
Product Configuration
Sales Order Entry

Enterprise
Application
Integration
EAI

Back-Office
ERP Applications
Distribution
Manufacturing
Scheduling
Finance

Thank you for your time