Powerpoint Presentation - Operations and Supply Chain

McGraw-Hill/Irwin

Copyright © 2011 The McGraw-Hill Companies, All Rights Reserved

Chapter 14

Enterprise Resource Planning Systems

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Learning Objectives

Understand the scope of enterprise resource planning (ERP) systems.

Recognize the client/server structure of ERP systems.

Relate the value of integrated information in a complex firm.

Identify the challenges associated with implementing ERP systems.

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Enterprise Resource Planning (ERP)

• Enterprise resource planning (ERP) system: computer system that links all the areas of the business

Manufacturing knows about new orders as soon as they are entered

Sales knows the exact status of a customer order

Purchasing knows what manufacturing needs to the minute The accounting

system is updated as all the relevant transactions occur

LO 1

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Enterprise Resource Planning (ERP) Continued

• The potential benefits are huge

Savings in redundant postings

Redundant jobs can be eliminated

Other jobs can be done faster

Creates new ways to do business

• Benefits are not without cost

ERP systems are complex and expensive

May require major changes in processes

LO 1

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SAP

• SAP AG is the world leader in providing ERP software

Flagship product is R/3

• Software designed to operate in a three-tier client/server configuration
• Cost is a high-speed network of database servers
• Application consists of software modules
• Applications are fully integrated and share data
• Firms wishing to use SAP may need to change their practices to those implemented by SAP

LO 1

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SAP Application Modules

• Software is built around a set of application modules:

Financials

Human capital management

Operations

Corporate services

Duet–Microsoft Office integration

• Can be used either alone or in combination

LO 2

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Financials

• Financial application provides functionality to run the financial accounts for the company
• The application is divided into three areas:

Financial and management accounting module: includes general ledger, accounts payable, accounts receivable, capital investments and closing the books

Corporate governance: internal control and audit functions needed to adhere to corporate governance standards, documentation of internal controls, and audits that comply with current requirements

Financial supply chain management: handles the money flow related to supply chain activities

LO 3

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Human Capital Management

• This application contain the full set of capabilities needed to manage, schedule, pay, and hire the people who make a company run
• It includes:

Payroll

Benefits administration

Application data administration

Personnel development planning

Workforce planning

Schedule and shift planning

Time management

Travel expense accounting

LO 3

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Human Capital Management Continued

• The “talent management” functions are designed to help align employee goals with corporate goals by maximizing the impact of training
• “Workforce deployment” applications are to aid in deploying the right people with the right skills to positions in the firm
• Managing project teams, monitoring the progress of projects, and tracking time are supported

LO 3

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Operations

• Materials management covers all tasks within the supply chain

It also includes inventory and warehouse management

• Plant maintenance supports the activities associated with planning and performing repairs and preventive maintenance
• Quality management plans and implements procedures for inspection and quality assurance and is built around the ISO 9001 specifications.

LO 3

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Operations Continued

• Production planning and control supports both discrete and process manufacturing processes
• Sales order management, configuration management, distribution export control, and shipping and transportation management are handled as well

LO 3

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Corporate Services

• The corporate services applications are designed to manage both centralized and decentralized services
• This includes managing the firm’s real estate portfolio, including:

Property acquisition and disposal

Property management

Building operations and maintenance

Investment reporting

• Another major aspect of the corporate services is travel management

LO 3

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Implementing ERP Systems

• SAP has strong competition

Oracle

i2 Technologies

PeopleSoft

• Implementation of ERP is costly

Cost of the software typically one-third or less of the total cost

• ERP implementation does not always work out

LO 4

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Major Problems with ERP Implementation

ERP technology could not support their businesses

Their organizations could not make changes needed to benefit from ERP

ERP implementation might actually damage their businesses

LO 4

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Reasons to Implement ERP

• Desire to standardize and improve processes
• To improve systems integration
• Improve information quality

LO 4