Enterprise Resource
Planning (ERP) System
An ERP system is a commercial software
package that enables a company to
integrate the data used throughout the
entire organization.
May be the most important development
in the corporate use of information
technology in the 90s.
(Source: Davenport, 1998)
Information Fragmentation
Information is typically spread across
numerous separate computer systems,
each housed in individual function,
business unit, region, factory or office.
This results in redundant data, need for
reentering or reformatting data, etc.
Interoperability problems exist between
individual systems.
(Source: Davenport, 1998)
Information Integration
At the core of an ERP software system is
a single comprehensive database, which
streamlines the flow of information
throughout a business.
The database collects data from and feeds
data into modular applications supporting
virtually all of a company’s business
activities.
(Source: Davenport, 1998)
ERP Software Modules
Financials
Human Resources and Pay Roll
Distribution/Logistics
Sales & Marketing
Manufacturing
 Product Data Management
 Material Planning
 Resource & Capacity Planning
 Shop Floor Management
 Quality Management, etc.
(Source: Davenport, 1998)
AN ERP SYSTEM
Sales &
Delivery
C
u
s
t
o
m
e
r
s
Sales
Force
&
Service
Customer
Service
Rep
Managers
and
Stakeholders
Reporting Financial
Central
database
Human
Resource
Mgmt
Employees
(Source: Davenport, 1998)
Manufac
-turing
Inventory
and Supply
BackOffice
Ad and
Workers
S
U
P
P
L
I
E
R
S
Big Five - JBOPS
OneWorld (www.jdedwards.com)
BaanERP (www.baan.com)
Oracle (www.oracle.com)
PeopleSoft (www.peoplesoft.com)
SAP’s R/3 (www.sap.com)
ERP Implementation
ERP systems
require a major commitment and
investment,
often require companies to modify some
of their processes to accommodate the
software, and
can take a long time to implement.
(Source: Davenport, 1998)
ERP & Business Processes
A company often has to modify some of
its business processes to accommodate
the ERP software system.
The organizational changes resulting from
these modifications could easily
overwhelm a company.
Furthermore, some of these modifications
may not be acceptable to the company.
(Source: Davenport, 1998)
Benefits of ERP Systems
Automated update of related information
when new information is entered in one
module.
Direct access to a wealth of real-time
operating information.
These benefits could translate into
dramatic gains in productivity and speed.
(Source: Davenport, 1998)
Current Trends in ERP
Software
Easy-to-install and relatively inexpensive
ERP modules.
Enterprise extension software that
plugs “holes” within the factory
expands ERP-style benefits beyond the
factory.
(Source: Bylinsky, 1999)
ERP Modules vs ERP
Systems
ERP modules designed specifically for
manufacturers using newer concepts.
For example, Pivot.Man from Pivotpoint.
In many cases they don’t force a company
to change its operations to suit the
software.
(Source: Bylinsky, 1999)
Enterprise Extension
Software
These hook on to traditional ERP systems
as well as to the newer ERP modules.
Within the factory, Manufacturing
Execution Systems (MES) bridge the gap
between the plant and ERP programs. For
example, Dynamic Performance
Monitoring (DPM) software from Foxboro.
(Source: Bylinsky, 1999)
Enterprise Extension
Software (continued)
Front-office and back-office software that
extends ERP-style benefits beyond the
factory.
An example of a back-office software is
CSM (Component and Supplier
Management) software from Aspect
Development Corporation, for the inbound supply chain.
(Source: Bylinsky, 1999)
Enterprise Extension
Software (continued)
On the front-office side, customer
relationship management (CRM) is the
hottest area.
Siebel systems is a leading manufacturer
of CRM software.
The Big Five are also developing CRM
extensions for their ERP systems.
(Source: Bylinsky, 1999)
e-Commerce
Using the Web and other electronic
means for buying, selling and
distributing goods and services
(Source: Alter, 1999)
Electronic Data
Interchange (EDI)
Allows companies to exchange documents
in a structured and computer-processable
format.
Helps to automate and streamline a
business by eliminating or simplifying
clerical tasks, speeding information
transfer, reducing data errors, and
eliminating business processes.
e-Commerce
Evolution from VAN-based EDI to Webbased EDI.
Web-based EDI addresses the needs of
small and medium-sized firms.
Business-to-consumer and business-tobusiness.
(Source: Fu et al., 1999)
Evolution of e-Commerce
VAN-based EDI
needs considerable infrastructure
application, translation software and
communication network
over private VANs
Web-based EDI
low-cost transport mechanism
world-wide connections
XML documents
(Source: Fu et al., 1999)