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Enterprise Resource Planning (ERP)

Enterprise Resource Planning (ERP). Rev: Feb, 2012 Euiho (David) Suh , Ph.D. POSTECH Strategic Management of Information and Technology Laboratory (POSMIT: http://posmit.postech.ac.kr) Dept. of Industrial & Management Engineering POSTECH. Contents. Discussion Questions (1/2).

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Enterprise Resource Planning (ERP)

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  1. Enterprise Resource Planning (ERP) Rev: Feb, 2012 Euiho (David) Suh, Ph.D. POSTECH Strategic Management of Information and Technology Laboratory (POSMIT: http://posmit.postech.ac.kr) Dept. of Industrial & Management EngineeringPOSTECH

  2. Contents

  3. Discussion Questions (1/2) What do you think is the main function of ERP? Give a definition of ERP system by your own words How can we meet the challenges that ERP brings to us? Which ERP selection criteria do you think is the most important, and why? What are the pros & cons of ERP vendors (SAP and Oracle)?

  4. Discussion Questions (2/2) • Case 2 in textbook (pp. 290~291, Chapter 7) • What are some of the business benefits of the technologies described in the case? Provide several examples beyond the mere automation of transaction-oriented processes • What are some of the challenges and obstacles in developing and implementing HRM systems? Are these unique to this type of systems? What strategies would you recommend for companies to meet those challenges? Provide several specific recommendations • Discussion Questions in textbook (p. 305, Chapter 7) • Why is there a strong trend toward cross-functional integrated enterprise systems in the business use of information technology?

  5. 1. Introductions of ERP 1) Fundamental Introductions of ERP What is ERP? Information Technology Advanced Process ERP BPR Process Innovation • Definition of ERP (Enterprise Resource Planning) • A set of applications designed to bring business functions into balance and represents the next generation of business systems – by Gartner Group • An accounting oriented information system for identifying and planning the enterprise wide resource – by APICS

  6. 1. Introductions of ERP 1) Fundamental Introductions of ERP Why ERP ? • Roles of ERP (Enterprise Resource Planning) • The backbone of business processes • A cross-functional enterprise system • An integrated suite of software modules • A system supports basic internal business processes • A system facilitates business, supplier, and customer information flows

  7. 1. Introductions of ERP 1) Fundamental Introductions of ERP ERP Application Components

  8. ERP Costs ERP Business Benefits 1. High risk & cost 2. Hardware and software are a small part of overall project 3. Failure can cripple or kill a business 1. Quality & efficiency 2. Decreased costs 3. Decision support 4. Enterprise agility 1. Introductions of ERP 1) Fundamental Introductions of ERP Benefits and Challenges of ERP

  9. 1. Introductions of ERP 1) Fundamental Introductions of ERP Costs of Implementing a New ERP

  10. 1. Introductions of ERP 1) Fundamental Introductions of ERP Causes of ERP Failures Common Causes of ERP Failure Failure to involve affected employees in planning and development Under-estimating the complexity of planning, development, training Over-reliance on ERP vendor or consultants ERP Selection Criteria Insufficient training Insufficient data conversion and testing Trying to do too much, too fast

  11. 1. Introductions of ERP 2) Development of ERP Development of ERP Inter-company Optimization Win-Win-Win Enterprise-wide Planning Management Innovation SCM (Supply Chain Management) Closed Loop MRP Capacity Planning Cost Reduction ERP (Enterprise Resource Planning) Material Planning Minimum Inventory MRPII (Manufacturing Resource Planning) MRP (Material Requirement Planning) 1980’s 1990’s 2000’s 1970’s

  12. ERP Product Development Process CAD/CAM Employee PDM Finance/ Accounting Management Process Drawing/DocuMgmt EC Mgmt Engineer- ing Configuration Control Logistics Release Control Manufacturing Process Customer MES Sales/ Mktg Production Finite Scheduling Data Collection/POP Order Fulfilment Process FA Supplier Facility Management Quality Management 1. Introductions of ERP 3) Functions of ERP Functions of ERP

  13. Product Life cycle PDM Engineering Purchasing Planning Order Admin Finance Manufacturing Plants Distribution Centers Planning Planning E D I . W e b E D I . W e b Order Entry Order Entry Order Order Supplier Customer Inventory Inventory Shipping Shipping Receiving Receiving Shop Floor Control AR AR AP GL GL AP FA 1. Introductions of ERP 4) Structures of ERP System Structure of ERP System

  14. 1. Introductions of ERP 5) Characteristics of ERP Characteristics of ERP Enterprise Real-time Integration

  15. 2. ERP Selection Criteria 1) Phases of ERP Selection Phases of ERP Selection Acquirement First filter Second filter Analysis Final decision

  16. 2. ERP Selection Criteria 2) ERP Selection Criteria ERP Selection Criteria (1/3) Functionality criteria

  17. 2. ERP Selection Criteria 2) ERP Selection Criteria ERP Selection Criteria (2/3) Technical criteria

  18. 2. ERP Selection Criteria 2) ERP Selection Criteria ERP Selection Criteria (3/3) • Others • Cost • Are the license costs justified given the functionality offering? • Are annual maintenance charges reasonable? • How quickly can payback be received? • Service & Support • Can the supplier provide a complete turn-key solution? • How quick are non-critical software bugs fixed? • Does the vendor offer business process reengineering as part of the implementation process? • Does the supplier have industry experience? • Vendor longevity • How many years has the company been actively engaged? • When was the product’s first release? What is the current release version being quoted?

  19. 2. ERP Selection Criteria 3) Market Share Market Share 2010 2005 Market share of ERP vendors in 2005 and 2010

  20. 2. ERP Selection Criteria 4) ERP Vendors with Their Characteristics ERP Vendors with Their Characteristics (1/2) • Logistics & Workflow • System Administration • Integration of Modules

  21. 2. ERP Selection Criteria 4) ERP Vendors with Their Characteristics ERP Vendors with Their Characteristics (2/2) • Usability • Ease of implementation

  22. Case Study

  23. Note • MIT PPT materials (MRP/ERP) • http://ocw.mit.edu/courses/sloan-school-of-management/15-761-operations-management-summer-2002/lecture-notes/lec13xrp.pdf

  24. Reference EuihoSuh, “BPR/ERP(PPT Slide)”, POSMIT Lab. (POSTECH Strategic Management of Information and Technology Laboratory) EuihoSuh, “ERP Selection Criteria (PPT Slide)”, POSMIT Lab. (POSTECH Strategic Management of Information and Technology Laboratory) O’Brien & Marakas, “Introduction to Information Systems – Fifteenth Edition”, McGraw – Hill, Chapter 7, pp. 271~276

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