Omercan Barut Dokuz Eylul University Industrial Engineering

Enterprise resource planning ( ERP ) integrates internal and external management information across an entire organization, embracing finance/accounting, manufacturing, sales and service, CRM, etc. management information financeaccountingmanufacturing ERP systems automate this activity with an integrated software application.software

 Integrates information across all departments  Facilitates the flow of information among the different functions and processes of an enterprise - functions: manufacturing, finance, HR - processes: order entry  Tracks a wide range of events in the enterprise in an integrated fashion

 Plans future activities based on these events  Supports analysis of trends in these events, to improve the performance of the enterprise.  Allows users to - input data in one location, that can be processed with other data and accessed as informational reports in a real-time environment - share common data and practices across the entire enterprise - reengineer the majority of its processes

 Technology  Business Processes  Strategy  Competition

The ERP systems evolution tightly followed substantial innovations in the field of computer software and hardware.

 Most common approach: - If the inventory drops below a minimum quantity, it is replenished with the Economic Order Quantity (EOQ)  Disadvantages - very large inventory investment - unreliable with a highly varying demand rate - large investment in safety stock - requires forecasts for all items - based on past demand data - material obsolescence is more likely

 Calculates component requirements based on the Master Production Schedule (MPS), Bill of Material (BOM) and inventory data  Determines batch sizes for purchasing and manufacturing, and sends out purchasing / manufacturing orders for them at the appropriate times

 Closes the loop with sales, financial and operations planning  Includes the allocation of production equipment and labor  Can manage changes in the production plan  Includes JIT capabilities

 ERP systems go beyond the barrier of manufacturing organizations  Data are generated as a result of diverse transactions and integrated to be used by multiple users, for multiple purposes and at multiple places

 Manufacturing: Resource planning, engineering, material planning, bills of material, quality, etc.  Financials: Accounts payable, accounts received, cash management, etc.  Human Resource: Recruitment, benefits, payroll, labor rules, etc.

 Supply chain management: Inventory management, supply management, sales order, etc.  Projects: Costing, billing, etc.  Customer Relations: Sales and marketing, commissions, services, etc.  Data Warehouse: All information used by the company, employees and customers for their learning.

 Help reduce operating costs ERP software attempts to integrate business processes across departments onto a single enterprise-wide information system. The major benefits of ERP are improved coordination across functional departments and increased efficiencies of doing business. The immediate benefit from implementing ERP systems we can expect is reduced operating costs, such as lower inventory control cost, lower production costs, lower marketing costs and lower help desk support costs.

 Facilitate Day-to-Day Management The other benefits from implementing ERP systems is facilitation of day-to-day management. The implementations of ERP systems nurture the establishment of backbone data warehouses. ERP systems offer better accessibility to data so that management can have up-to-the-minute access to information for decision making and managerial control. ERP software helps track actual costs of activities and perform activity based costing.

 Support Strategic Planning Strategic Planning is "a deliberate set of steps that assess needs and resources; define a target audience and a set of goals and objectives; plan and design coordinated strategies with evidence of success; logically connect these strategies to needs, assets, and desired outcomes; and measure and evaluate the process and outcomes." (source) Part of ERP software systems is designed to support resource planning portion of strategic planning. In reality, resource planning has been the weakest link in ERP practice due to the complexity of strategic planning and lack of adequate integration with Decision Support Systems (DSS).

The comparative study of ERP II and ERP shows that it overplays its successor in all areas. The advancement makes one to question if the remedies in ERP II will replace ERP from the picture of enterprise application

Companies have to clearly know what enterprise resource is planning before thinking of implementing them. The catch word of ERP implementation is speed. The faster it is implemented the quicker and better are the advantages and delivery in terms of results.

The popularity of ERP as a business application does deserve a special mention. The most crucial factor in the whole system of ERP is the implementation aspect. The implementation phase has the ability to cast the spell on ERP'S fortune. As discussed before the success of an ERP Implementation lies in quicker processes and hence training and the speed at which the quintessence of training is received decides its worth and value. Above all one has to clearly understand "What is Enterprise resource Planning"? and then implement it.