WELCOME FOR

‘ERP’ AWARENESS TRAINING

PROGRAM

AJIT BHOSALE RELEASE: 1

DATE: 14/03/08
 House Rules

Courtesy:
• Please keep your mobile phones on silent mode
• Be attentive, there will be an exam at the end of session
• Can interrupt any moment of time in case of any doubts
(please raise the hand)
FACULTY INTRODUCTION

Main Tutor: Ajit Bhosale

Support Tutor: P V Hampi
Training Objective
 Understanding Business
Processes
 Role of ERP
 Benefits / Outcome
 Risk Factors
 ERP Implementation Steps
 Understanding ERP
Terminologies
 Knowing about SAP
 Business Processes
How does our company runs ??
• The core activities to run our company are to get
the order from customer, procure raw material,
process the raw material, to make the finish goods
and sell the product.

• But to perform these core activities several

processes (set of activities) are involved like
marketing, manufacturing, engineering, purchasing,
quality, storage, accounting, finance……etc and all
these processes are inter linked with each other
called as integration, because not a single process or
department can run the company on its own
independantly.

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 Business Processes
How the processes are interlinked ??

• All these processes are interlinked through lots of

communication (internal or external) which may be in the
form of exchange of information (soft / hard / verbal)
(telephonic or one to one) as and when required by other
processes / departments. E.g.- Manufacturing & Stores

• Every department has its own system to carry out their own
documentation by using various forms or software’s (Xl,
Word, Tally, etc) in order to compile information or
generating some reports.

• But generally, this information remains in isolated form in

each department and is generally not available to other
departments without communication which results into lot of
waste of time, incurs communication cost if departments are
at various locations.

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Information Islands

B
 Before ERP
Customer Communication,
Customer PO

Contract Establishment Process

Planning
(BOM) Design
Interactions
Stock verification with Accounts Receivable
stores
Non-stock items
Requisition Crane Erection & Comm

Job-work services
Purchase
Order

GRN Receipt Material Production Final Finish Goods Invoice

Inspection issue Inspection Ready for making
Despatch
Accounts Payable
Plant
Maintenance

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What are Disadvantages of
current Practices?

• Isolated Processes
• No much of inter-locks (few transactions
can be by-passed)
• No common data base
• No hands on ready information
• Lot of follow-up & waste of time in other
communication

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 What is ERP?
Enterprise Resource Planning (ERP) system is one
integrated application or software through
which all the business process run on
common platform and share common database.

It replaces the old approach of a different computer

programs for every area like accounting, stores,
invoicing, etc where the systems did not share data.

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 What is ERP?
Contd….

Technically it manages following key processes such

as:
– Finance and Costing
– Sales & Distribution
– Materials Management
– Production & Planning
– Quality Management,
– Plant Maintenance & Customer Service, etc.

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 Customer Communication, Contract Establishment

Process
Customer PO

Interactions
Sales order entry Item Codification

Planning
(BOM) Design

MRP Run (Shortage List) Accounts Receivable

Non-stock items
Requisition Crane Erection & Comm

Job-work services
Purchase
Order

GRN Receipt Material Production Final Finish Goods Invoice

Inspection issue Reporting Inspection Ready for making
Despatch
Accounts Payable
Plant
Maintenance

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 What Kind of Reports / Info ?
Examples:
• Open sales order – total / crane-wise / region-wise, etc
• Total sales value - total / crane-wise / region-wise, etc
• Open PO’s – total / item-wise / supplier-wise, etc
• Open service calls / item-wise / customer-wise etc
• Inventory information – location-wise / item-wise, etc
• Goods receipt information – item-wise, supplier-wise, etc
• Goods inspection status – hold, OK, reject, rework – item
w-wise / supplier-wise, etc
• In-house quality status – rework / reject / hold, etc
• Pending accounts payable (supplier outstanding)
• Pending accounts receivable (customer recovery)
• ………n number of reports as per requirement and at any
moment of time i.e. current information in very less time

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 What are Benefits?
• Brings discipline in the organization
• Single platform for data entry
• Easier access to information
• Less paper work and reduction of manual tasks
• Fewer phone calls to other departments
• Better planning
• Better inventory control
• Cost reduction through cut down in wastages
• Reduction in cycle time
• Quick MIS for top management

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 What are Risks?
(E.g. How the crane cannot be dispatched)
– No Crane dispatch without invoice from ERP System
– No invoice without stock in FG goods location
– No goods in FG location without QA approval
– No QA verification without production entry
– No production entry without WIP RM stock
– No WIP stock without raw material transfer from stores
– No raw material transfer from stores for no clearance by QA
of receipt material or no stock in stores
– No QA verification without GRN
– No GRN without PO
– No PO without requisition
– No requisition without MRP run
– No MRP run without BOM & Sales Order
– No BOM without item code
– No item code without item info (price/UOM) from
Purchase………….

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 What are Risks?
(E.g. If BOM incorrect)

– BOM incorrect i.e. all the child items of the crane not
attached to the parent code
– No stock consumption from the manufacturing (WIP) location
of the items issued by the stores against material issue note.
– In correct valuation (Rs) of stock in manufacturing (WIP)
location as system quantity will be more than physical qty.
– Also, available information of items lying in the WIP will be
incorrect and hence wrong planning
– Ultimately, wrong costing of Crane !!!

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So what is important:
• Timely entry of all the transactions into ERP
system, in-line with physical transactions.
• Accurate entry for accurate output (reports)
• Accurate output means accurate planning,
costing and decision making.
• Accurate costing (cost roll up) at respective
transaction means finally accurate balance sheet
• Accurate balance sheet means accurate
profit/loss statement.
• Accurate decision making on factual data means
organization’s success.

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Various ERP Software’s

• SAP R/3
• SAP B1
• Oracle
• Mfg/Pro
• People Soft
• J D Edwards…….etc.

Depending upon our suitability, Electromech

has chosen SAP R/3, also now called mySAP

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 Five Main Steps Of ERP Implementation
Step 1 Purchase of Hardware & Blank Software E.g.- New
Mobile Phone
Step 2 Training

Enter all the basic information

Step 3 about company e.g- customer,
suppliers, items, routings, tax
structure, payment terms, etc
called as master data

Enter all the current

transaction information such
Step 4 as open sales order, open
purchase orders, in-process
cranes BOM, stock, etc

Step 5 Start using the software called

as Go-Live from certain cut off
date
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Understanding some of the
ERP Terminologies

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Entities

Pimpri Unit (EE)

• An entity is a business that

publishes financial statements
and files tax returns

Pirangut Unit (EMHSIL)

Sites

• A site is a unit used for

Entity EE / EMHSIL inventory planning and control

Site

Plant

Warehouse
Locations

• A site can have multiple locations

EE / EMHSIL
• A location is a place where inventory
is stored

Inspection Scrap

Finish Manufacturing Area (WIP) Raw

Goods Material

Stores
Master Data Setups

Quantitative

&

Financial
 Quantitative Setups

• Engineering Data
• Inventory Data
• Manufacturing Data
• Costing Data
• Distribution Data
• Planning Data
 Engineering Setups

• Item Data Definition

(UOM & Item status)
• Product Structure Definition
(Bill of Material)
 Inventory Data

• Site
• Locations
• Inventory Levels
 Manufacturing Data

• Work Centers
• Routings (Process Sequence)
• Shifts
• Operators
• Down time reason codes
 Cost Data

• Cost Sets Definition

• Item Cost Data Definition
(includes material, overheads,
burden cost)
 Purchase & Sales Data

• Credit Terms
• Customer Address & Tax Details
• Supplier Address & Tax Details
• Customer & Supplier types
• Excise Related data like, Chapter
sub chapter, range, division, etc
 Planning Data

• Re-order Level
• Safety Stocks
• All Lead times e.g. Purchase
Inspection, MF etc
• Order Multiples
 Financial Setups

• Entity
• Cost Centres
• Chart of Accounts
• Product Lines
• Tax Data
• GL Calendar
• Currency & Exchange rates
• Format Positions
 PM & CS Data
• List of Equipments
• PM schedule
• Down time (Breakdown reason) codes
• Customer Service Technician, analysis
code masters.
Understanding some of the
SAP/R3 Terminologies
SAP stands for “Systems Applications and Products”,
started in 1972 by five former IBM employees in Mannheim,
Germany, states that it is the world's largest inter-enterprise
software company and the world's fourth-largest independent
software supplier, overall.

R/3 (actual software) uses the client/server model and provides the
ability to store, retrieve, analyze, and process in many ways
Corporate Data for financial analysis, production operation, and
most other business processes. A recent release of R/3 makes it
possible to get to the R/3 database and applications through
Internet access and Web browsers.
Client/server describes the relationship between two computer
programs in which one program, the client (user), makes a service
Request to another program, the server, which fulfills the request.

In a network, the client/server model provides a convenient way to

interconnect programs that are distributed efficiently across different
locations.

Computer transactions using the client/server model are very common.

For example, to check your bank account from your computer, a
client program in your computer forwards your request to a server
program at the bank

ABAP (Advanced Business Application Programming) is

a programming language for developing applications for the
SAP/R3 system, a widely-installed business application subsystem.
SAP/R3 front Screen
Open
Session
Time to check the effectiveness!

Request to every individual to write down –

• What change ERP will bring into the organization

• What change ERP will bring in your daily routine work.
• What will happen if you will give incorrect input
(wrong information) to the ERP software.

Time Limit: 10 Min’s

Thanks for your
Participation &
Co-operation