ERP - Definition

ERP is a process of managing all

resources and their use in the entire
enterprise in a coordinated manner

Enterprise Resource
Planning (ERP)

ERP is a way to integrate the data and processes

of an organization into one single system.

ERP systems will have many components including

hardware and software, and unified database .

The term ERP referred to how a large organization

planned to use organizational wide resources.

ERP systems are used in almost any type of

organization - large or small.

History of ERP

The first software that was developed in this

process happens to be MRP (material Resource
Planning) in the year 1975.This was followed by
another advanced version namely MRP2 which is
the acronym for Manufacturing Resource
planning. None of them yielded the benefit of ERP.
These soft wares were helpful in manufacturing
process. Their benefits did not extend to other
Sectors. ERP was developed as multifaceted
software that gradually stretched its limits into
other areas like human resource, finance,
marketing and so on.

Function of ERP

Human Resources,
Supply Chain
Management,
Customer Relations
Management,
Financials
management,
Manufacturing and
Warehouse
Management
functions

Functional Modules of ERP

Software
ERP software is made
up of many software modules. Each

ERP software module mimics a major functional area of an

organization. Common ERP modules include modules for
product planning
parts and material purchasing
inventory control,
product distribution
order tracking
Finance
accounting
marketing
HR
Organizations often selectively implement the ERP modules that
are both economically and technically feasible.

Ideal ERP System Module

These software modules which are integrated in software are:

Manufacturing:
Financials:
Human Resources:
Supply Chain Management:
Projects:
Customer Relationship Management:
Data Warehouse

Manufacturing:

Production
improve productivity
eliminate costly rework
Capacity
Workflow Management
Quality control
Bills of material
Manufacturing process

Financials:
Both for-profit organizations and non-profit
organizations benefit from the implementation of
ERP financial module. The financial module is the
heart of many ERP software systems.
It can gather financial data from various
functional departments.
generates valuable financial reports like
balance sheet,
general ledger
trail balance
quarterly financial statements.

Human Resources

Personnel Management: It include HR master-data,

personnel administration, recruitment and salary
administration.
Organizational Management: includes organizational
structure, staffing schedules & job description.
Payroll System: Salary management, attendance
management for salary calculation.
Time Management: includes shift planning, time
recording, absence & leave management.
Personal Development: training and event
management, additional training determination and
training assessment.

Supply Chain Management

Inventory
supply chain planning
supplier scheduling
claim processing
order entry
purchasing

Projects:
Costing
billing
activity management
time and expense

Customer Relationship
Management:
sales and marketing service
commissions
customer contact
calls center support

Data Warehouse:
Organizations customers,
suppliers
employees.

What makes ERP

different

Integrated modules
Common definitions
Common database
Update one module, automatically
updates others
ERP systems reflect a specific way of
doing business
Must look at your value chains,
rather than functions

Importance of ERP software

for businesses:

Three of the most important ERP tools available

today are manufacturing, human resources, and
finance. It allow to maintain
financial information like accounts, budgets and
cash.
Internal as well as external factors effect on
organization.
Process of buying materials and maintaining them.
Inventory management,
production,
Quality management

Advantage of ERP

integrating the many processes by which

business operate , saves time and cost.
Decisions can be made more quickly and
with fewer errors
Data becomes visible across the
organization.
better corporate image
improved customer goodwill
customer satisfaction, and so on.
faster response time to customer-queries

Disadvantages of ERP
Systems
Takes time to implement.
Expensive
Training
Integration
Data analysis and conversion
Security issues
The success of the system is fully dependent on how the
workers utilize it. This means they must be properly trained,
Even if a company has enough money to implement ERP, they
may not be able to successfully use it if they do not have
enough money to train their workers on the process of using it.
Customization (modification) in many situations is limited. Also
too much customization may slow down the project and make it
difficult to upgrade.
ERP systems can be unaffordable to install and run
Technical support can be poor

Vendors

Do you currently have an

ERP package?

If your answer is "Yes", which ERP

package(s) do you currently use?

Are you considering adding new

modules to your existing ERP package?

If your answer is "Yes", which modules

are you planning to add?

Supply Chain
Management
(SCM)

Supply Chain
All facilities, functions, activities, associated
with flow and transformation of goods and
services from raw materials to customer, as
well as the associated information flows
An integrated group of processes to source,
make, and deliver products

10-21

What Is the Supply Chain?

Also referred to as the logistics network

(linked activity) of
Suppliers, manufacturers, warehouses,
distribution centers and retail outlets
facilities
Suppliers

Manufacturers

Warehouses & Customers

Distribution Centers

and the

Raw materials
Work-in-process (WIP) inventory
Finished products

Transportation
Transportation
Costs
Costs
Transportation
Material Costs
Manufacturing Costs Inventory Costs
Costs

that flow between the facilities

22

The Supply Chain

Suppliers

Manufacturers

Transportation
Costs
Material Costs

Warehouses &
Distribution Centers

Transportation
Costs

Manufacturing Costs
23

Customers

Transportation
Inventory Costs Costs

The Supply Chain Another View

Plan
Plan

Source
Source

Suppliers

Make
Make

Manufacturers

Deliver
Deliver

Warehouses &
Customers
Distribution Centers

Transportation
Transportation
Costs
Costs
Transportation
Material Costs
Manufacturing Costs
Inventory Costs
Costs
24

Buy
Buy

Supply Chain Illustration

10-25

Suppl
y
Chain
for
Deni
m

10-26

Suppl
y
Chain
for
Deni
m
Jeans
(cont.
)
10-27

Supply Chain Processes

10-28

Supply Chain Management

(SCM)

Managing flow of information through

supply chain in order to achieve the level
of organization that will make it more
responsive to customer needs while
lowering costs
Keys to effective SCM

information
communication
cooperation
trust
10-29

What Is Supply Chain Management

(SCM)?
Plan

Source

Buy

Suppliers
Manufacturers
Warehouses
Distribution centers

So that the product is produced and distributed

Deliver

A set of approaches used to efficiently integrate

Make

In the right quantities

To the right locations
And at the right time

System-wide costs are minimized and

Service level requirements are satisfied
30

Why Is SCM Difficult?

Plan

Make

Deliver

Buy

Uncertainty is natural to every supply chain

Source

Travel times
Breakdowns of machines and vehicles
Weather, natural disaster, war
Local politics, labor conditions, border issues

The complexity of the problem to globally

optimize a supply chain is significant

Minimize internal costs

Minimize uncertainty
Deal with remaining uncertainty
31

The Importance of Supply Chain

Management
Dealing with uncertain environments matching
supply and demand

Boeing announced a $2.6 billion write-off in 1997

due to raw materials shortages, internal and
supplier parts shortages and productivity
inefficiencies
U.S Surgical Corporation announced a $22 million
loss in 1993 due to larger than anticipated
inventories on the shelves of hospitals
IBM sold out its supply of its new Aptiva PC in 1994
costing it millions in potential revenue
Hewlett-Packard and Dell found it difficult to obtain
important components for its PCs from Taiwanese
suppliers in 1999 due to a massive earthquake
32

Supply Chain Management

(SCM)

Supply chain management, is the active

management of supply chain activities to maximize
customer value and achieve a sustainable
competitive advantage.

Supply chain management (SCM) is the combination

of art and science that goes into improving the way
your company finds the raw components it needs to
make a product or service and deliver it to
customers.

Information plays a crucial role in strategic

planning and managers' abilities to reduce inventory
and human resource requirement to a competitive
level.

They are going into the different

faces:
Supplier
Manufacturer
Distributor
Retailers
Customer

Supply chain management (SCM) is

concerned with
- The flow of products and information

between
members' organizations.
Manage the supply chain.
- Fast service as compare to paper based
transaction.
Provide competitive positioning of business
initiatives like cycle time reduction,
implementation, implementing redesigned
crossfunctional processes.

Components of SCM

The following are five basic

components of SCM.
Plan
Source
Make
Deliver
Return

The organizations that make up the supply

chain are linked together through

Physical flows:

Physical flows
Information flows.
Transformation
Movement
Storage of goods and materials..

Information flows

supply chain partners to coordinate their longterm plans

control the day-to-day flow of goods and
material up and down the supply chain.

For development and maintenance SCM we

need

Hardware

Software
Hardware.
computer's input/output devices
storage media.

Software:

Entire system and application programmed

for processing transactions management control
decision-making and strategic planning.

Advantages of SCM

Supply chain management will:

improve customer service
achieve a balance between costs and
service
reduce costs throughout the supply chain
improve relationships between buyers
and suppliers
provide a competitive advantage to all the
organizations in the supply chain

Customer
Relationship
Management (CRM)

Customer Relationship
Management

Process of creating and maintaining relationships

with business customers or consumers
A holistic process of identifying, attracting,
differentiating, and retaining customers
Integrating the firms value chain to create
enhanced customer value at every step
An integrated cross-functional focus on improving
customer retention and profitability for the
company.
CRM is the development and maintenance of
mutually beneficial long-term relationships with
strategically significant customers

Objectives of Customer
Relationship Management

Uses Technology to:

Collect
Sort

Integrate customer data

The objectives are:

Understand customer needs better
Maintain long term customer relationships long

Be able to pursue a strategy of Relationship

Marketing

CRM Objectives

Lifetime Value (LTV)

Refers to the net present value of the potential

revenue stream for any particular customer over a
no. of years
Starts with current purchase activity then
extrapolates to include potential additions from
cross-selling, upgrades, total ownership, etc.

Customer Ownership

Attempts to own the lionshare of customer

spending and/or share of mind in a particular
product category
Building brand equity, maintaining vigilant
customer contact, keeping current with the market
trends is critical

Understanding Customer Relationship Management (CRM)?

CRM is a business philosophy based on upon individual customers
and customised products and services supported by open lines
of communication and feedback from the participating firms that
mutually benefit both buying and selling organisations.
In short, CRM provides selling organisations with the platform
to obtain a competitive advantage by embracing customer needs
and building value-driven long-term relationships.

Determinants of CRM
In addition to trust and value, salespeople must:
Understand customer needs and problems;
Meet their commitments;
Provide superior after sales support;
Make sure that the customer is always told the truth
Have a passionate interest in establishing and retaining a longterm relationship

Managing Customer Relationships

The global salesperson must be involved in the following activities in order to initiate,
develop and enhance the process that is aimed at building trust and commitment with the
customer.

Developing the relationship

Select an appropriate offering;
Customise the relationship;
Link the solutions with the customers needs;
Discuss customer concerns;
Summarize the solution to confirm benefits; and
Secure commitment.

Faced with the ever increasing demand to

solve customer problems, the real estate
sector turned to the customer centric
strategy of the decade
CRM software supplies homebuilders with an
avenue to
It supports lead management, sales,
marketing, customer care and service as
well.
It also helps property professionals
understand and manage their most valuable
asset - their customers and thus contributes
to increased profitability.

Advantages of CRM

CRM increases customer loyalty and referrals..

It increases sales effectiveness through its ability

to boost sales and marketing functions. It reduces
sales, marketing and warranty costs.

CRM is its ability to provide for property and

market research.

CRM improves the flow of information across the

various departments within the organization.

CRM is a powerful sales tool for home builders. It

facilitates cost reduction and provides various
other services as well.

Integrate Framework for CRM

Strategy
development
process

Value
Creation
Process

Multi channel
Integration
process

Performance
assessments
process

Information Management Process

Strategy Development
Assessment of business strategy
Business strategy guides development of
customer strategy
Multi-Channel Integration

Serve customers well across many

Integrated Framework for CRM

Strategy: Multi-Channel Integration
potential interfaces
Offer a unified interface that delivers
customization and personalization

Value Creation
Translates business and customer strategies
into specific value propositions for both
customers and firm
Integrated Framework for CRM Strategy: Value
Creation
Customers benefit from priority, tiered services,

loyalty rewards, and customization

Company benefits from reduced customer
acquisition and retention costs, and increased share-ofwallet

Dual creation of value: Customers need to

participate in
CRM to reap value from firms CRM initiatives

Performance Assessment
Is CRM system creating value for
key
stakeholders?
Integrated Framework for CRM
Strategy: Performance
Assessment

Objectives Of CRM Systems

Data collection

Customer data such as contact details,

demographics, purchasing history, service preferences,
and the like

Data analysis

Data captured is analyzed and categorized

Used to tier customer base and tailor service
delivery accordingly.

Sales force automation

Sales leads, cross-sell, and up-sell opportunities

can be effectively
identified and processed
Entire sales cycle from lead generation to close of
sales and after- sales service can be tracked and
facilitated through CRM system

It reduces the expenses of the IT department.

CRM offers are search engine optimization,

systems reviews, sales database design etc.

CRM services facilitate Site and Unit

Management and Sales and Inventory
Management. Document Creation and
Management are also facilitated.

It is imperative if organizations want to build

a lifelong relationship with their customers.

CRM is the tool that helps you organize and analyze customer
data and thereby helping you to understand customer
preferences.

Understanding their likes and dislikes is the key to build

lasting relationships and also to gain new customers.

CRM tools provide easy access of information anywhere

anytime.

It also helps in managing various business activities such as:

- Sales and Marketing
- Billing and Expense
- Project Management
- Human Resources