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Enterprise Resource
Planning
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OBJECTIVES

Enterprise Resource Planning (ERP)

SAP ERP System
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Enterprise Resource Planning (ERP)

Enterprise Resource Planning (ERP) is

an enterprise-wide information system
that integrates all the business functions
such as operations, sales, financials,
and human resources
The integration is accomplished through
a common database shared by all the
application programs
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ERP (Contd)

ERP integrates all the business functions

Manufacturing knows about new sales orders
as soon as they are entered
Sales knows the production status of a
customer order
Purchasing knows what manufacturing needs
Accounting is updated as the relevant
transactions occur
Purchasing - Accounts payable
Sales - Accounts receivable
Shop floor control - Product costing
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ERP Application Modules

Data Analysis
Human Resources Product costing Sales and Marketing
Benefits Job costing Sales orders
Payroll Pricing system

Manufacturing
MRP ERP Customer Service
CRP Field service
Manufacturing System Quality
Execution

Accounting and Supply Chain

Finance Management
Accounts payable Forecasting
and receivable Purchasing
General ledgers Distribution
Asset management
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Reasons for Implementing ERP

Desire for greater communication between

departments and locations through an
integrated system
Standardize and improve business
processes by implementing best practices
embedded in ERP
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ERP Challenges

ERP system may not support some

business processes of the company
Change software to reflect process?
Change process to follow software?
Employees may be resistant to changes
needed to benefit from ERP
Training and change management are
important
Cost of ERP software and implementation
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ERP Vendors

SAP (25%)
Oracle (13%)

Sage (6%)

Infor (6%)

Microsoft (5%)

ERP market size in 2012: $24.5B

** % numbers in the parentheses are market shares in 2012
** Source: Forbes, 2013
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SAP ERP System

Developed by SAP AG
Fully integrated applications with a common
database
Three-tier client/server architecture
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SAP ERP Applications

Financials

SAP ERP
System Human Capital
Corporate Services
Functional Management
Components

Operations
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SAP ERP Operations Overview

Procurement and Logistics Execution

Procurement, inventory and warehouse management,
inbound and outbound logistics, transportation
management
Product Development and Manufacturing
Production planning (SOP, MRP, CRP),
manufacturing execution, product development, life-
cycle data management
Sales and Service
Sales order management, aftermarket sales and
service, professional-service delivery