MRP module of ERP :
Material Requirement Planning, popularly known as MRP, was developed during 1960s. This was a proactive manner of inventory management. This technique fundamentally explodes the end product demand obtained from the ‘Master Production Schedule‘ (MPS) for a specified product structure (which is taken from Bill of Material) into a detailed schedule of purchase order or production orders, taking into account the inventory on hand.
MRP is a simple logic but the magnitude of data involved in a realistic situation makes it computationally cumbersome. If undertaken manually, the entire process is highly time consuming. It therefore becomes essential to use a computer to carry out the exercise.
MRP successfully demonstrated its effectiveness in reduction of inventory; production and delivery lead times by improving coordination and avoiding delays, thus making commitment more realistic. MRP proved to be a very good technique for managing inventory, but it did not take into account of other resources of an organization. Due to this shortcoming a modified MRP logic, popularly known as ‘closed loop MRP’ has been developed. A new module called Capacity Requirement Planning (CRP) has been incorporated in this. This module manages the capacity of the organization to produce a particular product. A feedback loop is provided from the CRP module to MPS if there is not enough capacity available to produce.
Later the need was felt to integrate the financial resource with the manufacturing activities. From this evolved an integrated manufacturing management system called Manufacturing Resources Planning (MRP II).
Transition from MRP II to ERP happened some time later because the basic MRP II system design was suffering from a few inherent drawbacks such as limited focus to manufacturing activities, assumption of the mass or repetitive production set ups, and poor budgetary and costing controls.
The shortcomings o MRP-II and the need to integrate these new techniques, led to the development of a total integrated solution called Enterprise Resource Planning (ERP), which attempts to integrate the transactions of suppliers and customers with the manufacturing and service environment of the organization to produce the best possible plan. Today there are further development in the ERP concept and evolution of Web-enabled ERP.
It is important to understand the difference between Warehouse Management System (WMS) and Enterprise Resource Planning (ERP) system.
Though many of today’s ERP systems have tightly integrated WMS systems, the earlier version ERP systems had a limited participation for WMS. This may be the reason why many companies installed a WMS software separately to manage their warehouse activities.
An advanced system takes into account the data of the product, status, lot, dates, dimensions, location, area, region, owner and inventory details. For this function, WMS determines which would be the best location to store the recently received product. Some of the ERP package is not supported to determine the proper location. The selection of an ERP system with all these functions must be evaluated thoroughly before implementing it.
An effective ERP package gives the possibility to assign tasks automatically to the staff using rules and parameters previously defined. An intelligently integrated WMS module in an ERP system can give directions to the workers in an organized way.
The major characteristics of Business Process Re-engineering (BPR) are cross-functional orientation, process innovation, and customer-focus, clean slate and radical change in the organization’s business process by using Enterprise Resource Planning (ERP) systems.
Innovations and major improvements in the performance of business processes are difficult to achieve without leveraging the potential of ERP. Most of the business processes are developed before modern computers and communication technologies existed. ERP and BRP go hand in hand. Therefore, it is recommended that ERP System should be used to innovate the business processes and not just automate.
ERP can be used not only to automate transactional and laborious business processes but also to redesign the work management systems in an organization. ERP improves coordination and information access across organizational units, thereby allowing for more effective management of task interdependence.
Also Read – Which ERP solution is best for EPC contractors
E-commerce is buying and selling using an electronic medium. It is accepting credit and payments over the net, doing banking transactions using the Internet, selling commodities or information using the World Wide Web and so on.
E-Business in addition to encompassing E-commerce includes both front and back-office applications that form the engine for modern E-commerce. E-business is not just about E-commerce transactions; it’s about re-defining old business models, with the aid of technology to maximize customer value. E-Business is the overall strategy and E-commerce is an extremely important facet of E-Business.
Thus e-business involves not merely setting up the company website and being able to accept credit card payments or being able to sell products or services on time. It involves fundamental re-structuring and streamlining of the business using technology by implementing enterprise resource planning (ERP) systems, supply chain management, customer relationship management, data ware housing, data marts, data mining, etc.
Cloud-based ERP systems offer a cost effective solution where a business pays a recurring fee to utilize the service. This system is run from a shared server. The cloud system will benefit the company monetarily as there won’t be any expenses on hardware and infrastructure costs that are usually associated with an on-premises ERP.
Though on-premises ERP are little expensive it has more advantages and benefits than a cloud-based ERP system.
When companies layout a plan for their ERP implementation there are two options they will look into. That is, they have the option to choose the big bang theory where the installation of ERP systems of all modules happens across the entire organization at once or the phased out module-wise implementation.
The big bang approach promises to reduce the integration cost in the condition of thorough and careful execution. Majority of the ERP implementations are carried out in big bang way.
When the question comes about whether an organization should adopt the big bang theory, we can’t generalize the theory for it. For big organizations, Big Bang theory is the best choice. Mostly decision on this depends on the readiness audit result, available strength of consulting human, etc.
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ERP is the part of the interlinked processes that make up the total business and financial impact. Almost all the typical application systems are nothing but the data manipulation tools. They store data, process them, and present them in the appropriate form whenever requested by the user. In this process the only problem is that there is no link between the application systems being used by different departments.
An ERP system also does the same thing, but in a different manner. There are hundreds of such data tables which store data generated as a result of diverse transactions. These rather integrated for the speedy and accurate results required by multiple users, for multiple purposes, for multiple sites, and at multiple times.
Therefore, ERP solution implies that it be:
Flexible: An ERP system has to have modular application architecture. This means that various functionalities are logically clubbed into different business process and structured into a module which can be interfaced or detached whenever required without affecting the other modules. Comprehensive: It should be able to support variety of organizational functions and must be suitable for a wide range of business organizations.
Web-enabled capability: It should not be confined to the organizational boundaries; rather, it should support the on-line connectivity to the other business entities of the organization.
Best business practice: It must have a collection of the best business processes applicable worldwide.
Supply Chain Management (SCM) software is designed to enhance communication, collaboration, and coordination with vendors and suppliers, transportation and shipping companies, intermediaries, and other partners by enabling faster bi-directional information sharing.
With a supply chain management software in place, a business can manage its entire network more effectively by overseeing all activities across all suppliers, production plants, and storage and distribution facilities.
It becomes easy to streamline and centralize their distribution strategy, and eliminate the logistical errors and lack of coordination that can lead to delays.
SCM increases visibility and enhance collaboration across the entire supply chain by sharing valuable information such as demand trend reports, forecasts, inventory levels, and transportation plans with suppliers and other partners.
It can also minimize storage costs and improve cash flow by better managing inventory levels and it also helps improve logistics tracking, corrects break-downs, inefficiencies, or problems in the supply chain before they become unmanageable.
Search for a suitable ERP system starts when a company decides to implement an ERP system. It is not an easy procedure because there are hundreds of ERP vendors, all claiming to have a system that is suitable for your organization. It is not practically possible to evaluate each every package. Therefore it is better to limit the number of packages that are evaluated to less than five. It is always better to do a thorough and detailed evaluation of a small number of packages, than going a superficial analysis of dozens of packages. Hence, the company should do a pre-evaluation screening to limit the number of packages that are to be evaluated by the committee.
Not all packages are equal – each has its own strengths and weakness. The pre evaluation process should eliminate those packages that are not suitable for the company’s business processes. One can closely screen the few best packages by carefully studying at the product literature, getting proper guidance from professional consultants. Companies must also look for the packages that are used by companies which are in the same field.
While making the pre-evaluation screening it would be a good idea to look at the origins of the different packages. As there is a wrong conception that a system that was developed initially for manufacturing industry is not capable of catering to the needs of another business. With a proper understanding of the functional method of a particular field and its business process, the developers could make the necessary changes in the system which will obviously cater to the need of the particular industry in a successful way.
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Management Information System (MIS) are computer based information systems consisting of the network of all communication channels used within an organization.
* Integrated database of the MIS enables greater flexibility in meeting the information needs of the management.
* The MIS integrates the information flow between functional areas.
* MIS caters to the information needs of all levels of management
* Management’s information needs are supported on a more timely basis with the MIS.
* MIS is flexible and can be adapted to the changing needs of the organization.
* MIS uses an integrated database and supports a variety of functional areas.
* MIS supports the data processing functions of transaction handling and record keeping.
* MIS provides operational, tactical and strategic levels of the organization with structured information.
It is important to be noted that today’s ERP systems are integrated with functionalities of MIS (Management Information System) and DSS (Decision Support System). Therefore organizations that implement an ERP system could get advantage of all these functions
