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
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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 & Distribution Centers
Customers
and the
Raw materials Work-in-process (WIP) inventory Finished products
Material Costs
Transportation Costs
Transportation Costs Transportation Manufacturing Costs Inventory Costs Costs
that flow between the facilities
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The Supply Chain
Suppliers Manufacturers Warehouses & Distribution Centers Customers
Transportation Costs Material Costs Manufacturing Costs
Transportation Costs 23 Inventory Costs
Transportation Costs
The Supply Chain Another View
Plan
Source
Make
Deliver
Buy
Suppliers
Manufacturers
Warehouses & Distribution Centers
Customers
Material Costs
Transportation Transportation Costs Transportation Costs Manufacturing Costs Inventory Costs Costs 24
Supply Chain Illustration
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Supply Chain for Denim Jeans
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Supply Chain for Denim Jeans (cont.)
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Supply Chain Processes
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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
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What Is Supply Chain Management (SCM)?
Plan Source Make Deliver Buy
A set of approaches used to efficiently integrate
Suppliers Manufacturers Warehouses Distribution centers In the right quantities To the right locations And at the right time
So that the product is produced and distributed
System-wide costs are minimized and Service level requirements are satisfied
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Why Is SCM Difficult?
Plan Source Make Deliver Buy
Uncertainty is natural to every supply chain
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
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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 Information flows. Transformation Movement Storage of goods and materials.. supply chain partners to coordinate their long-term plans control the day-to-day flow of goods and material up and down the supply chain.
Physical flows:
Information flows
For development and maintenance SCM we need
Software Hardware. computer's input/output devices storage media. Entire system and application programmed for processing transactions management control decision-making and strategic planning.
Hardware
Software:
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. 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
Customer Ownership
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-of-wallet
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 aftersales 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
