ENTERPRISE

RESOURCE
PLANNING
WHAT IS AN ERP?
ERP systems are multiple module software
packages that evolved primarily from traditional
manufacturing resource planning (MRP II)
systems.

The objective of ERP is to integrate key

processes of the organization such as order
entry, manufacturing, procurement and accounts
payable, payroll, and human resources.
Core applications are those applications that
operationally support the day-to-day activities of the
business. If these applications fail, so does the business.

Typical core applications include, but are not limited to,

sales and distribution, business planning, production
planning, shop floor control, and logistics. Core
applications are also called online transaction processing
(OLTP) applications. Figure 11-2 illustrates these functions
applied to a manufacturing firm.
ERP SYSTEM
Sales and distribution functions handle
order entry and delivery scheduling. This
includes checking on product availability
to ensure timely delivery and verifying
customer credit limits.
Business planning consists of forecasting
demand, planning product production,
and detailing routing information that
describes the sequence and the stages of
the actual production process.
The exception report identifies potential situations
that will result in rescheduling production, such as
late delivery of materials.
The materials requirements listing shows the
details of vendor shipments and expected receipts
of products and components needed for the order.
Inventory requisitions are used to trigger material
purchase orders to vendors for items not in stock.
 ERP SYSTEM
Shop floor control involves the detailed
production scheduling, dispatching, and
job costing activities associated with the
actual production process.

The logistics application is responsible for

ensuring timely delivery to the customer.
This consists of inventory and warehouse
management, as well as shipping.
ONLINE ANALYTICAL
PROCESSING
An ERP is more than simply an elaborate
transaction processing system. It is a decision
support tool that supplies management with
real-time information and permits timely
decisions that are needed to improve
performance and achieve competitive
advantage. Online analytical processing (OLAP)
includes decision support, modeling,
information retrieval, ad hoc reporting/analysis,
and what-if analysis.
A data warehouse is a database constructed
for quick searching, retrieval, ad hoc queries,
and ease of use.
ERP SYSTEM
CONFIGURATIONS
SERVER CONFIGURATIONS
Briefly, the client-server model is a form of
network topology in which a user’s computer
or terminal (the client) accesses the ERP
programs and data via a host computer called
the server. The servers may be centralized,
but the clients are usually located at multiple
locations throughout the enterprise.
TWO-TIER MODEL
In a typical two-tier model, the server
handles both application and database
duties. Client computers are responsible
for presenting data to the user and
passing user input back to the server.
Some ERP vendors use this approach
for local area network (LAN)
applications for which the demand on
the server is restricted to a relatively
small population of users
 THREE-TIER MODEL
This architecture is typical of large
ERP systems that use wide area
networks (WANs) for connectivity
among the users. Satisfying client
requests requires two or more network
connections. Initially, the client
establishes communications with the
application server. The application
server then initiates a second
connection to the database server.
OLTP VERSUS OLAP
SERVERS
OLTP events consist of large numbers of relatively
simple transactions, such as updating accounting
records that are stored in several related tables.
The transaction processing activity involves updating
the customer’s current balance and inserting new
records into the Invoice and Line Item tables.
The relationships between records in such OLTP
transactions are generally simple, and only a few
records are actually retrieved or updated in a single
transaction.
OLAP can be characterized as online transactions
that:
Access very large amounts of data (for example,
several years of sales data).
Analyze the relationships among many types of
business elements such as sales, products,
geographic regions, and marketing channels.
Involve aggregated data such as sales volumes,
budgeted dollars, and dollars spent.
OLAP can be characterized as online transactions that:
Compare aggregated data over hierarchical time periods
(for example, monthly, quarterly, yearly).
Present data in different perspectives such as sales by
region, by distribution channel, or by product.
Involve complex calculations among data elements such
as expected profit as a function of sales revenue for each
type of sales channel in a particular region.
Respond quickly to user requests so they can pursue an
analytical thought process without being stymied by
system delays.
OLAP OPERATIONS
Consolidation is the aggregation or roll-up of data. For
example, sales offices data can be rolled up to districts and
districts rolled up to regions.
Drill-down permits disaggregating data to reveal the underlying
details that explain certain phenomena. For example, the user
can drill down from total sales returns for a period to identify
the actual products returned and the reasons for their return.
Slicing and dicing enables the user to examine data from
different viewpoints. One slice of data might show sales within
each region. Another slice might present sales by product
across regions. Slicing and dicing is often performed along a
time axis to depict trends and patterns.
BOLT-ON SOFTWARE
Bolt-on software is software that can be easily
attached to a client project, for example, a
website. The term “bolt-on” is similar to the
term “plug-and-play” that is used to describe
pieces of software that are easily integrated
into other larger systems. Some might also
call these “add-ons.”
SUPPLY CHAIN
MANAGEMENT
The supply chain is the set of activities
associated with moving goods from the raw
materials stage to the consumer. This includes
procurement, production scheduling, order
processing, inventory management,
transportation, warehousing, customer
service, and forecasting the demand for
goods.
SUPPLY CHAIN
MANAGEMENT
SCM links all of the partners in the chain,
including vendors, carriers, third-party
logistics companies, and information
systems providers. Organizations can
achieve competitive advantage by linking
the activities in its supply chain more
efficiently and effectively than its
competitors.
DATA WAREHOUSING
A data warehouse is a relational or multidimensional
database that may consume hundreds of gigabytes or
even terabytes of disk storage.
When the data warehouse is organized for a single
department or function, it is often called a data mart.
Rather than containing hundreds of gigabytes of data
for the entire enterprise, a data mart may have only
tens of gigabytes of data. Other than size, we make no
distinction between a data mart and a data warehouse.
The issues discussed in this section apply to both.
The process of data warehousing involves extracting,
converting, and standardizing an organization’s
operational data from ERP and legacy systems and
loading it into a central archive—the data warehouse.
Once loaded into the warehouse, data are accessible via
various query and analysis tools that are used for data
mining.
Data mining is the process of selecting, exploring, and
modeling large amounts of data to uncover relationships
and global patterns that exist in large databases but are
hidden among the vast number of facts. This involves
sophisticated techniques that use database queries and
artificial intelligence to model real-world phenomena
from data collected from the warehouse.
STAGES IN DATA
WAREHOUSING PROCESS
• Modeling data for the data warehouse
• Extracting data from operational databases
• Cleansing extracted data
• Transforming data into the warehouse model
• Loading the data into the data warehouse
database