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MGT 300
Individual Assignment
Chapter 12
“Enterprise Resources Planning”
Class : J3BM1114C
Name : Adibah Amira Bte Mohd Salehen
No. Matric : 2010404638
Lecturer : Tuan Syed Mazlan Bin Syed Mat Dom
ACKNOWLEDGEMENT
First of all, I would like to say Alhamdulillah, for giving me the strength and health to do this assignment work until it done. Not forgotten to my family for providing everything, such as money, to buy anything that are related to this assignment work and their advise, which is the most needed for this task. Internet, books, computers and all that as my sources to complete this assignment. They also supported me and encouraged me to complete this task so that I will not procrastinate in doing it.
Then I would like to thank my dedicate lecturer, Tuan Syed Mazlan for guiding me about this assignment and always encourage me and the whole class to perform better in this subject and also not forgotten my friends who is directly or indirectly helping me throughout this assignment. I had some difficulties in doing this task, but he taught me patiently until I knew what to do. He tried and tried to teach us in class until we understand what we supposed to do with this assignment.
Last but not least, my friends who were doing this assignment with me and sharing our ideas even thought our chapters are different. They were helpful that when we combined and discussed together, we had this task done.
Thank you very much… J
TABLE OF CONTENTS
Acknowledgments ………………………………………………2
Table of Content ………………………………………………3
List of Figures …………………………………………………..3
List of Tables ……………………………………………...........3
1.0 INTRODUCTION.…………………………………….…4
2.0 Data Flow of ERP Integration……………………………….5
3.0 The Evolution of Enterprise Resource Planning………………..7
4.0 Integrating SCM, CRM, and ERP…………………………....9
5.0 Integration Tools……………………………………………11
7.0 CONCLUSION…………………………………………….12
8.0 REFERENCES……………………………………………13
LIST OF FIGURES
Figure 2.0 (i) Data flow of ERP system………………………......5
Figure 4.0 (a) Popularity of different e-business application in Europe
according to company size…………………………………..……9
Figure 4.0 (b) - Primary User and Business Benefits of Strategic Initiatives....10
Figure 5.0 (a) - Integration between SCM, CRM and ERP Application……11
LIST OF TABLES
Table 3.1 (a) The summarize evolution of EPR from 1960s to 1990s….…7
Table 3.2 (a) The summarize evolution of EPR from 1990s to present……..8
What is Enterprise Resource Planning (ERP)? “Enterprise Resource Planning” is a term originally coined in 1990 by The Gartner Group to describe the next generation of MRP II software (Barton, 2001). The purpose was to integrate all facets of the business enterprise under one suite of software applications. At the heart of all ERP system is a database, when user enters or updates info in one module, it is immediately and automatically update throughout the entire system.
1.1 Definition
· Amy Philips, Paige Baltzan & Stephen Haag – Business Driven Technology
Enterprise Resource Planning serves as the organization’s backbone in providing fundamental decision-making support.
· Dave Chaffey – E-Business & E-Commerce
Software providing integrated functions for major business functions such as production, distribution, sales, finance and human resources management.
· Eric L. Keller – Manufacturing System
Enterprise Resource Planning would be broadened to include almost any type of large integrated software package.
· James A.Senn – Information Technology Principles, Practices & Opportunities
Large scope, unified application programs that integrate many of the transaction processing and information systems application features.
· James O’Brien & George Marakas – Introduction to Information Technology
Technological backbone of E-Business, an enterprisewide transaction framework with links into sales order processing, inventory management and control, production and distribution planning and finance.
2.0 Data Flow of ERP Integration
Figure 2.0 (i)
The ERP system is automatically connected to every department link. The order process moves speedily though the organization. For example, when user takes a sales order, its details are entered to common database and are immediately available to other application function where it is needed. The order process moves like a bolt of lightning through the organization, and customer can get their order faster and minimize error. ERP can use the same technique to the other major business processes.
2.1 ERP System Integrates Functions
a) Human Resources
· HR/ Benefits administration
· Payroll
· Self-service insurance management
· Self-service retirement fund management
b) E-Business
· E-Procurement
· Employee self-service supply purchasing
· Web-enabled transaction
· E-Commerce
c) Customer Relationship Management
· Customer descriptive information
· Personalization of services
· Real time access enterprise info
d) Supply Chain Management
· Planning, scheduling and fulfillment application that address all procurement requirements across the enterprise.
e) Data analysis
· Decision support software that provides capacity to analyze transaction data to track business performance.
f) Finance
· General Ledger
· Account Receivable
· Procurement
· Treasury and grant management
· Cost Control
3.0 The Evolution of Enterprise Resource Planning
Enterprise Resource Planning is evaluation of manufacturing requirements planning (MRP) II. Form business perceptive, ERP has expanded from coordination of manufacturing processes to the integration enterprise-wide back end process. From a technological aspect, ERP has move from legacy implementation to more flexible tiered client-server architecture.
3.1 The summarize of evolution of EPR from 1960s to 1990s
Timeline | System | Description |
1960s | Inventory Management & Control | The combination of Information Technology and business process of maintaining an appropriate level of stock in warehouse. The activities of inventory management include identifying inventory requirements, setting targets, providing replenishment techniques and option, monitoring item usages, reconciling the inventory balances, and reporting inventories status. |
1970s | Material Required Planning | Utilize software application for scheduling production process. MRP generates schedule for operation and raw materials purchased based on the production requirement of finished goods, the structure of the production system, the current inventories level and lot of sizing procedure of each production. |
1980s | Manufacturing Required Planning | Utilize software application for coordinating manufacturing process, from product planning, parts purchasing, inventory control to product distribution. |
1990s | Enterprise Resources Planning | Use multi-module application software for improving the performance of the internal business processes. ERP system often integrates business activities across-functional department, from product planning, parts purchasing, inventory control, product distribution, fulfillment, to order tracking. ERP software systems may include application modules for supporting marketing, finance, accounting and human resources. |
Table 3.1 (a)
Source: Adapt from Enterprise Resource Planning (2008)
3.2 The summarize of evolution of EPR from 1990s to present
Timeline | System | Description |
1990s | Enterprise Resource Planning | Utilize software application for material planning, order entity, distribution, general ledger, accounting and shop floor control. |
2000 | Extended Enterprise Resource Planning | Utilize software application for scheduling, forecasting, capacity planning, e-commerce, warehousing and logistic. |
Present | Enterprise Resource Planning II | Utilize software application for project management, knowledge management, workflow management, customer relationship management, portal capability and integrated financials. |
Table 3.2 (a)
Source: Adapt from Business Driven Technology (2009)
4.0 Integrating SCM, CRM, and ERP
According to Paige Baltzan, Amy Phillips and Stephen Haag “Application such as SCM, CRM and ERP are the backbone of e-business” (pg. 156). It is the key to success for every company. The approach of integrating different application through ERP is entirely consistent with principle of e-business, since e-business application must facilitate the integration of the whole supply chain and value chain.
For example, a European Union report (eEurope, 2005) also show surprisingly low rates of adoption of different types application. Figures 4.0 (a) shows the popularity of different types of e-business applications.
Figure 4.0 (a) – Popularity of different e-business application in Europe according to company size
Source: Adapted from E-Business & E-commerce (Pg 288)
ERP systems automate organization activity with an integrated software application. Their purpose is to facilitate the flow of information between all business functions inside the boundaries of the organization and manage the connections to outside stakeholders. The techniques and concept for integrated management of business as a whole from the viewpoint of the effective use of management recourses to improve the efficiency and effectiveness of enterprise management.
Figure 4.0 (b) - Primary User and Business Benefits of Strategic Initiatives
Source: Adapt from Business Driven Technology (Pg 157)
5.0 Integration Tools
Figure 5.0 (a) - Integration between SCM, CRM and ERP Application
Source: Adapt from Business Driven Technology (Pg 158)
Many company purchase module from ERP suppliers. A Customer Relationship Management vendor and Supplier Relationship Management must integrate the different module together to be absolute matching one with another.
Integration are achieved using middleware. It is a type of software that located in the centre and provides connectivity between two or more software application. It is act as translation between disparate systems.
If one of the applications is perform poorly, the entire customer value delivery system is affected to it. These system must be maintained and supervise accordingly to ensure the smoothness of the path link between them.
6.0 Enterprise Resource Planning’s Explosive Growth
All business nowadays is very complex and customer-orientation. The system and technology must be in advance to ensure the company earns its competitive advantages to thrive in the market. ERP system can generate significant business benefits for a company (O’Brien &Marakas, 2008). Many other companies have found major business value in their use of ERP in several basic ways.
6.1 Advantages of Enterprise Resource Planning
Installing an ERP system has many advantages both direct and indirect (Leon, 2008). The direct advantages include improved efficiency, information integration for better decision making, and faster respond time to customer demand. The indirect benefits include better corporate images, improve customer goodwill, customer satisfaction and so on.
· Quality and efficiency
ERP creates a framework for integrating and improving a company’s internal business processes that result significant improvement in customer services, production and distribution.
· Low cost
Reduce transactional processing cost, hardware and software.
· Support decision making
ERP provide vital, cross-functional information on business performance to managers and help their ability to make a decision making in a timely manner.
· Enterprise agility
ERP system breaks down departmental and functional walls of business processes, information system and resources. This will result in more flexible organization structures, managerial responsibilities, and work roles.
7.0 Conclusion
In Brief, an enterprise is a group of people in an organization that have same goal to achieve. In the enterprise way the entire organization is considered as a system and all the in the department are its sub-system. All information from the sub-system in organization is store centrally and is available to all departments.
The ERP system helps to make this task easier by integrating the information system, enabling smooth and seamless flow of information across department barriers, automating business process and function thus helping the organization to work more and move forward as single entity.
A business process is a collection of activities that takes one or more kind of input and creates an output that is of value to the customer. Thinking in term of business processes helps managers to look at their organization from a customer perspective. Sharing data effectively and efficiently between and within the functional areas that lead to more efficient business process.
Information systems can be designed so that accurate and timely data are shared between functional areas. These systems are called integrated information system. So, what is need is a system that treats the organization as a single entity to the information needed by the whole organization. Of this is possible and if the information generated is accurate, timely and relevant, then this system will lead the organization to realize its goal.
8.0 References
A.Senn, J. (2004). Information technology principles, practice & opportunities. (3 ed.). New Jersey: Pearson.
Baltzan, P., Phillips, A., & Haag, S. (2009). Business driven technology. (International ed.). DOI: McGraw-Hill
Barton, P. (2001). Enterprise resource planning: factors affecting success and failure . Retrieved from http://scholar.google.com.my/scholar?q=enterprise+resource+planning&hl=en&btnG=Search&as_sdt=1%2C5&as_sdtp=on
Chaffey, D. (2007). E-business & e-commerce. (3 ed.). New York: Prentice Hall.
Eric L. Keller, Lessons Learned, Manufacturing Systems, v17, iss.11, pp. 44-50
Leon, A. (2008). Enterprise resource planning. (2 ed.). New Delhi: McGraw-Hill. Retrieved from
O'Brien, J., & Marakas, G. (2008). Introduction to Information System. (14 ed.). New York: McGraw-Hill.
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