Is your company ready for ERP?Today's managers are finding it increasingly difficult to make strategic and tactical decisions because the information needed to make those decisions is not readily available. The data needed for analysis is often stored on different computers and in different programs. These computer systems are usually not integrated and therefore it is difficult to process the data and present it in a form that allows management to make rational decisions. Companies that recognize these problems are turning to Enterprise Resource Planning See ERP. (application, business) Enterprise Resource Planning - (ERP) Any software system designed to support and automate the business processes of medium and large businesses. (ERP (Enterprise Resource Planning) An integrated information system that serves all departments within an enterprise. Evolving out of the manufacturing industry, ERP implies the use of packaged software rather than proprietary software written by or for one customer. ) to help them integrate business processes and have a single source of data that they can rely on when making difficult decisions. In this article we will identify issues that should be addressed before deciding whether an ERP system is right for your company. [ILLUSTRATION OMITTED] ENTERPRISE RESOURCE PLANNING Enterprise Resource Planning (ERP) software integrates the business processes that are common to all companies. These would include finance, manufacturing, distribution, and logistics logistics In military science, all the activities of armed-force units in support of combat units, including transport, supply, communications, and medical aid. The term, first used by Henri Jomini, Alfred Thayer Mahan, and others, was adopted by the U.S. . ERP companies do not typically offer software modules that support industry specific or company specific business processes. Table 1 shows the common business processes that are supported by most ERP software packages Free and Open Source ERP software (sorted alphabetically)
One common misconception mis·con·cep·tion n. A mistaken thought, idea, or notion; a misunderstanding: had many misconceptions about the new tax program. about ERP software is that it encompasses all computerized computerized adapted for analysis, storage and retrieval on a computer. computerized axial tomography see computed tomography. functions within a company. In the coatings industry we often use formulation formulation /for·mu·la·tion/ (for?mu-la´shun) the act or product of formulating. American Law Institute Formulation packages to assist the chemists This is a list of famous chemists: (alphabetical order) : Top - 0–9 A B C D E F G H I J K L M N O P Q R S T U V W X Y Z A
1. to state in the form of a formula. 2. to prepare in accordance with a prescribed or specified method. . It is, however, quite common to integrate stand-alone (jargon) stand-alone - Capable of operating without other programs, libraries, computers, hardware, networks, etc. Exactly what is absent is presumed to be obvious from context. "We only run Windows on stand-alone PCs because it's too dangerous to run it on networked ones." software so that it can use data from an ERP system and provide data to the ERP system. An example would be formulation software that would use current raw materials costs from the purchasing module of the ERP software and would return product cost information to the order entry module of the ERP software. BENEFITS OF USING ERP In the 1960s and 1970s small companies used hand written ledgers to record sales and to track production. In the 1980s the introduction of personal computers allowed these same companies to use the power of PCs to record the information more accurately and in a form that could be easily analyzed an·a·lyze tr.v. an·a·lyzed, an·a·lyz·ing, an·a·lyz·es 1. To examine methodically by separating into parts and studying their interrelations. 2. Chemistry To make a chemical analysis of. 3. . This was a significant improvement over the hand written ledgers but it created a problem. Within an organization there were often multiple sources of data--none of which matched. In ERP systems unique data is only stored in one location. All programs that require data will read it from that source. An example would be customer information. The unique customer information is stored in a table. When needed, different program modules such as order entry, accounts receivable accounts receivable n. the amounts of money due or owed to a business or professional by customers or clients. Generally, accounts receivable refers to the total amount due and is considered in calculating the value of a business or the business' problems in paying and shipping will refer to this table for the data required. When the data needs to be updated it only needs to be updated in one table, saving data entry effort. The key benefit of ERP systems is that there is only one source for each piece of data. This limits data entry and ensures that everyone is using the same data. ERP IS NOT FOR EVERYONE ERP software can be expensive, implementation difficult, and the software requires, in some cases, that you change your business processes to match the software. Careful thought and planning must occur prior to deciding to use ERP. The primary reason that companies walk away from ERP projects once implementation has started is that they find that the ERP system selected does not support one of the company's key business processes. This occurs because the company did not spend sufficient time testing all of their business functions with the prospective software. For coatings companies this means ensuring the manufacturing module will allow different units of measure such as gallons, pounds, and ounces. Another area of concern for coatings companies is whether the system will support very small additions in the bill of materials The list of components that make up a system. For example, a bill of materials for a house would include the cement block, lumber, shingles, doors, windows, plumbing, electric, heating and so on. . Because some manufacturing modules are designed for discrete A component or device that is separate and distinct and treated as a singular unit. parts they do not allow decimal Meaning 10. The numbering system used by humans, which is based on 10 digits. In contrast, computers use binary numbers because it is easier to design electronic systems that can maintain two states rather than 10. quantities in the bill of materials. In coatings we often store the formula as a 100-gallon formula. This is then scaled for the required batch size. To support this functionality the system must accept quantities containing the appropriate number of decimal places decimal place n. The position of a digit to the right of a decimal point, usually identified by successive ascending ordinal numbers with the digit immediately to the right of the decimal point being first: for the materials added in small quantities. Most businesses use workarounds when their current systems cannot support a particular need. An example in the coatings industry occurs when a customer requires a rush batch. Often we ship the product before all of the quality control checks have been recorded and the batch ticket closed. To ship the product we manually prepare the shipping documentation. In the ERP environment the shipping documentation cannot be generated until all of the data has been entered and the batch ticket closed. This is done to ensure data integrity. Experience has shown that it is best to implement all of the business processes contained in an ERP package because of the dependency dependency In international relations, a weak state dominated by or under the jurisdiction of a more powerful state but not formally annexed by it. Examples include American Samoa (U.S.) and Greenland (Denmark). of one module on another. For example, an order entry module may use data from the customer data table, credit module, costing module, and warehouse management module. Many smaller companies considering ERP do not use all of the business processes that are available in an ERP system and may not get the full benefits of ERP unless they begin using those business processes. Before purchasing an ERP system a company should determine whether they are prepared to change internal business processes that do not match the functionality of the ERP system being considered. EMPLOYEES MUST CHANGE THE WAY THEY DO THEIR JOBS Just as the company may have to change the way certain business process are done, your people will also have to change the way they work. Change is challenging for most people and if your employees have been at their present jobs for any period of time they may find it difficult to change to meet the requirements of ERP. Employees who are not willing to change are one of the most common reasons that ERP implementations fail. In some extreme cases it may be necessary to replace employees who are unwilling to change. [ILLUSTRATION OMITTED] UNEXPECTED COSTS OF ERP It is important to realize that there are significant costs, over and above the ERP software costs, when implementing an ERP system. Knowing what to expect will allow you to keep them as low as possible. These costs include training, integration and testing, customization, data conversion, loss of internal staff time, and the cost of outside assistance. These costs can be many times the cost of the software. Training Experience shows that the amount of training that is needed to get the most out of an ERP system is greatly underestimated. There are two types of training that will need to be done. First, everyone will need to be trained on how the software functions. The amount of time needed for this training is usually quite predictable. The unpredictable element of training is the training needed because ERP requires that business be conducted using standard practices. These practices may be very different than the way the job is currently being done. Practices that may have been used for years may need to dramatically change. Workarounds that allowed the company to meet unique customer requirements may not be available and workers will need to be trained in how to address these situations. The amount of training needed for a particular company will depend on how much the company's business processes vary from the standard processes used in the ERP system. Our experience suggests that smaller companies have a more difficult time because the business processes have been developed over many years to meet the particular needs of the company as it has grown. These processes often do not match the standard processes in ERP and significant additional training is needed. When one mid-sized coatings company calculated their costs for re-training their employees in the new business processes and training them to use the ERP software, it was equal to four months' wages for each person. Integration and Testing Most businesses will need to use software that is not part of the standard offering of an ERP system. These include programs such as bar coding, formulation software, or e-commerce e-commerce, commerce conducted over the Internet, most often via the World Wide Web. E-commerce can apply to purchases made through the Web or to business-to-business activities such as inventory transfers. . These programs will need to be integrated with the ERP system in order to achieve the maximum benefit from their use. This is never an easy task. The ERP companies have spend years testing and debugging (programming) debugging - The process of attempting to determine the cause of the symptoms of malfunctions in a program or other system. These symptoms may be detected during testing or use by real users. their programs. Despite rigorous testing, we have seen ERP systems with software problems. Integrating an outside piece of software into an already complex system is extremely difficult and should only be considered if absolutely essential. It is extremely important to extensively test the functionality of the add-in software, but even more important to test and determine if the standard processes in the ERP system have been adversely affected by the integration of the add-in program. The cost to integrate software can vary dramatically depending on how many ERP modules are affected, but on a recent project the cost of implementing an outside planning and forecasting program was over $100,000 in programming and testing costs. Customization Customization is different than integration in that we are modifying the core ERP system to meet a particular need. Since every module of the ERP system is tightly integrated, a change in one module to meet a need may require changes in many more modules. Not only is there a cost for making the modifications but every module that could be affected by our changes must be tested. When upgrades to the ERP software become available all of the customization will have to be repeated. We strongly recommend that the core ERP software never be modified mod·i·fy v. mod·i·fied, mod·i·fy·ing, mod·i·fies v.tr. 1. To change in form or character; alter. 2. . [ILLUSTRATION OMITTED] Converting Data Another major cost when implementing an ERP system is the cost of converting data from your legacy systems to the ERP system. This is not simply a matter of having the data read into the ERP system. The data must be "cleaned" to ensure that all of the data is good. This is critical in an ERP system where all of the data is integrated. An example of this is in the Warehouse Management module. The WMS WMS Warehouse Management System WMS Web Map Service (open geospatial consortium specification) WMS West Middle School (Rochester Hills, MI) WMS Workforce Management Software WMS Wechsler Memory Scale requires that we record how many units can fit in a warehouse location. If we set the system so that 72 five-gallon pails can fit into a warehouse location and in fact only 36 pails will fit we could find ourselves cleaning up a big spill spill - register spilling . Data Analysis It is usually not possible for an ERP provider to anticipate all the reporting needs of a company. Therefore it is necessary to develop custom reports. Many companies prefer to have key data available in a data warehouse. Since these reports and the data warehouse are not part of the standard system, creating them will entail entail, in law, restriction of inheritance to a limited class of descendants for at least several generations. The object of entail is to preserve large estates in land from the disintegration that is caused by equal inheritance by all the heirs and by the ordinary additional cost. Loss of Internal Staff Time Implementing an ERP system is difficult and time consuming. Many companies prefer to use their best people to help implement an ERP system due to its complexity. Implementing an ERP system is a full time job. It is not going to be possible for the implementation team to put the required effort into getting the ERP system up and running and do their regular jobs. It is usually necessary to find a replacement to do the job of the person selected to the ERP implementation. Clearly this adds to the cost of the project. CONCLUSION ERP systems can be a great asset to a company. They ensure data integrity so data can be used to make tactical and strategic decisions. They require us to standardize stan·dard·ize v. 1. To cause to conform to a standard. 2. To evaluate by comparing with a standard. our business practices. However, they are not for everyone. By studying your current business processes and carefully matching them to an appropriate ERP system you can successfully implement ERP and use the system to meet your business challenges.
Table 1 -- Common Business Processes Supported by ERP
Department Business Processes
Finance Accounts Receivable
Accounts Payable
General Ledger
Cash Management
Fixed Assets
Financial Reporting
Credit
Sales Order Entry
Human Resources Human Resources
Operations Manufacturing and Material Requirements Planning
Warehouse Management
Distribution Requirements Planning
Inventory Control
Purchasing
Quality Control
by Kevin KEVIN Keepers of the Eternal Vigilance of the Islamic Nation (fictional, from White Teeth by Zadie Smith) Reid Orr Orr , Robert Gordon Called "Bobby." Born 1948. Canadian-born hockey player. He led the National Hockey League in scoring in 1970 and 1975 and was the first defenseman to score more than 100 points in a season. Noun 1. & Boss* *44450 Pinetree Dr., 2nd Fl., Plymouth Plymouth, city, England Plymouth, city (1991 pop. 238,583) and district, Devon, SW England, on Plymouth Sound. The three towns that Plymouth has comprised since 1914 are Plymouth, Stonehouse, and Devonport. , MI 48170-3869. |
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