Re-Engineering and Enterprise Resource Planning Systems Mary Sumner 17 3

https://t.me/PrMaB Pearson New International Edition Enterprise Resource Planning Mary Sumner First Edition https://t.me/PrMaB International_PCL_TP.indd 1 7/29/13 11:23 AM ISBN 10: 1-292-03980-9 ISBN 13: 978-1-292-03980-0 Pearson Education Limited Edinburgh Gate Harlow Essex CM20 2JE England and Associated Companies throughout the world Visit us on the World Wide Web at: www.pearsoned.co.uk © Pearson Education Limited 2014 All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without either the prior written permission of the publisher or a licence permitting restricted copying in the United Kingdom issued by the Copyright Licensing Agency Ltd, Saffron House, 6–10 Kirby Street, London EC1N 8TS. All trademarks used herein are the property of their respective owners. The use of any trademark in this text does not vest in the author or publisher any trademark ownership rights in such trademarks, nor does the use of such trademarks imply any afﬁ liation with or endorsement of this book by such owners. ISBN 10: 1-292-03980-9 ISBN 10: 1-269-37450-8 ISBN 13: 978-1-292-03980-0 ISBN 13: 978-1-269-37450-7 British Library Cataloguing-in-Publication Data A catalogue record for this book is available from the British Library Printed in the United States of America https://t.me/PrMaB Copyright_Pg_7_24.indd 1 7/29/13 11:28 AM 10711914117395975911 PEARSON C U S T OM LIBRAR Y Table of Contents 1. A Foundation for Understanding Enterprise Resource Planning Systems Mary Sumner 1 2. Re-engineering and Enterprise Resource Planning Systems Mary Sumner 17 3. Planning, Design, and Implementation of Enterprise Resource Planning Systems Mary Sumner 39 4. ERP Systems: Sales and Marketing Mary Sumner 59 5. ERP Systems: Accounting and Finance Mary Sumner 75 6. ERP Systems: Production and Materials Management Mary Sumner 91 7. ERP Systems: Human Resources Mary Sumner 107 8. Managing an ERP Project Mary Sumner 119 Index 141 https://t.me/PrMaB I A Foundation for Understanding Enterprise Resource Planning Systems Objectives 1. Develop an understanding of how ERP systems can improve the effectiveness of information systems in organizations. 2. Understand the business benefits of enterprise resource planning (ERP) systems. 3. Understand the history and evolution of ERP. ◆ THE EMERGENCE OF ENTERPRISE RESOURCE PLANNING SYSTEMS In the past several years, many organizations have initiated Enterprise Resource Planning (ERP) systems, using such packages as SAP,Peoplesoft, and Oracle.The ERP market is one of the fastest growing markets in the software industry. In research con- ducted by APICS, 34.5% of companies with revenues over $1 billion who were APICS members planned to purchase or upgrade an ERP system (Umble, Haft, and Umble, 2003). AMR Research predicts that the sales of ERP software will reach $180 billion by 2002 (Kalling, 2003). According to one study, the ERP market may reach $1 trillion by 2010 (Bingi, Sharma, and Godla, 1999). Enterprise resource planning systems are a major investment. Companies have invested between $50,000 and hundreds of millions of dollars in ERP software, using a variety of business justifications, including the replacement of numerous legacy From Chapter 1 of Enterprise Resource Planning, First Edition. Mary Sumner. Copyright © 2005 by Pearson Education, Inc. All rights reserved. https://t.me/PrMaB 1 A Foundation for Understanding Enterprise Resource Planning Systems systems, reduction in cycle times from order to delivery, and reduction in oper- ating costs. The on-line, real-time operational data that ERP systems provide enable managers to make better decisions and improve responsiveness to customer needs (Ross, Vitale, and Willcocks, 2003). There is evidence that organizations are satisfied with ERP. Based upon a sample of 117 firms in 17 countries, the Conference Board reports that 34% of the organizations were satisfied with ERP, 58% were somewhat satisfied, 7% were somewhat unsatisfied, and only 1% were unsatisfied (McNurlin, 2001). WHAT IS ERP? ERP systems are the software tools used to manage enterprise data. ERP systems help organizations deal with the supply chain, receiving, inventory management, customer order management, production planning, shipping, accounting, human resource management, and other business functions (Somers and Nelson, 2003). According to Deloitte Consulting, an ERP system is a packaged business software system that allows a company to “automate and integrate the majority of its business processes; share common data and practices across the enterprise; and produce and access information in a real-time environment.” ERP systems are different from legacy systems in that organizations use ERP to integrate enterprise-wide information supporting financial, human resources, manufacturing, logistics, and sales and marketing functions (Shanks, Seddon, and Willcocks, 2003). An ERP system provides an enterprise database where all business transactions are entered, processed, monitored, and reported. One of the most challenging issues associated with ERP systems is that the software imposes processes on the organizations that implement it.The issue of whether to make modifications or not is a significant challenge that every organization implementing ERP must face. To be competitive, organizations must improve their business practices and share information with their suppliers, distributors, and customers.An ERP system introduces “best practices,” which are defined as “simply the best way to perform a process.” The biggest mistake made in implementing ERP, especially in a manufacturing environment, is to redesign the new system to work in the old environment (Honig, 1999). THE EVOLUTION OF ERP In the 1960s, most software packages included inventory control capability. Material Requirements Planning (MRP) systems, which were introduced in the 1970s, used a master production schedule and a bill of materials file with the list of materials needed to produce each item (see Table 1). Later on, MRP systems were enhanced by adding tools for sales planning, customer order processing, and rough-cut capacity planning— which provided input into production scheduling, known as closed-loop MRP (Somers and Nelson, 2003). In the 1980s, MRPII systems incorporated the financial accounting system along with manufacturing and materials management systems (Somers and Nelson, 2003). MRPII led the way toward an integrated business system that developed the material and capacity requirements for production and translated these requirements into 2 https://t.me/PrMaB A Foundation for Understanding Enterprise Resource Planning Systems TABLE 1 Historical Evolution of ERP Systems Types of Systems Time Purpose Systems Reorder point 1960s Used historical data to Designed to manage high- systems forecast future inventory volume production of a demand; when an item falls few products, with below a predetermined constant demand; focus level, additional inventory on cost is ordered Materials requirement 1970s Offered a demand-based Focus on marketing; planning (MRP) approach for planning emphasis on greater systems manufacture of products production integration and ordering inventory and planning Manufacturing 1980s Added capacity planning; Focus on quality; resource planning could schedule and manufacturing strategy (MRP-II) systems monitor the execution of focused on process control, production plans reduced overhead costs, and detailed cost reporting MRP-II with 1990s Provide ability to adapt Focus on the ability to manufacturing production schedules to create and adapt new execution (MES) meet customer needs; products and services on a systems provide additional feedback timely basis to meet with respect to shop floor customers’ specific needs activities ERP (enterprise Late 1990s Integrate manufacturing Integrates supplier, resource planning) and onward with supply chain processes manufacturing, and systems across the firm; designed to customer data throughout integrate the firm’s business the supply chain processes to create a seamless information flow from suppliers, through manufacturing, to distribution to the customer financial information. By the 1990s, ERP systems provided seamless integration of all information flows in the company—financial accounting, human resource, supply chain management, and customer information (Somers and Nelson, 2003). THE “INTEGRATED” SYSTEMS APPROACH ERP systems impose an “integrated systems” approach by establishing a common set of applications supporting business operations. In fact, successful implementation of an ERP system typically requires re-engineering business processes to better align with the ERP software (Brown and Vessey, 2003; Dahlen and Elfsson, 1999). Limited cus- tomization makes it simpler to upgrade the ERP software as new versions and add-ons emerge over time. As you can see from Table 2, an ERP system overcomes the ineffi- ciencies of independent systems and non-integrated data by providing integrated data to support multiple business functions. https://t.me/PrMaB 3 A Foundation for Understanding Enterprise Resource Planning Systems TABLE 2 Before and After ERP: Systems Standpoint Before ERP After ERP Information systems Stand-alone systems Integrated systems Coordination Lack of coordination among Supports coordination across business functions (e.g., manu- business functions facturing and sales) Databases Non-integrated

Load more