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Enterprise resource planning

2023-09-12 return

The management concept proposed by Gartner Group Inc, Enterprise Resource Planning (ERP), is based on information technology and provides a management platform for decision-makers and employees to make decisions through a systematic management approach. Proposed by Gartner Group in 1990. Enterprise Resource Planning (ERP) is the next-generation manufacturing system and resource planning software of MRP II (Enterprise Manufacturing Resource Planning). In addition to the existing production resource planning, manufacturing, finance, sales, procurement and other functions of MRP II, there are also quality management, laboratory management, business process management, product data management, inventory, distribution and transportation management, human resource management, and periodic reporting system. The meaning represented by ERP in our country has been expanded, and all types of software used in enterprises have been included in the scope of ERP. It breaks away from the boundaries of traditional enterprises and optimizes enterprise resources from the scope of the supply chain, based on the new generation of information systems in the era of network economy. It is mainly used to improve business processes in enterprises to enhance their core competitiveness. ERP is a supply chain management concept proposed by Gartner Group Inc, a computer technology consulting and evaluation group in the United States. Enterprise Resource Planning (ERP) refers to a management platform established on the basis of information technology, which provides decision-making and operational means for enterprise decision-makers and employees with a systematic management philosophy. The ERP system supports mixed manufacturing environments such as discrete and process oriented, and its application scope has expanded from manufacturing to retail, service, banking, telecommunications, government agencies, and schools. By integrating database technology, graphical user interfaces, fourth generation query languages, client server structures, computer-aided development tools, and portable open systems, it effectively integrates enterprise resources.

"Enterprise Resource Planning (ERP) is a management platform built on information technology, employing systematic management thinking to provide decision-making tools for the decision-makers and employees of an enterprise. It was proposed by the American Gartner Group in 1990 and represents the next generation of Manufacturing Resource Planning (MRP II) in manufacturing systems and resource planning software.

ERP goes beyond the functions of MRP II, including production resource planning, manufacturing, finance, sales, procurement, quality management, laboratory management, business process management, product data management, inventory management, distribution and transportation management, human resources management, and periodic reporting systems. In China, the meaning represented by ERP has been expanded to include various types of software used in enterprises, all of which are classified under the umbrella of ERP.

ERP extends beyond traditional enterprise boundaries, optimizing enterprise resources from the perspective of the supply chain. It is a new generation information system based on the network economy era. ERP is mainly used to improve enterprise business processes and enhance core competitiveness. It is a supply chain management concept proposed by the American computer technology consulting and evaluation group Gartner Group Inc. ERP refers to the establishment of a management platform based on information technology, offering systematic management thinking for decision-makers and employees in enterprises.

ERP systems support various manufacturing environments, extending the application scope from manufacturing to retail, services, banking, telecommunications, government agencies, and educational institutions. By integrating database technology, graphical user interfaces, fourth-generation query languages, client-server architecture, computer-aided development tools, portable open systems, etc., ERP effectively integrates enterprise resources. Customer Relationship Management (CRM) is a system that utilizes software, hardware, and network technology to establish an information system for collecting, managing, analyzing, and utilizing customer information.

The Sales and Market module focuses on the market, demand, orders, raw material procurement, production, inventory, supply, and distribution. It covers every aspect from production to delivery, involving every link from suppliers to customers. It aims to reduce inventory, improve delivery and supply capabilities, decrease workflow cycles, enhance productivity, and lower supply chain costs.

The Finance Management module in ERP is crucial for clear and distinct financial management in an enterprise. It includes both accounting and financial management. The accounting section comprises the general ledger, accounts receivable, accounts payable, cash, fixed assets, and multiple currency modules. The finance management module automates the entry of accounting vouchers based on activities in production and procurement, generating general ledger entries and accounting reports.

ERP also provides modules for other aspects, such as Manufacturing Management, Inventory Management, Plant and Equipment Maintenance, Human Resources, Reports, Manufacturing Execution System (MES), Workflow Services, and Enterprise Information System. Additionally, it includes supplementary functions like Financial Investment Management, Quality Management, Transportation Management, Project Management, Regulations and Standards, and Process Control.

ERP integrates and manages all resources within an enterprise, addressing the three major flows: logistics, capital flow, and information flow. The modules are different from those of previous MRP or MRP II systems, as they are applicable not only to manufacturing enterprises but also to various other types of enterprises, including non-production and non-profit organizations.

In summary, ERP is a comprehensive management information system that facilitates the integration and management of an enterprise's material resources, financial resources, and information resources. It encompasses various functional modules that allow enterprises to optimize their business processes, respond dynamically to changes in the supply-demand relationship, and make informed decisions based on accurate and timely information."

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The primary function of financial management is based on accounting data, further analyzed to carry out corresponding forecasting, management, and control activities. It focuses on financial planning, control, analysis, and forecasting:

  1. Financial Planning: Developing financial plans and budgets for the upcoming period based on previous financial analysis.

  2. Financial Analysis: Providing query functionality and assessing financial performance through graphical displays of user-defined variance data, including account analysis.

  3. Financial Decision-Making: The core component of financial management, involving decisions related to funds, including fundraising, investment, and fund management.

The Production Control Management module is the core of the ERP system. It organically integrates the entire production process of the enterprise, enabling effective reduction of inventory and improved efficiency. The automatic connection of previously scattered production processes ensures a coherent production flow, avoiding production gaps and delays in delivery times.

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This is an advanced production and management method guided by planning. First, the company establishes a total production plan, which is then further subdivided through systematic processes and delegated to various departments for execution. Each department, such as production and procurement, follows this plan. The main content overview of production control management is as follows:

  1. Master Production Planning (MPS): Based on production plans, forecasts, and customer orders, it arranges the types and quantities of products provided in each future cycle. It transforms production plans into detailed schedules, precise in terms of time and quantity, balancing material and capacity needs.

  2. Material Requirements Planning (MRP): After determining how much final product to produce based on the master production plan, it converts the quantity of products to be produced into the required quantities of components. By comparing with existing inventory levels, it determines the additional processing and procurement quantities needed.

  3. Capacity Requirements Planning (CRP): After generating a preliminary material requirements plan, it creates detailed work plans by balancing the total workload of all work centers with their capacities. This ensures that the generated material requirements plan is feasible in terms of the enterprise's production capacity.

  4. Shop Floor Control: It involves dynamic job scheduling that changes over time, allocating tasks to specific workshops, followed by job sequencing, management, and monitoring.

  5. Manufacturing Standards: In planning, various production basic information, known as manufacturing standards, is needed. These include part codes, product structures, processes, and work centers, identified by unique codes in the computer system.

ERP, with its emphasis on planning, integrates customer demands and internal manufacturing activities, forming a complete supply chain. Its core management philosophy is reflected in three main aspects: managing the entire supply chain resources, incorporating lean production, agile manufacturing, and synchronous engineering concepts, and emphasizing pre-planning and pre-control.

The success of ERP application is marked by integrated system operations, streamlined business processes, dynamic performance monitoring, and continuous improvement in management. ERP offers significant features such as integration, systematization, flexibility, and real-time control.

ERP in China faces challenges such as the use of unfamiliar terminology and the lack of standardized implementation methods. Successful ERP implementation relies on effective decision-makers, thorough consultation and research, and careful selection of suitable ERP software considering various factors. ERP systems based on the supply chain management philosophy demand attention to key aspects during implementation to ensure success.

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Ensure effective training for employees, including workshop and department heads, finance personnel, production planners, sales and procurement staff, production statisticians, warehouse managers, etc., throughout the entire implementation process of the ERP system. Since the use of the ERP system will significantly change employees' existing operating methods or procedures, training should cover different levels and degrees of personnel involved in the ERP project, focusing on aspects such as efficient production, on-time production, and comprehensive quality management.

Establish a sound engineering project management system and operational mechanism. ERP systems are characterized by large investment, long cycles, complex systems, and high risks. Therefore, enterprises implementing ERP must ensure successful project implementation from the perspectives of system engineering and scientific management.

Integrate ERP with e-commerce. E-commerce is the mainstream business model for optimizing enterprise operations and participating in future international competition. In the era of e-commerce, ERP systems will leverage Internet and information integration technologies to comprehensively integrate and optimize functions such as supply chain management, customer relationship management, and enterprise office automation to support collaborative business models such as product collaboration commerce.

Globalize ERP. The development trend in information construction for small and medium-sized enterprises is globalization of enterprises, globalization of markets, and globalization of competition. As e-commerce continues to develop, policy barriers have gradually disappeared in recent years, and enterprises' e-commerce has existed in small and medium-sized enterprises for a considerable period, gradually expanding its scope to the global level. Therefore, as information construction for small and medium-sized enterprises strengthens, there is a requirement to optimize ERP system functions to provide services for globalized enterprises.

Speed up ERP. In a fiercely competitive business environment, small and medium-sized enterprises must quickly understand what individual customers want at a specific time and respond through ERP software. Therefore, ERP software is required to have the ability to quickly perceive and respond. The optimized ERP must meet the technological needs of information construction for small and medium-sized enterprises, improving the speed and flexibility of enterprise responses to customers.

Reorganize ERP. Economic globalization promotes mergers between companies. However, due to the demand for cost reduction in corporate and management institutions, various companies will be prompted to reorganize within their industries. After restructuring, companies should be able to carry out ERP restructuring with the help of optimized ERP software to meet the current requirements after corporate restructuring.

Virtualize ERP. As virtual organizations are formed by enterprises for mutual benefit through joint cooperation, the relationship scope is very extensive. To cover such a range, the optimized ERP software needs to support the joint data and process of different levels, from simple market transactions between organizational structures to complete joint and sharing. One way to virtualize ERP software is to expand the value chain by integrating information from multiple data systems.

 
 
 
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