ERP is abbreviation of Enterprise Resource Planning, which is firstly presented by an IT company form the United States. ERP system is a management software integrated by material resources management (material flow), human resources management (human flow), financial resource management (financial flow) and information resource management (information flow).
BPR (business process reengineering) was first put forward by Michael Hammer and Jame Champy from the United States, and finally identified as a management idea in the 20th century. BRP stressed that business process should be the transformation object as well as transformation center, with being concerned about customer needs and relationship satisfaction as the goal, to fundamentally rethink and radically redesign the existing business processes. BRP is supposed to maximize the technical function inheriting, break the traditional intelligence organization structure (function-organization), establish a new organization structure (process-oriented organization) in order to achieve great improvements on business cost, quality , service and speed by the use of advanced manufacturing technology, information technology and modern management tools.
The reengineering pattern of BPR: on the premise of work-flow-centered business process, break the pyramid-shaped structure to make the business adapt to High Efficiency and fast tempo of this information society, to make enterprise employees more conveniently to participate in business management. The final goal of BPR is to male enterprises has strong adaptability and greater flexibility. In this definition, there are four core contents: Essentiality, Thoroughness, Significance and Process which should be concerned about.
Essentiality means that business processes reengineering is concerned more about core issues, such as "Why are we doing the current work?", "Why should we use the present method to do the work?" and "Why should we while not anyone else do such a work?". Through careful consideration of these issues, companies may find their existing business processes are inefficient or even incorrect.
Thoroughness means that we must figure out the source and the fundamentality. BRP is a re-structuring work while not only improving, enhancing or adjusting work.
Significance means that business process reengineering is not pursuing short-term minor upgrade or a slight improvement in performance, on the contrary, BRP is to bring the enterprises with a significant increase and a greatly leap. Significant growth in operating efficiency is a sign of BRP features.
Finally, business process reengineering is more concerned about the company's business processes. All restructuring work must be carried out focusing on business process. Enterprise can only win the competition after having effectively managed its whole business processes.
posted by ERP System, ERP Applications, ERP Software
n the early 1940s, western economists proposed OPM (order point method) theories by the research on consumption rules of stock material over time.
Order point method has following characteristics:
(1) Demands for a variety of materials are independent of each other.
OPM thinks that materials are independent of each other so that we can determine order separately for each material. Therefore, the material of OPM is parts-oriented rather than product-oriented. However, manufacturing requires that all materials number must be matched in order to be assembled into a product. Because of the independent predict and order of material, there will be extra materials during the assembly.
(2) Continuity of material requirements.
OPM thinks that material requirements are relatively uniform and the inventory consumption is stable. But assembly the requirements for parts and components manufacturing in Assembly Manufacturing are uneven and unstable, and the inventory consumption is intermittent. Even if the final demand for product is continuous, the bulk of the components and raw materials demand is not continuous caused by needs of the production process. This phenomenon raised the question of how to determine the time.
(3) Lead Time is known and fixed.
Order point method thinks that lead time is known and fixed, but it is not actually true. For example, an 8-week-lead-time material’s actual lead-time can change between the 4-90 day ranges. To determine such a large time span into a fixed number is clearly unreasonable.
(4) Stock should be re-filled after consumption.
According to this provision, when the material below the order point, an order notice must be issued so as to refill the inventory. However, if the demand is not continuous, then this is not only unnecessary but also irrational.
posted by ERP System, ERP Applications, ERP Software
"When to order" is considered as a major problem of inventory management, however, the really important question is "when to need materials". Order Point Method (OPM) is to determine order time by triggering order point and determine request date by the lead time, which is in fact putting the cart before the horse. MRP (Material Requirements Planning) was proposed on the basis of filling the gap of Order Point Method.
MRP is to determine the order and production according to materials types, numbers and inventory made by Master Schedule Planning (also called MRP). Therefore, MRP is a method which measures future material supply, production and control according to real demands, MRP provides the exact time and quantity of material requirements.
There are three differences between MRP and OPM:
(1) Requirements of all the materials are linked together by product structure.
MRP focuses on reasonable inventory quantity by considering relationship between different materials requirements.
(2) Material requirement is divided into independent requirement and relevant requirement.
If a material’s requirement does not depend on the requirements of other materials, it can be called independent requirement, such as, raw materials, parts and components. If a material’s requirement depends on the requirements of other materials, it can be called relevant requirement, such as, final product and maintenance parts. Independent requirement usually demands on forecast, customer orders and other external factors, while relevant requirement is determined by the MRP system.
(3) The concept of time slicing is introduced to the inventory status data of materials.
Time slicing is to add coordinate into the material’s inventory status data, that is, inventory status data will be recorded and stored by a specific date or plan. This helps accurately answer any time-related problem.
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MRPⅡ (Manufacturing Resources Planning) is proposed by an American management expert Oliver Wight in 1977. The main difference between MRPⅡ and traditional MRP is that MRPⅡ illustrates benefits from materials planning in monetary form to integrate financial information with material information.
Here are six outstanding features of MRPⅡ:
1. Consistency and enforceability of plan
MRPⅡ is a plan-led management with several planning levels from macro to micro, from strategy to technology, from coarse to fine and from abstract to the concrete layer optimization, to ensure the plan is always consistent with the business strategy.
2. Systematic management
MRPⅡ is a systematic project, which links all departments which are directly related to production and management together to build Integrated System.
3. Data Sharing
MRP Ⅱ is an enterprise-class management information system. Every department shares the same data to do management and every kind of data can be reflected to each department to achieve data sharing.
4. Dynamic adaptability
MRPⅡ is a closed-loop system which requires timely track, control and feedback of the actual situation of information changes. MRPⅡ allows enterprise to grasp the dynamics information to maintain a shorter production cycle, strong resilience and adaptability as well.
5. Simulation predictability
MRPⅡ has a budget predicting function, which can expect potential problems within the longtime plan period. It helps enterprise take measures in advance to eliminate hidden dangers. MRPⅡ also offers a number of possible options for making policy.
6. Unification of Logistics flow and capital flow
MPPⅡ combines traditional financial transaction processing with the cause of the financial transaction, which not only shows the financial status of funds but can trace the origin of funds.
MRPⅡ is a relatively complete production and management plan system, which is the overall and effective business management to get benefits for enterprise.
posted by ERP System, ERP Applications, ERP Software
ERPⅡ(Enterprise Resource Planning Ⅱ) is to create a business strategy between customer and shareholder and a set of specific-industry-oriented applications by supporting and optimizing financial processes and coordinate operation which occurs among the internal enterprise and between enterprises.
It was proposed by U.S. research and consulting firm Gartner Group in 2000 based on the original ERP.The main difference between ERP and ERPⅡ is the emphasis on the role of collaborative commerce. Here we describe the characteristics of ERPⅡ.
- ERPⅡ is not just the sales and purchase under e-business models, which was added into a new function of using corporate collaborative operation resources and information than simply inheriting the traditional ERP business process optimization.
- ERPⅡ has extended to non-manufacturing industries such as financial services, high-tech, telecommunications, retail so as to greatly expanded the scope of ERP implementation.
- ERPⅡ function was beyond the traditional manufacturing, distribution and financial backup to extend to those specific-industry-oriented business.
- ERPⅡ business process focuses on the development management of internal processes and external links.
- Compared with the monotonous structure of ERP system, ERPⅡ system structure is oriented to Web and integrated design, and it is also open and component-based.
- ERPⅡ can process the whole business data which is distributed in the entire business community while ERP system has to put the data in internal enterprise together before processing.
Under the e-commerce environment, fierce degree of market competition, the scope of market competition and the speed of customer needs and market changes, all of which have changed. ERP system will move in the direction toward integrated, networked, modular, intelligent, fast, efficient and customer-relationship-management-focused type.
posted by ERP System, ERP Applications, ERP Software