Following Video will explain the need of an ERP software like SAP in an enterprise Video Transcript with Key Takeaways Highlighted:
* The very basic question is why Enterprise Resource Planning also called ERP is required ?To answer this , lets examine this typical business scenario * Sales Team approaches the Inventory department to check for availability of the product. * In case the product is out of stock ,the sales team approaches the Production Planning Department to manufacture the product.The Production planning Team checks with inventory department for availability of raw material * If raw material is not available with inventory , the Production Planning team buys the raw material from the Vendors then Production Planning forwards the raw materials to the Shop Floor Execution for actual production. * Once ready , the Shop Floor Team forwards the goods to the Sales Team , who in turn deliver it to the client. The Sales Team updates the Finance with revenue generated by sale of product * Production planning Team update the finance with payments to be made to different vendors for raw materials.All departments approach the HR for any Human Resource related issue. * That is a typical business process of in a manufacturing company * Some Key Inferences one could derive from the scenario would be. * A typical Enterprise has many Departments or Business Units. * These Departments or Business Units continuously communicate and exchange date with each other. * The success of any organization lies in effective communication, and data exchange, within these departments ,as well as associated Third Party such as Vendors, Outsourcers ,and Customers. * Based on the manner in which communication and data exchanged is managed * Enterprise systems can be broadly classified as 1) Decentralized System. 2) Centralized System which are also called as ERP. * Lets look at Decentralized system first
* In a company with Decentralized System of Data Management – Data is maintained locally at the individual departments; Departments do not have access to information or data of other Departments * To identify problems arising due to decentralized Enterprise management system lets look at the same business process again. * The Customer approaches the sales team for a product, but this time around he needs the product, on an urgent basis * The Sales Team do not have real-time information access to the products inventory. * So they approach the Inventory department to check the availability of the product. * This process takes time and customer chooses another vendor * Loss of Revenue and Customer Dissatisfaction.
* Now , suppose the product is out of stock and the Sales Team approaches the Production Planning team to manufacture the product for future use. * Production Planning Team checks the availability of the raw materials required. * Raw Material Information is separately stored by Production Planning as well as Inventory Department. * Thus Data Maintenance Cost (in this case Raw Material) goes up. * A particular raw material required to manufacture the product is available in the inventory ,but as per the database of the production planning team, the raw material is out of...