Concepts and management ideas of ERP System

-- Introduction to the collection of ancient moon collection ERP
Differences between ERP system and MRP-ⅱ

ERP is an enterprise management information system developed on the basis of MRP-ⅱ. To further understand the concept and main functions of ERP systems, it is necessary to clarify the differences between ERP and MRP-ⅱ.

1. Differences in resource management scope
MRP-II mainly focuses on the management of internal personnel, financial resources, and other resources in the enterprise. The ERP system puts forward the concept of the supply chain (supply chain, that is, the customer needs are integrated with the manufacturing activities within the enterprise and the manufacturing resources of suppliers, and all links in the supply chain are managed effectively, these five sections cover orders, procurement, inventory, planning, manufacturing, quality control, transportation, distribution, service and maintenance, financial management, personnel management, laboratory management, project management, and formula management..

2. Differences in Production Method management
The MRP-ⅱ system classifies enterprises as several typical production methods for management, such as repetitive manufacturing, batch production, order-based production, order-based assembly, and inventory-based production, there is a set of management standards for each type. In the late 1980s s and early 1990s s, in order to keep up with the changes in the market, enterprise production with multiple varieties, small batches, and plate production became the main production methods adopted by enterprises, ERP can well support and manage this hybrid manufacturing environment, meeting the diversified business needs of enterprises.

3. Differences in management functions
In addition to the manufacturing, distribution, and financial management functions of the MRP-ⅱ system, ERP also provides support for transportation management and warehouse management throughout the entire process; support Quality Management, laboratory management, equipment maintenance and spare parts management of the production assurance system; support for workflow (business processing process) management.

4. Differences in transaction processing control
MRP-ⅱ controls the entire production process by rolling the plan in a timely manner. It has poor real-time performance and generally only implements in-process control. The ERP system supports Online Analytical Processing (OLAP), after-sales service, and quality feedback, emphasizing the enterprise's prior control capabilities, it can integrate design, manufacturing, sales, transportation, and other operations in parallel, it provides enterprises with real-time analysis capabilities on key issues such as quality, adaptability to changes, customer satisfaction, and performance.

In MRP-ⅱ, the financial system is just the sum of information. Its function is to convert the quantity information in supply, production, and sales into value information, reflects the value of logistics. The ERP system integrates the financial planning and value control functions into the entire supply chain, for example, in the production planning system, in addition to retaining the original master production plan, material demand plan and capacity plan, the Sales Execution Plan SOP and Profit plan are expanded.

5. Differences in the handling of transnational (or regional) business transactions
The development of modern enterprises makes the coordination between various organizational units within the enterprise and between the enterprise and external business units more and more important. The ERP system uses a sound organizational structure, thus, it can meet the needs of multi-country, multi-factory, multi-language, and multi-currency applications operating in different countries and regions.

6. Differences in Computer Information Processing Technology
With the rapid development of IT technology, the application of network communication technology enables the ERP system to achieve integrated management of the entire supply chain information. ERP system application Client/Server (C/S) architecture and distributed data processing technology, supports Internet/Intranet/exclusive, e-commerce (e-busincss, E-Commerce) and electronic data exchange EDI. In addition, it can implement interoperability on different platforms.

Management Ideology of ERP System

The core management philosophy of ERP is to effectively manage the entire supply chain, mainly reflected in the following three aspects:

1. reflect the idea of managing the entire supply chain Resources
In the era of knowledge economy, it is impossible to effectively participate in market competition only by the resources of your own enterprises, in order to effectively arrange the production, supply and marketing activities of enterprises, it is also necessary to include relevant parties, such as suppliers, manufacturing plants, distribution networks, and customers, in the business process into a close supply chain, to meet the needs of enterprises to use all market resources of the whole society for rapid and efficient production and operation, in order to further improve efficiency and gain a competitive advantage in the market. In other words, modern enterprise competition is not the competition between a single enterprise and a single enterprise, but between one enterprise supply chain and another enterprise supply chain. The ERP system manages the entire enterprise's supply chain and adapts to the enterprise's market competition in the era of knowledge economy.

2. reflect the ideas of lean production, synchronous engineering and agile manufacturing
The ERP system supports the management of mixed production methods. Its management philosophy is manifested in two aspects: the first is the "Lean Production LP (leanproduction)" concept, which is developed by the Massachusetts Institute of Technology (MIT) the proposed Enterprise Business Strategy system includes customers, sales agents, suppliers, and cooperation units in the production system when enterprises organize production in a large volume of production, the relationship between an enterprise and its sales agents, customers, and suppliers is no longer simply a business relationship, but a partnership that shares interests. This partnership forms an enterprise's supply chain, this is the core idea of lean production. The second is the idea of Agile Manufacturing. When the market changes and the enterprise has specific market and product requirements, the basic partner of the enterprise may not be able to meet the requirements of new product development and production, an enterprise organizes a short-term or one-time supply chain composed of specific suppliers and sales channels to form a "Virtual Factory", and regards supply and collaboration units as an integral part of an enterprise, use "simultaneous Enginering" to organize production, and use the shortest time to bring new products into the market. This ensures high quality, diversity, and flexibility of products at all times, this is the core idea of Agile Manufacturing.

3. reflect the idea of advance planning and in-process control
The planning system in the ERP system mainly includes: main production plan, material demand plan, capability plan, procurement plan, Sales Execution Plan, profit plan, financial budget and human resources plan, these planning functions and value control functions have been fully integrated into the entire supply chain system.
On the other hand, the ERP system defines the accounting accounts and accounting methods related to transaction processing (transaction) to automatically generate accounting entries when transaction processing occurs, this ensures the consistency between bonus streams and logistics synchronization records and data. In this way, based on the current status of financial funds, we can trace back the ins and outs of funds, further trace the related business activities, and change the status of capital information lagging behind material information, it facilitates in-process control and real-time decision-making.

In addition, the planning, transaction processing, control, and decision-making functions are all implemented in the business process of the entire supply chain, it is required that the potential and responsibility of each person be maximized during each process's business process. The spirit of cooperation between people is emphasized between processes, in order to give full play to the initiative and potential of individuals in Organic organizations, and realize the transformation from a "Towering" organizational structure to a "flat" organizational structure, this increases the speed at which enterprises respond to market changes.

In short, with the rapid development and application of IT technology, ERP systems can turn many advanced management ideas into computer software systems that can be applied in reality. However, the ERP system is also in constant development, mainly manifested in the following aspects:

First, we should fundamentally consider the requirements of continuous technological innovation in the knowledge economy era and rapid changes in the market competition environment for dynamic adjustment of enterprise production processes and business management processes, the further development of the ERP system requires the separation of the model from the software system, in order to realize the dynamic reorganization process of the enterprise.

Second, in the era of knowledge economy, the service industry will become the dominant industry in social economy. How ERP breaks through the traditional manufacturing industry, especially in terms of customer service and online customer service (like the functions of helpdesk software systems outside China, to achieve rapid response to customer service needs and high satisfaction.

Third, in the era of knowledge economy, intellectual capital has begun to become an important part of enterprise value. Knowledge management (including knowledge acquisition, processing, and sharing) is becoming more and more important, ERP systems are still facing challenges in how to establish a knowledge management system and management methods in the enterprise's internal or enterprise supply chain.

Fourth, the Business Process (Business proccss) composed of ERP system functions should be more closely integrated with the work flow to effectively control and manage the business processing process.

With the further development of IT technology and modern management ideas, the functions of ERP systems will continue to develop. The Development and Application of ERP system will certainly promote the improvement of enterprise management level in China, and will greatly enhance the competitiveness of Chinese enterprises in the international market.