What is ERP?

A concept developed by Gartner Group that describes the next generation of manufacturing business systems and Manufacturing Resource Planning (mrp ii) software. It will contain the customer/service architecture, and use graphical user interfaces to create an open application system. In addition to the existing standard features, it also includes other features, such as quality, process operation management, and adjustment reports. In particular, the basic technologies used by ERP will give users both software and hardware independence, making it easier to upgrade. The key to ERP is that all users can crop their applications, so it is easy to use.
Gartner Group proposed that the functional standards of ERP should include four aspects:
1. integration functions beyond the range of MRP II
Including quality management, laboratory management, process operation management, formula management, product data management, maintenance management, control report and warehouse management.
2. Support Hybrid Manufacturing Environments
This includes a manufacturing environment that supports both discrete and flows; the ability to combine business processes according to object-oriented business models and international applications.
3. Support active monitoring capabilities to improve business performance
Including the adoption of control and engineering methods throughout the enterprise; simulation functions; Decision Support and graphical capabilities for production and analysis.
4. supports open Client/Server Computing Environments
Including the client/server architecture, graphical user interface (GUI), computer-aided design engineering (CASE), object-oriented technology, and query relational databases using SQL; internal Integration of engineering systems, business systems, data collection and external integration (EDI ).
ERP is beyond mrpⅱ. In essence, ERP is still based on mrpⅱ, but its functions and technologies surpass the traditional mrpⅱ, it is a customer-driven, time-based, enterprise resource plan oriented to the entire supply chain management.

I. 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 idea of "Lean Production LP (Lean Production, it is a business strategy system proposed by the Massachusetts Institute of Technology (MIT. That is, when enterprises organize production in mass production mode, they include customers, sales agents, suppliers, and cooperation units into the production system, and the relationship between enterprises and their sales agents, customers, and suppliers, it is no longer simply a business relationship, but a partnership that shares interests. This partnership forms an enterprise's supply chain, which 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 the "synchronization Engineering (SE)" to organize production, use the shortest time to bring new products into the market, and maintain the 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 of the synchronization records and data between capital flows and logistics. 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 each subjective initiative and potential in an organic organization. Enterprise Management is transformed from a "Towering" organizational structure to a "flat" organizational structure, improving the response speed of enterprises to dynamic 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.

Ii. Relationship between application of ERP and Enterprises

ERP is an advanced and effective management method to use a new management mode to transform the old management mode of the original enterprise. In the practical application of ERP software, the depth and breadth of its application are not in place, and the effects of most enterprises are not significant, which has not aroused the vibration of enterprise decision makers and widespread attention of people.
1. implementing ERP is a comprehensive change in Enterprise Management
The enterprise leadership should first be the educated, followed by the thorough practitioners and implementers of modern management theories, standardize enterprise management and its related links, and make it a leader, management, and employee conscious action, make the modern management consciousness rooted in the enterprise and become part of the enterprise culture. Foreign enterprises seem to have no room for discussion about implementing ERP. They accept it in an all-round way and are highly conscious. In fact, it is natural for enterprises to do so, and we have to wait for our thoughts to improve, our ideas to be updated, and sometimes we have to stay away from the barriers, adapt to old things, and push each other. If we do not insist on saying goodbye to these bad habits, this comprehensive change will be repeated or even aborted.
2. The enterprise management team should reach consensus
We need to work hard, practice our internal skills, and do a good job in basic management. This is something that no good application software or software vendor can provide. We can only work hard on our own. The implementation of ERP is called "the first hand Project", which shows the special role of decision makers in ERP implementation. ERP is a management system that affects the global environment. It is difficult to mobilize the global environment without first-hand participation and authorization.
3. ERP investment is a system project
Compared with the input and output of other fixed assets equipment, the ERP investment and output are not so intuitive, simple, and clear. It is impossible to get a return immediately and see the benefits. The investment in ERP is a system project and cannot be immediate. It implements the management philosophy, which is a red line in enterprise management. It takes effect for a long time and creates benefits, so it needs benefits from management in the process of continuous deepening.
In addition, the implementation of ERP should also adapt to local conditions, because enterprises do not, specific issues are analyzed. First, the system should be based on the specific needs of the enterprise, rather than general on Minicomputers, or regardless of the size of the enterprise on WindowsNT, such long-term operation is very harmful to the Enterprise. Second, this investment is not permanent. Due to the rapid development of technology, with the deepening of work, enterprises will increasingly feel the shortage of resources. Therefore, each year should have a corresponding investment, in order to ensure the healthy operation of the system.
4. the implementation of ERP requires compound talents
They must understand both computer technology and management. At present, the cultivation of compound talents in colleges and universities is far from meeting the needs of enterprises. The cultivation of compound talents requires a certain period of time. However, enterprise leaders often regard such few talents as general managers, rather than regard them as the hard-won fortune of enterprises, is an important team. This is related to the long-term neglect of management. These compound talents are far inferior to market developers and product developers in their position in the enterprise, but are "Auxiliary" roles, rather than policy skews, this is an important reason for the loss of talent. In addition, when enterprises use ERP, these compound talents play a leading role, and once management enters the regular, they seem to be redundant, which has become an inevitable rule. In the Talent Market, compound talents are the most active, and talented entrepreneurs will make efforts to mine talents, which is not conducive to the stability of the implementation team.
In short, qualified enterprises should seize the opportunity to launch ERP management systems, rather than simply conducting theoretical research and further research. First, sort out the basic internal management data and select or develop ERP software suitable for your enterprise.

Iii. ERP risks and Prevention

No matter how favorable the conditions are and whether the preparation is sufficient, the implementation risks still exist. In the implementation cycle of the ERP system, various influencing factors may change at any time. How to effectively manage and control risks is one of the important steps to ensure successful implementation of the ERP system.
ERP project risks
When considering the factors of failure, we usually focus on the analysis of many factors in the implementation process, and often ignore the potential risks of the ERP system before and after the project starts. For ERP projects, risks exist in the whole process of the project, including project planning, project preparation, implementation process and system operation. To sum up, the risks of the ERP project mainly include the following:
1. Lack of planning or unreasonable planning;
2. The pre-preparation of the project is inadequate, and the hardware selection and ERP software selection are incorrect;
3. the implementation process is not strictly controlled, and the stage results are not up to standard;
4. the design process lacks effective control links;
5. The implementation effect is not evaluated or the evaluation is unreasonable;
6. the system security design is incomplete and there is a hidden danger of illegal system intrusion;
7. improper or incomplete disaster prevention measures may cause system crashes.

1. Strategic Planning
Does an enterprise have a five-year IT system plan? With the informatization of society, IT systems are not only tools but also technical means for enterprises. ERP, as an important part of IT systems, serves the long-term planning of enterprises and is a means and guarantee for long-term planning. The goal of ERP is derived from IT system planning, which is the basic criterion for evaluating the success or failure of the ERP system. The implementation scope and content of the ERP system should be clarified based on the IT system planning.
2. Project Preparation
Determining the hardware and network scheme, selecting the ERP system, and evaluating the consulting partner are the three main tasks of this phase, and they are also the three major elements of ERP system implementation. Hardware and network solutions directly affect the system performance, operation reliability, and stability. The strength of ERP system functions determines the degree to which the enterprise needs to meet; the ability and experience of the consulting partner determine the quality and effectiveness of the implementation process.
3. Project Implementation Control
In ERP system implementation, project management technology is usually used to control and manage the implementation process. Effective implementation control is manifested in the scientific implementation plan, clear stage results, and strict results review. In addition, effective control is also manifested in active coordination and smooth information transmission channels. The ERP implementation organizations include: Steering Committee, Project Manager, external consulting consultant, IT department, functional department Implementation Team and end users of functional departments. Coordination and communication between departments determine the quality and efficiency of the implementation process. At present, this risk is particularly obvious and serious in the absence of appropriate project managers for enterprises.
4. Business Process Control
Business process reengineering is completed in the design phase of the project implementation. The Control and Supervision links in the Process ensure that all services are under effective control after ERP is officially run, so as to avoid human losses to enterprises. Both control and efficiency should be taken into account in the design control process. Excessive control links and business process Redundancy will inevitably reduce work efficiency. The lack of control links poses a risk of out-of-control business.
5. Project Implementation Effect
Although project evaluation is the last step in the ERP implementation process. However, this does not mean that project evaluation is not important. On the contrary, the project evaluation result is a direct reflection of the ERP implementation effect. Correct evaluation of implementation results is inseparable from clear implementation objectives, objective evaluation criteria, and scientific evaluation methods. Currently, project evaluation is ignored. Ignoring the project evaluation will cause the implementation team not to care about the implementation results. This is precisely the great risk of the ERP project.
6. System Security Management
System Security includes: operating System Authorization, network device permission, application system function permission, data access permission, virus prevention, illegal intrusion monitoring, data change tracking, data security backup and archiving, Master Data Center security management rules, System Administrator supervision, and so on. At present, there are few people familiar with computer technology in enterprises, and there are not many computers connected to the Internet. Therefore, when implementing the ERP system, there is a general phenomenon that does not pay attention to system security. For example, the user does not pay attention to password confidentiality, and the Super User authorizes multiple users. The direct consequence of lack of security awareness is that the system has vulnerabilities and defects in security design. In recent years, newspapers have repeatedly reported illegal intrusions to banking or enterprise computer systems, which has triggered alarms for enterprises.
7. accidents or disasters
Floods, fires, earthquakes, and other irresistible natural disasters can bring a devastating blow to the ERP system. After an enterprise officially launches the ERP system, such damages will directly lead to business transaction interruptions and cause immeasurable losses to the enterprise. A proactive strategy and response is a good way to reduce this risk. Such as the establishment of a remote backup and recovery mechanism; In the case that the computer system does not work properly, restore the steps and measures for manual business processing.

Iv. Mark of successful ERP application

Whether the ERP application is successful can be measured in the following aspects:
1. Integration of system operation:
This is the most basic manifestation of successful ERP applications in terms of technical solutions. The ERP system is a software system for integrated management of enterprise logistics, capital flows, and information flows. Its core management philosophy is to manage the "Supply Chain. The application of software will span multiple departments and even multiple enterprises. To achieve the expected application goals, the most basic requirement is that the system can run to achieve integrated applications and establish a complete data system and information sharing mechanism for enterprise decision-making.
Generally, if the ERP system is only applied to the Finance Department, it can only standardize financial management, improve accounts receivable and fund management; apply it only to the sales department, and only strengthen and improve marketing management; it can only be applied in the inventory management department, and can only help to grasp inventory information; it can only be used in the production department to assist in the formulation of production plans and material demand plans. It is possible to achieve the following only when integration is integrated:
Reduce inventory, increase capital utilization, and control operation risks;
Control product production costs and shorten product production cycles;
Improve product quality and pass rate;
Reduce the amount of bad debts and bad debts.
Whether these goals can be achieved depends on the Implementation Effect of business process reengineering.
2. Business Process rationalization:
This is an embodiment of successful ERP applications in improving management efficiency. The premise of successful ERP application is that business process reengineering must be implemented for the enterprise. Therefore, the success of ERP application means that the business process of the enterprise tends to be rationalized and the following ultimate objectives of ERP application are achieved:
The competitiveness of enterprises has been greatly improved;
The response speed of enterprises to the market is greatly accelerated;
Customer satisfaction has been significantly improved.
3. Dynamic Performance Monitoring:
The Application of ERP will provide rich management information for enterprises. How to make good use of this information and play a real role in enterprise management and decision-making is another indicator of the success of ERP applications. After the ERP system is fully put into practical operation, enterprises should use the information resources provided by the ERP system to design a report system that dynamically monitors and manages performance changes, in order to provide immediate feedback and correct management problems. This work is generally completed by the enterprise after the implementation of the ERP system. If an enterprise fails to use the information resources provided by the ERP system to establish its own performance monitoring system, it means that the ERP system has not been fully applied.
4. Management Improvement continuity:
With the application of ERP system and the rationalization of enterprise business processes, the level of enterprise management will be significantly improved. To measure the improvement degree of enterprise management, the enterprise management level can be evaluated comprehensively based on the enterprise management evaluation index system provided by the management consulting company. The evaluation process itself is not an aim. It is the true purpose to establish a mechanism for enterprises to continuously conduct self-evaluation and continuously improve management. This is also a sign that the success of ERP applications is often ignored.