ERP Introduction The term Enterprise Resource Planning (ERP) is most commonly referenced in the context of commercially available software systems. ERP systems provide an integrated suite of information technology applications that support the operations of an enterprise and are not, as the acronym ERP implies, limited to planning functions. The activities supported by ERP systems include all core functions of an enterprise, including financial management, human resources management, and operations. Increasingly, ERP vendors are offering “bolt-on” products that provide specialized functionality to augment the core, such as Advanced Planning and Scheduling (APS), and Customer Relationship Management (CRM). Although the term ERP generally refers to a software system, it also encompasses the business processes that drive system requirements and capabilities. ERP systems support and enable the transformation of enterprises through the deployment of best practices and integrated business processes. Transformation of business processes can be achieved using a Continuous Business Process Improvement (CBPI) approach. CBPI refers to both incremental and larger, more radical process changes. Transformation through the use of CBPI frequently leverages the implementation of an ERP solution as a key enabler. In CBPI, business processes, work flows, information, organizational design and position descriptions are changed. back to top ERP Background The ERP model took years to emerge and is still evolving today. The concept began in the 1960’s with MRP, or Material Requirements Planning systems, that assisted manufacturing companies in planning and scheduling. The first actual ERP system was created in 1972, in Mannheim Germany, by five former IBM employees who founded the company SAP to produce and market standard software for integrated business solutions. In the early 1980’s, MRP evolved into Manufacturing Resource Planning, or MRP II, introducing the concept of integrating financials with the manufacturing work-in-process. These early MRP and ERP systems were mainframe based. In the latter 1980’s, the second phase of ERP development occurred when organizations increased the integration of their business and focused more attention on quality measures. In the 1990's, with the Year 2000 computer problem looming and the advent of client/server platforms, businesses decided there were benefits to integrating all the core systems across their internal enterprise. ERPs soon became known as Commercial Off-The-Shelf (COTS) solutions that specialized in business processes, functions, and industries. This integration focus resulted in a dramatic increase in the widespread use of ERPs. Today, in the world of the Internet and e-commerce, ERP vendors are moving toward integrating businesses with other businesses by building an organization that connects your supplier’s supplier to your customer’s customer. back to top ERP Purpose The main value ERP systems provide is the opportunity to integrate an entire organization. End to end business processes that were traditionally disjointed, now share information through a common database. The information flow is much more efficient in that there are clear lines of business processes across the enterprise. For example, in a horizontally integrated ERP system, a purchasing department would process a purchase order in a central database with a common General Ledger (GL). Both Accounts Payable and Receiving have access to the same GL so the data would be immediately available to them. There is no time lag, re-entry of information, or dependency on paper documents. By having a single point of entry the risk of inaccuracy in the end-to-end transaction is reduced, resulting in fewer reconciliation points. Additionally, the ERP systems of today provide utilities for vertical integration with suppliers and distributors. When properly implemented as part of a comprehensive transformation effort, ERP solutions can yield the following results: Integrated processes and information systems Consolidation and/or elimination of current systems Reduced complexity of application and technology portfolios Reduced reliance on programmers to make software changes Authoritative data source Reduced data redundancy and duplicative data entry More effective and efficient business processes View large image | Read accessible description of image Figure 1: Before & After ERP Figure 1 illustrates the concept of consolidating applications and interfaces through the use of an ERP solution. This represents an “ideal” situation, which is rarely the implementation reality, but nonetheless a goal. back to top ERP in DoD During the 1990s, the majority of Fortune 500 companies completed ERP implementations and have been refining and upgrading these systems as part of continuous improvement efforts ever since. By contrast, the Federal Government, and in particular the Department of Defense (DoD) have just begun implementing ERP solutions over the last three to five years. Since these implementations take years to complete, there are few Government implementations to be benchmarked. Additionally, due to the size, complexity and organizational composition of the DoD, many ERP solutions are being deployed in stove piped rather than enterprise implementations. For example, the Army Logistics community has several SAP implementations ongoing, while the Navy and Air Force have their own Logistics ERP programs. Another example is the Human Resources community, where enterprise ERP implementations are either completed or underway, but civilian and military personnel are tracked in two different ERPs. The implication is that ERP systems are being implemented in DoD as a point solution rather than an enterprise solution. Although it is a step in the right direction in terms of consolidation, the current situation does not represent the ideal state of an integrated enterprise. The Transformation Framework in Draft DA Pamphlet 5-XX provides an overarching five-phase approach to transformation. Within these five phases, initiatives to move the Army from its current state to its target state are identified and carried out. These initiatives will include, among others, CBPI and ERP programs. A carefully orchestrated portfolio of programs will maximize the effectiveness and efficiency of the institutional Army and move toward the ultimate goal of a campaign quality Army with joint and expeditionary capabilities. ERP Data Sheets Manufacturing: The Manufacturing module defines the production process, calculates and tracks product and job cost, and records all of the activities necessary to manufacture products. Stages of manufacturing are consolidated into a process specification. Actual cost rollups within the process specification are compared to standard job cost for each lot or batch produced. All manufacturing-related activities are tracked and charged to a job, thereby determining actual job cost and variances. General Ledger journal entries are automatically created for all transactions, and lot trace information is recorded from the manufacturing activities. Sales Order Management: Sales Order Management includes functions for Order Entry, Shipping, Invoicing, Credit Memos, and Sales Analysis. To support these functions, creation and maintenance of the Customer Master, along with Price and Discount functions are also included. Included with Order Entry and Shipping are on-line Credit Checking and Inventory Availability, including ‘Available to Promise’ and Reservations. Purchasing: The Purchasing module handles Purchase Requisitions, Purchase Orders, Receiving, and Vouchering of Invoices for raw materials, MRP purchases, Maintenance, and other MRO and one-time purchases. It can support the purchasing requirements of both multi-site, multi-national corporations and single-site domestic operations in either a centralized or decentralized mode. Financials: Financials is the central source of financial information that leverages data from across your enterprise and helps manage your critical financial processes – from planning through decision-making. It provides the flexibility and functionality to manage even large, complex, or multi- national enterprises in dynamic business environments. General Ledger: General Ledger provides a central, integrated data repository for all financial and statistical transactions, with flexible configuration and feature-rich functionality to plan, manage, and analyze your organization’s financial performance and operating results. Accounts Payable: The Accounts Payable module delivers comprehensive functionality for supplier maintenance, online inquiry, and cash management capabilities, handling multi-currency invoices and payments to enable you to conduct your business anywhere in the world. Accounts Receivable: The Accounts Receivable module delivers comprehensive functionality to streamline routine tasks such as billing, credit management, payment application, and tax calculation – reducing costs and enabling your finance professionals to concentrate on analyzing credit risk and customer performance. Fixed Assets: Ross ERP enables you to efficiently track and maintain detailed administrative data about your organization’s assets, from acquisition to disposal. It allows you to distribute depreciation and expense information to the General Ledger on a monthly basis. Maintenance Management: Ross ERP enables you to maintain the current and historical data you need to control and effectively manage maintenance; ensure consistently high levels of equipment reliability, regulatory compliance, and cost containment; and extend the life of significant capital assets. Security, eSignatures, and Audit Trails: Ross Enterprise Security Manager provides advanced, role-based security administration capabilities. Roles are created and users are assigned to one or many roles. In order to use any of the transactions within the software, the user must pass through a number of layers of security. Technology and Deployment: Beyond business issues, systems become obsolete due to the disconnect between the software vendor and the technology platforms they run on. Ross Enterprise mitigates these risks by ‘future-proofing’ your investment. Our software has one common software code base for the business logic and provides the middleware to port to all common platforms to ensure evolution without obsolescence.