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Introduction to ERP/SCM

Introduction to ERP/SCM. Table of Contents. 0. Course Outline 1. Introduction 2. What is ERP( Enterprise Resource Planning) ? 3. What is EERP(Extended ERP) ? 4. So, what is the problem? 5. Next generation ERP and SCM. Course Outline.

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Introduction to ERP/SCM

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  1. Introduction to ERP/SCM

  2. Table of Contents 0. Course Outline 1. Introduction 2. What is ERP( Enterprise Resource Planning)? 3. What is EERP(Extended ERP)? 4. So, what is the problem? 5. Next generation ERP andSCM

  3. Course Outline • This course aims to teach students the basic ideas and technologies that make up ERP/SCM systems. Hopefully, students will also be able to develop the ideas and skills to design information systems of the future manufacturing companies focusing on production planning and control aspects. • This course consists of 3 subjects. • We learn the processes of MRP/ERP and extended ERP systems focusing on advanced planning systems(APS) of Supply Chain Planning. Subjects like CRM(Customer Relationship Management), SRM(Supplier Relationship Management), MES(Manufacturing Execution System), SCM(Supply Chain Management), PLM(Product Life-cycle Management) and KMS(Knowledge Management System) will also be covered briefly. • Students will have hands on experience with current ERP solutions using SAP R/3 and APO, i2 Tech's SCP engine. Depending on the preparedness of the students we may not only cover PP(Production Planning), MM(Material Management) modules but also FI(FInancial accounting) and CO(COst accounting) modules. • We learn computer technology related with efficient DB design and in memory analytics for ERP/SCM systems.

  4. Text books and references • Text books: Handouts • References: • Manufacturing Planning and Control for Supply Chain Management(6th Ed.) or previous editions of the book. • Supply Chain Management and Advanced Planning, H. Sadtler and C. Kilger, Eds., Springer, 2008. • Understanding SAP R/3 Based on Business Scenario(비즈니스 시나리오를 통한 SAP R/3 이해), 황재훈 外 4명 공저(SAP코리아 감수), 어람출판사, 1999. • Fundamentals of Database Systems (6th ed.) by Elmasri & Navathe, Addison Wesley, 2011. • Enterprise Solutions, 대표저자김은,박진우, 박준호,유세열,어람출판사, 2004.

  5. 산업생산 비중%/고용인구 비중%(2010)* *)Source: https://www.cia.gov/cia/publications/factbook/geos/ks.html **) farming, forestry, and fishing 0.6%, manufacturing, extraction, transportation, and crafts 22.6%, managerial, professional, and technical 37.2%, sales and office 24%, other services 17.7%

  6. Gross GDP and per capitaGDP of nations(2009, Billion US dollar) *)In the year 2005, Korea 10th(793 Bill US Dollar), India11th(775), Brazil12th (2006.4.27 Maeil Economic News)

  7. 2010년도 Fortune Global 500 Companies(2009년도 매출 기준) Rank Company Revenues $ millions) 1 Wal-Mart Stores (3) 408,214 2 Royal Dutch Shell (1) 285,129 3 Exxon Mobil (2) 284,650 4 BP (4) 246,138 5 Toyota Motor (10) 204,106 6 Japan Post Holdings (11) 202,196 7 Sinopec (9) 187,518 8 State Grid 184,496 9 AXA 175,257 10 China National Petroleum (13) 165,496 13 General Electric 156,779 … 23 Ford Motor (19) 118,308 32 Samsung Electronics (40) 108,927 51 Honda Motor 92,400 67 LG (69) 78,892 69 Sony(81) 77,696 78 Hyundai Motor(87) 71,678 괄호 속은 작년 순위

  8. 2009년도 Fortune Global 500 Companies Rank Company Revenues ($ millions) 1 Royal Dutch/Shell Group 458,361 2 Exxon Mobile 442,851 3 Wal-Mart Stores 405,607 4 BP 367,053 5 Chevron 263,159 6 Total 234,674 7 Conoco Phillips(-) 230,764 8 ING Group(-) 226,577 9 Sinopec 208,814 10 Toyota Motor(-) 204,352 11 Japan Post Holdings 198,700 12 General Electric 183,207 13 China National Petroleum 181,123 … 40 Samsung Electronics 110,350 69 LG 82,082 72 SK Holdings 80,810 81 Sony 76,945 87 Hyundai Motor 72,542

  9. 2008년도 Fortune Global 500 Companies Rank Company Revenues ($ millions) 1 Wal-Mart Stores 378,799 2 Exxon Mobile 372,824 3 Royal Dutch/Shell Group 355,782 4 BP 291,438 5 Toyota Motor 230,201 6 Chevron 210,783 7 ING Group 201,516 8 Total 187,280 9 General Motors 182,347 10 Conoco Phillips 178,558 11 Daimler 177,167 12 General Electric 176,656 13 Ford Motor 172,468 … 38 Samsung Electronics 106,006 67 LG 82,096 75 Sony 77,682 82 Hyundai Motor 74,900

  10. 2005년도 Fortune Global 500 Companies Rank Company Revenues ($ millions) 1 Wal-Mart Stores(2) 287,989.0 2 BP(7) 285,059.0 3 Exxon Mobile(1) 270,772.0 4 Royal Dutch/Shell Group(6) 268,690.0 5 General Motors(4) 193,517.0 6 Daimler 176,687.5 7 Toyota Motor(10) 172,616.3 8 Ford Motor(4) 172,233.0 9 General Electric(8) 152,866.0 … 39 Samsung Electronics 71,555.9 … 47 Sony 66,618.0 … 92 Hyundai Motor 46,358.2 괄호 속은 작년 순위

  11. IT as a tool for increasing competitiveness • Korean industries have made great strides in many ways after the IMF crisis but… • Weakness: • in the utilization of information technology and internal process except some world class companies • Human resource development and business culture • We need industrial innovation – ERP and EERP( Extended ERP ) are just a part of such innovations.

  12. The growth of information workers* *) Statistics based on 267 occupations in 64 industries, Communications of the ACM, October, 2005 in the U.S.

  13. Rosetta Net solution(made in Korea)

  14. 2. ERP와 EERP 2. Enterprise Solutions: ERP와 EERP • 1980s, CIM(Computer Integrated Manufacturing) Concepts : • Open(Hardware, OS, DBMS independent) • Easy to program and maintain, • Standard Software expected. • ERP(Enterprise Resource Planning) is the software to fit to that rqmt. • Famous ERP packages : • SAP R/3 -Duzone ERP • Oracle Applications - Uni ERP • MS Dynamics ERP- Top ERP

  15. 2. ERP와 EERP Modules of ERP Packages • 판매 및 분배(Sales and Distribution) • 물자 관리(Material Management) • 재무 회계(Financial Accounting) • 관리 회계(Cost Accounting) • 생산 계획(Production Planning) • 품질 관리(Quality Management) • 공장 관리(Plant Maintenance) • 인사 관리(Human Resources) • 자산 관리(Asset Management) • 프로젝트 관리(Project Management) • 워크 플로우(Work Flow System) • 산업별 특수 모듈 (Industrial Packages) Courtesy : SAP Korea

  16. mrp, MRP, ERP, EERP, …

  17. R/3 Modules

  18. SAP R/3 System

  19. The Challenge for IT: Empower Business Users, Streamline Operations, Manage Costs Archittecs/ Engineers Subcontractors MANUFACTURING Projects CORPORATE HQ Materialsupplier Equipment Supplier DISTRIBUTION CENTERS CUSTOMER CUSTOMER Deliver a high-performance yet cost-effective infrastructure to manage high volumes of dynamic, variable data from multiple, disparate data sources Volume, Frequency and Granularity Accurate, up-to-the minute and “always on” access enterprise-wide; structured and unstructured, current and archived, internal and external Real-Time Data & Information Access Enable local access, configurability and deployment while maintaining global standards and minimizing IT support requirements Empower the Business User

  20. Poorly Managed Information Leads to Inefficiency and Risk “ 90% of upper level management feel they don’t have the necessary information for critical business decisions; 50% of them are afraid they are making poor decisions because of it.” ― Economist Intelligence Unit Lower Profits “ 50% to 70% of ERP implementations are reported as “challenged” in part to data integrity and/or data accuracy problems.” ― Adaptive Growth, Inc. LowProductivity “ 90% of all businesses still do not have sufficient policies in place to meet data governance regulations.” ― IT Policy Compliance Group ComplianceFailures

  21. What Does This Mean for Your Business? • Top executive issues • How to do integrate complex data from multiple internal and external data sources to enable real-time decision support? • How do I deliver automated, efficient yet timely and accurate data and information to business users globally? • How do I ensure secure access to all information, current and archived, to support business process management & analytics? • How do I synchronize and manage internal and external data to ensure compliance and enable customer, supplier and project development collaboration? How can I enable an Enterprise Information Management strategy?

  22. 1. ERP란? Resource Plan Prod. Plan Demand Mgt MPS:기준생산계획 Routing 제조 공정도 B/M IR 재고 레코드 MRP:자재소요계획 Detailed Cap. Plan MRP Record MRP (결과) PO: Prod Order PO: Purchase O ERP(MRP) System ERP의 목적은 적량의 소요 자재를 적시, 적소에 제공하는 것. 그러나 기존 ERP는 소요자재와 설비 용량을 충분히 고려하지 못하여 실현 불가능한 계획이 산출되는 경우가 대부분.따라서, APS (Advanced Planning and Scheduling) 시스템의 필요성이 대두됨.

  23. Basic Idea“최종제품에 대한 MPS(대일정 생산계획: Master Production Schedule)에 근거하여 소요 조립품, 반제품 또는 최초의 원자재까지의 생산 계획(주로 주단위까지)을 수립하여 줌.” MPS( 기준생산계획 ) B/M( 자재 명세서 : Bill of Material ) Routing( 제조공정도 ) IR( 재고 레코드 : Inventory Record ) MRP System Overview 4 Key Information for MRP

  24. B/M(자재명세서:Bill of Material) MPS B/M Routing IR LEVEL 0 0123 Carpet Cleaner LEVEL 1 4651 2927 3804 1115 Housing Assembly Customer Pack Handle Assembly Tank Assembly LEVEL 2 3219 7114 2156 1959 6221 Trigger Assembly Power Cord Instruction Set Handle Bottled Concentrate LEVEL 3 5319 1910 5746 4315 6111 1196 3215 Value Assembly Brush Assembly (3) Tank Sub- assembly Hose (10) Motor Housing Solution Tank 또한, Level별 불량율, Level별 리드타임 등의 정보도 필요함.

  25. 1 2 3 4 5 6 7 8 MPS(기준생산계획: Master Production Sched) B/M MPS Routing IR (예) Requirement Generation (Carpet Cleaner) Planning Period Order Confirmed 50 20 40 60 Order of Current Period 30 30 Indep. Demand 10 10 Gross Rqmt 50 40 20 70 10 60

  26. Routing(제조 공정도) B/M MPS IR Routing (예) 제조 공정도(Routing Sheet 또는 Operation Sheet) Product : FuelPin Product No : 12-562 Raw Mtl : 1020 C.R.S Dwg No : 12-562-D Stock Place : ST-100 Date : 91-12-4 Eng. Change : N Prepared by : Hong, Gildong Proc. No Desc. MC No Too No Set-up Time Time per Pc 10 Face LT 100 V-200 40 1.5 15 Drill. Thread DR 132 - 20 1.0 30 Grind GR 83 30 3.0 80 Finishing DB13 5 2.0

  27. Planning Period 1 2 3 4 5 6 7 8 G R 40 0 50 0 0 60 0 60 S R 120 P A B 60 20 20 90 90 90 30 30 -30 P O R 100 Inventory Record(재고 레코드) B/M MPS Routing IR • MRP Record • 총 소요량(Gross requirement) : during period각 기간별 제품의 예상 소요량 • 입고 예정량(Scheduled receipts) : beginning of period각 기간 초에 도착예정인 기존 발주량 • 재고량(Projected available balance) : end of period각 기간 말의 가용 재고량, 예전엔 "on-hand balance" 라고 불리웠다 • 계획오더발주량(Planned order release) : beginning of period각 기간 초의 계획발주량

  28. MPS 40 40 40 40 45 45 45 45 1 2 3 4 5 6 7 8 Projected Gross Requirement 40 40 40 45 45 45 45 45 Scheduled Receipt 60 Projected Available Balance 60 20 40 0 -45 15 -30 30 -15 45 0 -45 15 Planned Order Release 60 60 60 60 60 60 1 2 3 4 5 6 7 8 Projected Gross Requirement 60 60 60 60 60 60 Scheduled Receipt *120 Projected Available Balance 30 30 -30 30 -30 90 90 30 -30 90 30 Planned Order Release 120 120 1997.3.5 ERP MRP Part Explosion Part No. : 123 Lead Time : 2 Week Part No. : 3804 Lead Time : 2 Week Order Qty : 60 Housing Assembly Part No. : 1196 Lead Time : 2 Week Order Qty : 120 Housing

  29. Basic terminologies in MRP • Time bucket (Period) : Usually one week(sometimes month, 2 hours) • Planning horizon : Number of periods in MRP record, Number of future periods for planning • Independent demand, Dependent demand • Scheduled Receipt • Refers to all Open Orders • Includes WIP or already issued production orders • MRP 부품전개(Part Explosion) : • The process of calculating the lower level part requirement beginning from the independent demand considering the current inventory and scheduled receipt. *)Work In Process

  30. Technical Issues • Frequency of MRP Part Explosion • Typically 1 week, but some companies boast two hour time bucket. • Regenerative vs. Net Change MRP • Bucketless MRP • No Time Bucket : absolute time scale (Big Computing Power 필요) • Lot sizing (Fixed lot size, Discrete lot size, lot-for-lot) • Subassy : lot-for-lot • Lowest level: lot sizing procedure • Safety Stockvs. Safety Lead Time • Low-level Coding • Pegging and Where-used

  31. Operation of MRP System • MRP Planner • Well trained MRP Planner is a prerequisite of efficientMRP System • Duties of MRP Planner • Issuing of Orders ( i.e. launch purchase order or shop order ) • Adjust Due Dates of Existing Orders if needed • Analysis and Adjustment of System Planning Factors (Lot Size, Lead Time, Scrap Allowances, Safety Stock ) • Monitoring and Adjustment of Errors, Elimination of Causes of Errors • Earlier Detection of Problematic Areas that will cause Big Costs in the Future.

  32. Facility Time Process Product Prod Order Current PO, Forecast, Order Info. Operation of Production Control Production Planning & Control Plan,g Prod. Sched. Assignment Dispatching • Prec. Design • Prod Info • Routing • Paper Slips for Production Control • MPS • Load • Work Sheet • Scheduling Board • Production, Logistics, Sales, Inventory Control Order Info and Master Data are used to build OrderB/M. In the Shop, use only Order B/M (예) 수주량이 100개이고 하나의 완제품당 4개의 반조립품이 필요하다면, 주문 B/M에는 400개의 반조립품을 소요량으로 표시.

  33. Production Control • 필요한 자재의 • 출고를 위해 • 창고 관리인 • 에게보내진다. • 제품원가 • 계산을 위해 • 원가 부서로 • 보내진다. • 자재 재고 레코드를 • 고치기 위해 재고 • 관리 부서로 보내진다. A-1 Mtl Requisition Per Part • 식별표가 자재와 • 같이 이동한다. A-2 Prod Sheet • Control board를 • 갱신시키기위해 • 작업진행부서로 보내진다 • 작업을 수행할 • 권한을 부여한다 B-1 Opt Slip • 작업시간기록을 • 위해 개개인의 • 작업자에게 • 보내진다. • 제품원가 • 계산을 위해 • 원가 부서로 • 보내진다. • 임금 관리 부서로 • 보내진다 B-2 Time Ticket • 개인 실적화일 Per Operation • 자재 이동권한을 • 부여한다. B-3 Move Tkt • 공구를 준비하고 • 반출하도록 공구저장소에 보내진다. B-4 Tool Rqstn • 자재 검사 권한을 • 부여한다. B-5 Insp. Tkt

  34. 생산관리업무 Time Card

  35. After ERP • ERP(Enterprise Resource Planning) is a prerequiste. • It is not easy to implement ERP • It is a planning Tool • Next Step: EERP(Extended ERP 또는 ERP II).

  36. 2. ERP와 EERP EERP • “Sell Side” • Customer • Relationship • Management • Tele-, DB-, e- Marketing • Customer Care & Service • Call Center/ Tele-Business • e-business • “Buy Side” • Supply Chain • Management • Supply Chain Execution • Supply Chain Planning • Supplier Relationship Management • Collaborative Production • “Inside” • Strategic Enterprise • Management • Enterprise Portal • Advanced Planning and Scheduling • Manufacturing Execution System • Knowledge Management • Business Intelligence “Platform : Database, Middleware, Security Tools, Internet, etc.

  37. ERP와 그 이후? ExtendedERP • Extended ERP = ERP + - APS(Advanced Planning and Scheduling) - MES(Manufacturing Execution System) - CRM(Customer Relationship Management) - KMS(Knowledge Management System) - SCM(Supply Chain Management) Not many companies has reached to the level of full implementation of EERP.

  38. Origin of Supply Chain Management?( J. Forrester, “Industrial Dynamics”, 1961, MIT press) T.C. Jones and D.W. Riley, “Using Inventory for Competitive Advantage through Supply Chain Management,”Int’l Journal of Physical Distribution and Materials Management. v.15 n.1, 1985. “Supply Chain Management” first appeared in 1982, in a book by Oliver and Weber, "Supply Chain Management: logistics catches up with strategy".

  39. Bull Whip Effect: 10% 수요가 급증하였을 때 Retail, Distribution,Factory수준에서의재고, 주문, 판매량의 변동 추이(J. Forrester저, “Industrial Dynamics”, 1961, MIT press)

  40. Supply Chain Management Customers Product and material flows Information and financial flows Strategic business units Retailers 1st Tier suppliers Distribution Centers Assembly/Mfg 1st Tier Suppliers 1st Tier Suppliers 2nd Tier Suppliers 2nd Tier Suppliers 2nd Tier Suppliers

  41. Modules of Supply Chain Management • PPDS: ATP(Available To Promise), CTP(Capable To Promise) 기능 • Forecasting System: PLC, Effects of Mktg Campaign, Forecasts by Agents, Bull Whip Effect • Supply Network Planning • Distribution Planning • Transport Load Builder

  42. Supply Chain Management 네트워크 구성요소 선택 및 입력 네트워크 정보 관리 네트워크 구성요소의 계층적 관리

  43. SNP – SAP APO Supply Chain Cockpit(Courtesy: SAP AG) • Graphic user interface to manage total supply chain

  44. Network Design Design and Redesign your Supply Chain Courtesy: SAP AG

  45. Geographical Location Assignment (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . è . . . . . . . Courtesy: SAP AG

  46. Geographical location assignment including new locations (2) Selection of candidate sites for a new location • Select Voronoi node with a) largest weight b) 2nd largest weight c) 3rd largest weight initial candidate improve location: solve Weber problem . . . . . . . . . . . . . . . . . . . . . . . . . è . . . . . . . . . . . . . newVoronoi diagram Courtesy: SAP AG

  47. System Integration APO Master Data R/3 Demand Planning Network Design SEM BW SupplyNetwork Planning Courtesy: SAP AG

  48. System Integration: Reporting with BW Courtesy: SAP AG

  49. ERP Core Concept Order Information Released Order ERP Master Data Gantt chart

  50. Raw Mtl Mtl Recycle 노트북 Oil field 철 판 철광석 자동차 반도체 PDP 모 래 제품 SCM Core Concept

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