Concepts of Enterprise Resource Planning - Coursework Example

The full industry acronym for ERP is Enterprise Resource Planning. ERP can be broadly defined as integration and automation of any company’s core business. The main idea behind integration is to focus on simplified success and effectiveness of strategy. The main function of ERP System is to automate and integrate various core businesses of any company. These core businesses include various functions of company like keeping financial data and inventory records, scheduling operations and receiving customer’s orders. There are many features of ERP systems which enables lot of improvements and effectiveness of any company. Assistance in definition of various businesses processes and ensure that they are complied throughout supply chain of company. Protection of crucial business data through complete definition of security access as well as role Enable planning of workload which is based upon future forecasts and existing orders Giving suitable tools for offering next level of service for benefit of customers Easy translation of data in information suitable for decision making Some ERP Benefits 1. Integration across entire business processes of company – It is necessary for complete integration which includes all aspects of any business, such as front end which faces customers, the planning and scheduling process to production of the products and their distribution for realization of comprehensive ERP system benefits. 2. Enhancing productivity with automation – The main benefit of ERP system is to automate various business processes which increases efficiency, reduces errors at faster speed. It also enables people to free themselves from various mundane tasks and increases productivity. 3. Increase in overall performance – ERP system helps to avoid discontinuity, duplication, and people who are working at cross purpose in different sections of any organization with integration of disparate business processes. The cumulative positive effects of this change is overall best performance of company. 4. Performance Analysis and Quality Reports – With ERP analysis you can conduct regular analysis on organization performance as well as produce boardroom and financial quality reports 5. Integration across complete supply chain – The best ERP system extends its reach beyond company and integrates both with organization’s customer and supplier system for ensuring full efficiency as well as visibility across entire supply chain of company. ERP benefits - Microsoft Dynamics GP IPIC has implemented following Microsoft Dynamics GP Modules Financial Module Analytical Accounting section Management Report Human Resource department Customized Payroll at Middle East Supply Chain Management Financial Module Microsoft Dynamics GP’s financial Module is the combination of below sub-modules Foundation General Ledger Fixed Asset Accounts Payable Accounts Receivable Bank Management Foundation Microsoft Dynamics GP’s main core Module includes Company Setup, Web Services, Key Performance Indicators, Word Templates, Report Writer, Security Management and System Manager. Responsibility/Ownership Due to its technicalities, presently IT Division of IPIC is in charge for maintaining this section General Ledger Presently General Ledger at Microsoft Dynamics GP is being used for various tasks such as setting up budgets, posting beginning balances and entering chart of various accounts. Also, it is also being used for completion of following tasks Entry and posting of correction or standard transactions Entry of variable or fixed allocation accounts which allows efficiency in distribution of amounts among various accounts Entry of various posting accounts which enables the posting of transactions from various subsidiary ledgers to General Ledgers. After that, we can review and correct them if it is required or post them in one step through General Ledger Deletion or voiding un-posted transaction, reversing or backing out of posted transactions. Then posting of corrected entries with clear and complete audit trail Increasing efficiency in repetitive transactions by defining them in quick journal transaction which is posted repetitively with minimum changes . Ownership/ Responsibility Presently, Accounts Division of IPIC is in charge for maintaining above module. Fixed Asset Presently, Fixed Asset Software is being used for setting up, entering and maintenance of asset records and addition of user-defined and insurance and information. This software is also being used for creation of additional records regarding each asset. Fixed Asset is also being used for completion of following tasks: Calculation of depreciation Import of information from other sources to FixedAsset Creation and use of Asset groups for easy maintenance of records Transfer of an asset to new account in general ledger Retirement of an asset, Partial retirement of an asset or Retirement of an asset group Ownership/Responsibility Presently, Account Division of IPIC is in charge for maintaining above module. Accounts Payable Presently, we are using Account payable for maintaining comprehensive information about vendors, tracking payments to all vendors and entry and posting all purchase transactions. We can assign individual posting account to each vendor. This module is used for various tasks such as application of credit and debit documents, invoice and payments. The payment generation facility is used for computer checks. The use of Payables Management is also being done for completion of various tasks. Managing various disputes with vendors with placement of hold status on chosen vendor records as it prevents the payment of vendors until the removal of hold status. We can also place individual transactions as per requirement. The system disables the application or payment of the transactions which are on hold. Management of payable accounts can be done with report of various segments like program, department, division and cost center. The breakdown on organization’s control payable account can be displayed by accounting segment. You can create 1 or more than 1 sets of various reports which can be sorted according to fiscal year or calendar. Also, you can search required information in reports on screen. We can also easily customize predefined reports at Report Writer or make new reports. Ownership/ Responsibility Presently, Accounts Division of IPIC is in charge of maintaining above module Accounts Receivable Presently, Accounts Receivable is being used for setting up, entries and maintenance of customer records. It is being also used for other related transactions which include setting of customer classes and entries of beginning balances. The Accounts Receivable for completion of below tasks Posting of various transactions in batches or individually Allocation of transaction amount in correct posting accounts Entry of received payment transactions from customers Ownership/ Responsibility Presently, Accounts Division of IPIC is in charge of maintaining this module Bank Management The bank reconciliation is being used for entries and maintenance of checkbooks. These checkbooks are used for payments of employees, vendors, distribution of petty cash and reconciliation of bank statements. For updating checkbooks in reconciliation, we are using postings from payroll and payables Management. It is also used for check printing. For completion of following tasks, bank reconciliation is also being used. Writing of checks without setting up any vendor record or completing check run of computer. Control of reconciliation process with creation of default settings and selection of transaction types such as receipts, checks and adjustments Starting reconciliation of new checkbook before finishing reconciliation of other checkbook Viewing detailed information required for reconciliation such as payment description and amount, transaction number and deposit number Ownership/Responsibility Presently, Finance and Accounts Division of IPIC is in charge of maintaining this module Analytical Accounting Presently, Analytical Accounting is being used as useful tool which enables us to do various tasks such as analysis, interpretation and creation of reports which uses chart of company accounts as base. This is because we can do better assessment of our company’s accounting by using Analytical Accounting. The analytical accounting is also being used for storage of detailed information like labor hours which we cannot compute in monetary terms. We can enter information regarding detailed analysis. We do not require segmental accounting for this purpose. .The analysis dimension is used for creation of budgets and we can do comparison of budget figures with actual figures. The analytical accounting also being used for completion of following tasks Set up of unlimited analysis dimensions Entry of analyzed information for a analysis dimension group Creation of budget which uses pre-defined analysis dimensions Export of analysis query to Excel sheet and performing comprehensive report Ownership Presently, Accounts division of IPIC is owner of above module Responsibility Presently, various divisions such as General services, Administration, Procurement, and Accounts of IPIC are in charge for updating information which is related to above module. Management Reporter Presently, Management Reporter is being used for creation, maintenance and deployment of various interactive reports with which financial statements can be viewed by business and financial professionals. It easily surpasses the constraints of traditional reporting and lead to enhancement of creativity. It also enables us to design various reports with efficiency. Management reporter has various features such as account dimensions or segments and native dimension support. They can be immediately selected in Management reporter. You do not require additional configuration or support for this software. Responsibility/Ownership Presently, Account division of IPIC is in charge of maintaining above module. Human Resources Presently Human Resources is used to set up, making entries, maintenance and requirements of employee management and tracking of personal details as well as organizational information regarding IPIC employees. Human Resources are also being used for viewing important information regarding employees, their historical data and benefits. The company is using Human Resources for completion of various tasks. Complete management of various tasks such as interviews, hiring of employees, tracking training, evaluation and termination. It also maintains of other organizational details like supervisor position. Enrollment of employees and dependents and creation of company benefits plan. Ownership/ Responsibility Presently, Human Resource Division of IPIC is in charge of maintaining above module Customized Payroll (Middle East) Presently, Customized Payroll (Middle East) is being used to set up, make entry and maintenance of employee payroll transactions and records. The foundation of Payroll system is Employee cards and we use them for keeping payroll information updated. With customized Payroll, the historical and current payroll information can be viewed and complete payment process for an employee group or an individual employee. The payroll is also being used for completion of following tasks. Set up various employee classes for creation of default entries which can be accessed quickly for employee records which are new. This is because we group the payroll information as per common factors like positions and pay codes. Creation of repetitive batches which can be used for regular transaction entries or creation of batches which are used only 1 time You can use reconciliation process for detection of discrepancies in financial information of employees as well as for checking differences between summary and detail record. Preparation of payroll reports for analyzing payroll activity and identification of errors in any transaction entry Ownership/Responsibility Presently, Human Resource Division of IPIC is in charge of maintaining above module Supply Chain Management Microsoft Dynamics GP’s supply Chain Management is combines subsequent sub - module Purchase Order Process Control of Inventory Purchase Order Process Presently, Purchase Order Process is used for entries of purchase order for required items. This software enables us to change individual line item on purchase order or purchase order status. This software also has ability to cancel any item on purchase order if that item which has been ordered is being discontinued by supplier. The input on purchase order can also be changed if the quantity which has been ordered need to get changed. The purchase order processing is also being used for completion of various tasks. Posting and making entries of invoice receipts and goods received in batches Posting and making entries of invoices received in batches Completing process of purchase returns and offsetting of original purchase order amount against the applicable general ledger and inventory accounts. Matching return items against original receipt. Ownership/Responsibility Presently, Procurement Division of IPIC is in charge of maintaining above sub-module Inventory Control Presently, Inventory Control is used for management of Company items which are in inventory. Some tasks which are done with this software include creation of records for various items like tracking of items. Inventory Control is also used for completion of various tasks. Making entries, posting variance and adjustment transactions in different batches Making entries and posting of transfer transactions in various batches Printing of Historical Stock status report Ownership/ Responsibility Presently, Procurement Division of IPIC is in charge of maintaining above sub-module ERP Implementation We have introduced some implementation terminology of Microsoft Dynamics GP and processes in this section. Here, you can find some details of Microsoft Dynamics GP implementation process 1. Diagnostic 2. Analysis 3. Design 4. Development 5. Deployment 6. Optimization Diagnostic Evaluation of entire infrastructure, business processes, conduction of meetings, discussions and interviews with business owners and end users. Analysis Analysis of present business model and creating documents for requirements Analysis Documentation and Gap Analysis. Design Business Process Re-engineering and mapping. Offer of out of box resolutions like using Extender Data migration design for migration of legacy data in Microsoft Dynamics GP. Designing of Testing Criteria which includes Technical design document Development Customizing or developing features with Crystal report, Dexterity Tools and VBA .Developing and customization of test environment and testing functions and features. Creating customized manuals for customers and offering them quick access. Deployment In the end, Set up production environment, configure system, migration of legacy in Microsoft Dynamics GP. Test the system. Next, training of end-users and get the system Live Optimization Analysis of the system for determining the best method for optimizing it for requirements of end-user and perform optimizing tests at monthly interval. The main goal of this stage is to enable owner of project for refining system for increasing business benefits. There are many times when project owner desires minor tweaks to system after implementation is completed. This phase is completed to convey support and understanding the requirements of owner. In addition to that, you need to find below gaps and findings which were done during implementation. Payroll Process Current Payroll Process SN Current Process Comments 1 Creation / Selection of Payroll Batch Entry of monthly Payroll transaction Building and calculation of payroll checks Preparation and printing of monthly payroll report in spreadsheet. Comparison between Excel Payroll and Calculate Checks Report Submission of report to Manager regarding appraisal If rejected then complete correction of transactions in Excel or Payroll report. Rebuilding of and recalculation of payroll checks After Manager’s approval, posting of payroll batch by accountant and printing of bank advise report Preparation of Bank Cover letter by Payroll accountant in MS Word manually After getting approval from Accounts Manager and CFO on Bank advise and Cover letter. Then it is sent to bank authorities for transfer of salary After the completion of process, the accountant prepares GL JV in spread sheet which is based upon payroll transaction. Then it is sent to GL Accountant who posts it at IPIC Finance Company. Considerable reduction in manual work load with following streamlined process Customization of monthly payroll report with which user does not have to waste time with preparation in excel sheet and comparison with Calculate Check Report Customization of Bank cover letter with report which reduces manual workload of user With Interface customization which links both companies, both user will use automated report and it is posted You are required to refer proposed payroll process Proposed Payroll Process SN Proposed Process Comments 1 Creation / Selection of Payroll Batch Entries of Monthly Payroll Transactions Building & Calculation of Payroll Checks Printing of customized monthly payroll reports by GP before posting of payroll batch Submission with Manager for appraisal If rejected then correcting payroll transactions. Rebuilding and recalculation of payroll checks After approval, printing of Bank Cover letter and Bank advise Getting report from GP and sending it to Accounts Manager as well as CFO. Posting Payroll Batch After approval from Accounts Manager as well as CFO, posting of payroll batch by user. Then he sends cover letter with advise to bank for process of Salary transfer. After that, GL JV is created with customization at IPIC Finance Company Purchasing Process Current Purchase and Invoice Process SN Current Process Comments 1 Raising purchase request through module of BP Requisition Management Module After completion of approval process from various authorities, creation of PO in GP by Module of Requisition Management. Submission of vendor’s invoice at Admin dept. After approval the invoice is sent to: payable section for payment process. The user at Payables user process the creation of invoice, complete payment process and apply to invoice. Printing check and posting of payment. The entire process is complete deviation from GP standards, so this functionality is used for streamlining the process and achieves standards of IPIC for processing of purchase invoice from the module itself. Although, proper Pos are sent to vendor but not proper system in place for receiving products or services. It also includes registration in system for tracking payments. Vendor invoices based upon separate dept. approval no co-ordination or cross validation system. Due to this issue, IPIC does not get below purchase reports Analysis of PO Status of expected shipment Products and services received but no invoice Invoice and GRN matching when there is separate invoice and GRN These reports may enable IPIC for analysis of vendor performance You need to refer proposed invoice and purchase process Proposed Invoice and Purchase Process SN Current Process Comments 1 Raising purchase request at BP Requisition Management After approval by various authorities creation of PO by Module of Requisition Management GP Submission of invoice by vendor at Admin Dept . After approval by Admin Dept. submission of invoice to Purchase/Payables section for record of invoice & shipment Creation of GRN for Invoice & shipment by Purchasing user After completion of payment process, applying it for invoicing at Accounts Payables Printing of checks and posting it for payment So, the result will include faster and easier process which avoids errors & duplication It will make the reports more secure and accurate which can be controlled Entire Purchase module process streamlined Better collaboration due to automation between Payables and Purchase module Effects of Pre and Post ERP It was taking long time for reconciliation financials at the month end, before we implemented Microsoft Dynamics GP. Most often our cash forecast were based upon guesswork rather than solid figures. As our business was not able to cope up with transactions, the satisfaction of our stakeholders was faltering. We never had any idea about the inventory in our store as it was difficult to find out. Although, there is not a single indicator regarding the requirement of ERP, but the companies which stand to benefit most from ERP software most often have similar frustrations and issues. It was also our situation before ERP. These problems are as follows. Separate software for separate processes The IPIC employees were used to process recording and tracking information manually. The accounting staff used Peachtree software for General ledger, payable and receivables but administration staff were functioning manually to complete purchase orders and received goods. The accounting of this process was done manually which was wasting lot of time. As various processes including front and backend processes were run separately, it was very difficult to reconcile in/out invoices and products. In absence from accurate data, all departments including purchase, marketing, inventory, payments and payroll were unable to function efficiently. Due to all these issues, our organization made the decision about implementation of Microsoft Dynamics GP or ERP software which handles integration of all systems. This enables all business functions to rely on same database. A single source of information which has real-time accurate data offers the staff the best medium for making best decisions easily and increases their productivity. Due to this solution, they can focus their attention on high value exercise such as helping business to grow faster. Difficulty in accessing business information If someone asked some questions about average investment of our company, the question was how much time I would require for finding out answer. If they asked questions about any other important performance metrics such as cash up to this date or number of transactions in a day. The IPIC employees used to wait for a long time as they had to rely on spreadsheets which are required to be continuously updated and reconciled. Today, as the pace is business is increasing considerably, the employees who are working across all sections requires faster access to key information. After Microsoft Dynamics GP software, the executives will be able to get complete picture of business operation with real-time data and other staff will be able to get quick access to required information for doing an effective job. Critical requirement of accounting The first symptom which indicates requirement of ERP software most often is from accounting department. This is because employees waste lot of time every week entering all information manually in various accounting systems and cross-checking information. The management at such time needs to consider about wasted time which can be handled by ERP software instantly. It is same for financial reporting as it takes lot of time for reconciliation or consolidation of financial information across all systems which encompasses spreadsheets Here, ERP can make an excellent impact. With a single source of financials, the accounting staff will save a lot of time and become more productive. It also frees them for delivery of critical reports which are necessary for company’s growth. Suffering of Sales department and customer experience One of the biggest challenges when company is growing fast is inventory management. One of the vital parts of any business operation is availability of right amount of right items at right time at right location. A serious problem arises when purchase and sales data is maintained separately. Before, ERP it was difficult to locate any item when HOD queried about that item in stocks. With installation of ERP, staff in each department has access to same database. This system has enabled HOD to answer any query posed by Executives about employees, cash, investment etc. instantly without hanging up call and initiating query to other departments. Complex issues of IT department With multiple systems across the office, working in IT division used to be a nightmare. The main function of IT department used to be customization of these systems, their integration and maintenance with upgrades and patches. The work used to be time consuming, expensive and complex. With patchwork system on premises, it was a nightmare to do system upgrades which gave lot of trouble. In addition to that, the updates were time-consuming as well as expensive. Also, sometimes they could undo various customizations which were implemented by office staff. Installing ERP in office enabled us to give quick response to changing requirements of business instead of adding more complexity in form of software to an ineffective system. Summary With increasing tough competition in the market, it has become necessary for any business regardless of its scale, small, medium and large to get an edge over its competitors in the market. This is becoming possible with continuous innovation in technology and research and development. There is lots of software which are being introduced in the market which help these organizations to automate routine and repetitive work and focus the energy of staff for organizational growth. One of most popular software which encompasses the functioning of all divisions in any organizations is Microsoft Dynamics GP which is ERP or Enterprise Resource Planning software application (Microsoft Dynamics GP, 2015). Microsoft Dynamics GP can be broadly defined as ERP or Enterprise Resource Planning software application which offers employees access to required information regarding different aspects of any business transaction from a single source of database in real-time. This enables staff from different divisions located at different places to input, see and process latest information regarding any transaction with any company on real time basis (Microsoft Dynamics GP, 2015). Take an example, the executives located at head office of the company can query and check current business transactions and performance of employees located at branch of a specific country with this information. Modules of Software Application Microsoft Dynamics GP has various series which are organized in several modules. These series are System, Company, Manufacturing, Payroll, Project, Inventory, Purchase, Sales and Financials. The company and system series includes some important modules which can customize system wide and companywide options. Each series offer a full cycle of business transactions which is required for that particular series for benefit of the customers. Microsoft Dynamic GP offers many advantages such as customized deployment model for your company. The company management can have various options regarding deployment models which are suitable for your business. It can be cloud or on premises or combination of both (Microsoft Dynamics GP, 2015). The business solution offers flexible and innovative tools which help you to be productive and proactive which is very important to stay ahead of competitive market. References Microsoft Dynamics GP:ERP for Small-Midsized Businesses: 2015, Microsoft Dynamics GP:ERP for Small-Midsized Businesses: 2015 [ONLINE] Available at: http://www.microsoft.com/en-us/dynamics/erp-gp-overview.aspx [Accessed 13 February 2015] Microsoft Dynamics,” Top Reasons to Purchase a Business Solution from Microsoft: 2015[ Online], http://www.microsoft.com/en-us/dynamics/resource-library.aspx?SortField1=Microsoft%20Dynamics%20GP, [Accessed 13 February 2015] Read More