ERP (Enterprise Resource Planning)

Purpose of ERP: To integrate all business operations into one unified system.

Example: Assume an XYZ manufacturing company. For manufacturing, it needs to buy raw material, has to convert it into products or finished goods and finally it sells those products to customers. So buying raw material, making goods and selling is not a single process. It divides into different processes based on the nature of work.

            For those processes, Oracle has integrated required (ERP) modules like Procurement, Inventory, WIP, BOM, Order Management, etc,. Each module replicates one process. Procurement is for buying material, WIP is for manufacturing goods, CRM sales is for selling the finished goods, etc,. Integration of all these modules (all business operations) into a single system forms ERP system.

Oracle Competitors: Like Oracle there are many other application systems is in market.

Example:        SAP

                        Ramco

                        Tally

Verticals of Oracle Applications:

Financials: GL, AP, AR, FA, CM

Distribution: PO, INV, OM

Sales and Distribution: CRM sales, Customer Online, Service Contracts

Manufacturing: BOM, WIP

Explanation of total process:

Let’s take an example. Suppose you are running a small grocery shop named âœJanata Groceryâ, so the typical operation as a shop owner is you basically buy groceries from some big seller and stock it in your shop. Now people come to your shop for day-to-day needs and buy stuff from your shop at a slightly higher price than what you originally bought and stocked it in your shop.
Occasionally you may not be carrying items or run out of stock that people ask for so you make a note of it and promise the person to come back tomorrow and they will get their item. So far so good, now lets name some entities before we proceed and things get complicated. The big seller from whom you buy stock is called as Vendor, the people who come to your shop to buy things are known as customers, the stock in your shop is known as inventory.

So far we have identified few entities that play an active role in your day-to-day operations. As time goes by, your business expands and now you take orders over the phone and provide service to deliver the items to your customers, so you hire people to help you out in maintaining the inventory, do the delivery part and all the necessary stuff to keep the business running smoothly. The people you hire are known as employees.
So in this small shop, you typically manage the bookkeeping activities by hand using a notepad or something similar. Now imagine the same setup on a larger scale where you have more than 10,000 customers, have more than 1000 vendors, have more than 1000 employees and have a huge warehouse to maintain your inventory. Do you think you can manage all that information using pen and paper? Absolutely no way! Your business will come to a sudden stop sign.

To facilitate big businesses, companies like Oracle Corporation have created huge software known in the category of ERP (Enterprise Resource Planning) as Oracle Applications. Now coming to think of it, Oracle Apps is not one huge software, instead it is a collection of software known as modules that are integrated and talk to each other.

Now what is meant by integrated? First let us identify the modules by entities. For e.g Purchasing and Account Payables deal with the vendors since you typically purchase from vendors and eventually have to pay the dues. Oracle Purchasing handles all the requisitions and purchase orders to the vendors whereas Oracle Accounts Payables handles all the payments to the vendors.

Similarly Oracle Inventory deals with the items you maintain in stock, warehouse etc. Dealing with customers is handled collectively with the help of Oracle Receivables and Oracle Order Management. Order Management helps you collect all the information that your customer is ordering over the phone or web store etc whereas Receivables help you collect the money for the orders that are delivered to the customers.

Now who maintains the paychecks, benefits of the 1000 employees? right! it is managed by Oracle Human Resources. So you get the idea by now that for each logical function there is a separate module that helps to execute and maintain that function.

So all the individual functions are being taken care but how do I know if I am making profit or loss? That is where integration comes into play. There is another module known as Oracle General Ledger. This module receives information from all the different transaction modules and summarizes them in order to help you create profit and loss statements, reports for paying Taxes etc.

Just to simplify the explanation, when you pay your employees that payment is reported back to General Ledgers as cost i.e money going out, when you purchase inventory items the information is transferred to GL as money going out, and so is the case when you pay your vendors. Similarly when you receive items in your inventory it is transferred to GL as money coming in, when your customer sends payment it is transferred to GL as money coming in. So all the different transaction modules report to GL (General Ledger) as either “money going in� or “money going out�, the net result will tell you if you are making a profit or loss.

All the equipment, shops, warehouses, computers can be termed as Assets and they are managed by Oracle Fixed Assets. Initially Oracle Applications started as bunch of modules and as time passed by they added new modules for different and new functions growing out of the need for today is internet world.

So if you come across a module that you are trying to learn and work on, first try to understand what business need is it trying to fulfill and then try to understand what the immediate modules that it interacts with. For e.g lets say you come across Oracle Cost Management module, you will learn that it helps to maintain the costs of items in your inventory and the immediate modules that it interacts with are Oracle Inventory (ofcourse), Oracle Bills of Material, Order Management and so on..

ERP contains all processes and business functionalities. Then what we do in the ERP implementation project?

Sometimes client may want to use additional concept like VAT management, etc,. Those functionalities are not available in the ERP. Sometimes client may need some other objects (reports, forms, etc,.) to improve the existing functionality in his system (which might be not there is in the existed ERP). Analyzing those gaps (requirements) and filling that gap, is nothing but a project. Analyzation of those gaps is gap analysis.