UNIT III ERP MODULES

Business modules in an ERP Package

just by considering name we can simply define ERP as System or software that used to manage all the resources of the
whole enterprise. ERP is cross-functional software that supports all the business processes within the organization. In
an organization, ERP helps to manage business processes of various departments & functions through the centralized
application.
There are many vendors in the market which are providing traditional ERP solutions or Cloud based ERP solutions.
Though implementation platforms or technologies are different, there are common & basic modules of ERP which can
be found in any ERP System. Depending on organizations need required components are integrated & customized
ERP system is formed.
All the below-mentioned modules can be found in an ERP system:
1. Finance & Accounting
2. Manufacturing / Production Planning Module
3. Human Resource / Human Capital Management
4. Plant Maintenance
5. Inventory Management / Materials Management
6. Warehouse Management
7. Quality management
8. Sales & Marketing / sales & distribution
9. Purchase / Procurement
10. Customer Relationship Management(CRM)
11. Engineering/ Production/ Research & Development
12. Order Management
13. Supply Chain Management (SCM)
14. E-commerce

Quality Management

The Quality management area facilitates the establishment and execution of business quality. In today’s global
marketplace, quality management and quality assurance ideals are now the requirements of doing business rather
than elective efforts left to the choice of a business. In ERP, quality management is based on the driving standards
first set forth by the ISO 9000 series of quality measures and business certification.

ERP’s Quality Management module has been built to automate ISO compliance. By ISO Standards, Quality
management must be applied to all areas of a business – not just production but internal company management and
business processes as well. Therefore elements of quality management can be found throughout the different
modules. QM module exists as a central control point to establish, track, and maintain quality measurements and
analyses throughout the ERP business architecture.

In ERP, the QM module manages the following key aspects of business quality management:

Material Management: Vendor evaluation, goods receipt evaluations, material inspection result management,
provision of inspection data to the procurement team.

Production: Inspection planning and work scheduling, inspection activities within production activities, production
quality monitoring, surfacing of problems in production areas.

Accounting: Surfacing of costs associated with quality management actions.

In relation to the activities directly related to the act of monitoring quality management, ERP also provides the
following functions:

Quality Planning: Creation of plans to manage various quality inspection procedures.

Quality Inspection: Scheduling of quality inspection activities, generate documents resulting from inspections, collect
and analyze quality data, suggest corrective or follow up measures.

Quality Controls: Establish benchmark quality standards and sample groups of information, generate statistical tools
to monitor and evaluate quality compliance, development of corrective task plans.

Integration of QM
 ERP modules
ERP is ubiquitous in businesses of all sizes. The modular design of ERP provides data and
supports the processes that help employees manage their daily tasks. Each module is
integrated into the system to ensure a single source of accurate data in the organization.
These are some basic modules of ERP software:
1. Finance and Accounting
2. Human Capital Management
3. Procurement
4. Manufacturing
5. Order Management
6. Inventory Management
7. Warehouse Management
8. Supply Chain Management
9. Customer Relationship Management
10. E-commerce

ERP Modules Explained

1. Finance and Accounting

This module allows manufacturers to understand the current financial state and future outlook
of the organization. The major features in this module include general ledger, accounts
payable, accounts receivable, and taxation.
The Finance and Accounting module in ERP automates billing tasks, account reconciliation,
vendor payments, and more. Financial planning and analysis data help to prepare key reports
such as Profit and Loss statements.
2. Human Capital Management
This module promotes an approach for managing, recruiting, and developing human
resources (employees). The Human Capital Management software module is the repository
for employee data. It helps Human Resource departments with the onboarding process and
ensures education about the organization is shared with all employees.
From payroll to taxes, time-off requests, agreements, etc., are all available in ERP. Functions
of the Human Capital Management module include talent management, workforce
management, compliance management, and maintenance of employee data.
3. Procurement
Also known as Purchasing, this module helps an organization manage and safeguard goods
required to manufacture or sell products. The Procurement ERP software module helps you
automate, track, and analyze quotes. Once a quote is accepted, this module helps the
purchasing department prepare and send a purchase order. As a manufacturer, you can keep a
list of approved vendors and associate specific supply items with each vendor.
4. Manufacturing
The first version of ERP was designed for manufacturers. MRP or Material Requirement
Planning was the earliest version of ERP that helped businesses estimate quantities of raw
materials to schedule on-time deliveries.
Modern ERP for manufacturers offers functionality such as Material Requirement Planning
(MRP), Advanced Planning and Scheduling (APS), and Manufacturing Execution System
(MES).
Material Requirement Planning synchronizes the flow of materials that are aligned with the
production schedule. It focuses on customer retention, cost reduction, and productivity
through one view of all demand-driven activities.
Advanced Planning and Scheduling helps manufacturers map every single resource required
to fulfill the order and deliver it on time. It automates the process of converting planning into
production orders. It also adjusts schedules in real-time and forecasts the downstream impact
in operations.
The Manufacturing Execution System tracks, collects and monitors accurate data about the
production cycle. It promotes data collection, product tracking, and management of quality
control and resources.
5. Order Management
Order Management provides a single platform to manage orders from all sales channels, from
receipt to delivery. It tracks their status as they are shipped to customers. This ensures on-
time delivery of orders and that no orders are lost.
Order Management provides a single platform for increased efficiency, better customer
experience, and management of all sales channels. From tracking orders to managing people
and data connected to the orders, the Order Management module delivers visibility and
service availability.
6. Inventory Management
Inventory Management allows manufacturers to gain real-time inventory information and
manage all aspects of the business on one platform. This includes finance, planning, logistics,
and operations.
The Inventory Management ERP module provides just-in-time (JIT) inventory, real-time
goods receipts, and inventory levels, valuation of inbound and outbound inventory, ABC item
analysis, inventory audits, accurate forecasting, direct drop shipment, and more.
7. Warehouse Management
Warehouse Management software manages high-volume warehouse operations and guides
employees throughout the operation, from put away to picking, packing, and shipping. It is a
crucial module for manufacturing organizations.
Warehouse Management reduces cycle times and overhead costs while increasing inventory
turns. It lets you automatically coordinate and record the movement of inventory. When this
module is integrated into an ERP solution, employees can easily locate the right products to
ensure timely delivery to customers.
8. Supply Chain Management
Supply Chain Management tracks every step in the supply chain process. It ensures the
availability of the right inventory, in the right place, and at the right time. This module also
manages man, materials, and refunded products or replacement orders.
9. Customer Relationship Management
Customer Relationship Management (CRM) helps manufacturers manage the customer
lifecycle, from initial contact to sales, production, and post-sale maintenance and support
services. You can find information about customers and prospects, their communication
history, and purchase history.
ERP CRM helps you create and manage service and warranty agreements efficiently and
provide faster response to service calls. It enables you to automate operations such as
generating accounts receivables, sending notifications, filling out purchase orders, and more.
10. E-commerce
An E-commerce module integrated with ERP software provides a feature-rich E-commerce
platform for B2B and B2C manufacturers. It ensures a shared database of payment, order,
and inventory information.
The E-commerce module ensures automation, real-time information, data consistency, and
eliminates data redundancy. It saves time and eliminates the possibility of manual data entry
errors.
 ERP finance module

The ERP finance module is the software component that handles the main accounting and
financial management functions of an enterprise resource planning system. It contains
standard accounting records, such as the general ledger (GL) and balance sheet; generates
financial reports; and handles related transactions, such as invoicing and expense reporting.
The ERP finance module, which is also referred to as ERP core finance or financial
management, also commonly supports functions such as profitability analysis and revenue
management.

ERP is modular software designed to integrate an organization's business processes into a

single system running on a central database. The finance module shares data with other core
business functions, including inventory management, production planning,
purchasing, customer relationship management (CRM) and others. When a transaction in one
of these other modules has a financial impact or must be recorded in the accounting system, it
usually triggers an action or transfer of data in the ERP finance module.

Why are ERP finance modules important?

The finance module is usually the first component activated in an ERP system and the reason
organizations replace their standalone accounting software with ERP. Integrating the finances
of the various business functions helps ensure accounting accuracy, which is essential in
meeting financial regulations and reporting requirements that have grown more stringent in
recent years. It also provides the consolidated financial data needed to measure and improve
corporate performance.

The finance module is also the component that most differentiates ERP from other integrated
business applications, such as human capital management (HCM) suites, and from its
predecessor, material requirements planning, which mostly addresses the raw materials and
components needed in manufacturing. It is the one truly essential ERP module and often
serves as the vanguard of deployment when a company changes ERP systems or expands to
new locations.

ERP finance module features

Following are the main features of an ERP finance module:

• Profit tracking. The profit tracker provides a business with a picture of its overall
financial health and an overview of how it is using its financial resources. With
profit tracking -- sometimes called profitability analysis -- an organization has
visibility into where most of its profits come from. Some profit trackers will also
forecast an organization's return on investment (ROI) from all channels based on
historical sales transactions and expense data.

• General ledger.The GL is a comprehensive record of all of a company's financial

transactions. It tracks such things as income and expenses, capital accounts, assets
and liabilities.

• Accounts payable (AP). An organization uses the AP function to manage the

money it owes vendors and other creditors. By automating AP, an enterprise can
save money and time, as well as minimize human error. The AP feature of the
ERP finance module can quickly process a large number of invoices and other
financial transactions between an organization and its vendors. AP also integrates
an organization's payables data with its purchasing system, which may be part of
core finance or in a separate purchasing or procurement module, enabling better
control of cash flows.

• Accounts receivable (AR). The AR function is where a company manages the

money that customers owe. It tracks payments and manages cash and invoices. An
organization can use this function to automate such tasks as generating recurring
invoices, financial statements and payment reminders. By automating the AR
process, a company can accelerate collections and make it easier for customers to
pay, thereby improving cash flow and customer satisfaction.

• Fixed asset management. Companies use this feature to track and manage
tangible assets, such as computers, factory equipment and vehicles. Fixed asset
management lets an organization take into consideration depreciation calculations,
compliance requirements and tax implications. By using this feature, it can get
better visibility into how it uses its fixed assets, along with the associated costs
and maintenance.

• Purchasing. Most core ERP financial modules have some features a company
needs for basic purchasing of supplies and services, including generating the
required paperwork, such as requisitions and purchase orders. Integration to AP
 usually provides the necessary handling of invoices, while invoice matching
ensures that vendor invoices match the information in AP before payment is
processed. Organizations that need more sophisticated purchasing capabilities,
especially for buying the raw materials and components needed for
manufacturing, usually have a more sophisticated procurement software module
from the ERP vendor or a third-party provider.

• Risk management. The finance module's enterprise risk management features

enable an organization to predict, analyze and manage risks to its operations and
financial stability. For example, getting a handle on credit risk can ensure that a
company has enough cash reserves on hand to cover AP if a customer misses a
payment. Risk management features can also help companies deal with issues
related to security, legal liabilities, compliance and reputational risks.

• Reporting. Basic reporting features provide access to financial data, often in real
time, and help a company to prepare financial reports typically for internal use,
though some products can produce reports and audit trails needed for regulatory
requirements. The reporting features' visibility into ERP financial data helps an
organization make data-driven decisions and predictions about its finances.
Business intelligence (BI) and analytics features give a company a clearer view of
its revenue picture. Dashboards can display actual and expected sales, expenses
and other financial information. Presenting the data in a graphical format helps
managers quickly understand the organization's financial health.

• Tax management. This feature, available in some finance modules, stores the
ERP system's tax settings and provides tax reporting and audit functions. It
enables an organization to collect tax information from all of its financial
documents into a single repository. It also generates the reports a company needs
to file its taxes.
Analytical and planning functions are built on an accounting foundation.
Benefits

The ERP finance module helps speed up an enterprise's financial processes and offers
auditable revenue management and expense management. It also enables a company to more
clearly communicate financial information to external parties, including vendors and
customers.

Other benefits include the following:

• Financial transparency. The GL and analytics dashboard give authorized users

the information they need to understand their company's financials.

• Improved productivity. Once a company automates its manual and time-

consuming finance processes, productivity will improve.

• Reduce human errors. Accounting errors, including data entry mistakes, are
easier to detect and avoid.

• Better-informed planning and budgeting. The ERP finance module's analytics

and reporting functions help a company to forecast costs and revenue and produce
more accurate budgets.
 • Tracking and organizing financial documents. The digital format means an
organization is less likely to misplace or lose documents. In addition, documents
are usually filed in the proper place automatically.

• No missed payments. The AP feature notifies a company about upcoming

payments. The company can also have payments taken out automatically.

• Centralization. A company can access its financial information in one place.

• Integration. Because the ERP finance module integrates with other ERP modules
and business systems, an organization has access to key data, such as sales figures
and marketing budgets.

ERP finance module use cases

A business use case is a common task or workflow carried out in software. Here are some
examples from ERP finance.

• Payables: Invoice processing, cash management and bank reconciliation.

• Receivables: Billing, extending credit and matching invoices with cash received.

• Revenue recognition: Recording revenue that is received over time rather than in
a single transaction. Strict regulations require this revenue to be recognized
properly in the general ledger and income statement.

• Reconciliation: Automatically reconciling account discrepancies to avoid delays

in the monthly close.

• Collections: Analyzing receivables and customer accounts to identify payment

risks and executing steps to encourage timely collection.

ERP finance module vendors

The ERP market consists of several dozen vendors offering a range of systems geared to
companies of varying sizes, from SMBs to large enterprises.

Infor, Microsoft, Oracle and SAP are the four biggest ERP vendors by global revenue,
according to most market research firms, and have broad product lines that start with entry-
level ERP for small businesses.
Deployment options range from on-premises systems to cloud ERP that runs on the vendor's
servers -- or those of a partner -- and is delivered over the internet to users.

One type of cloud, SaaS, is increasingly used as a way to move just the ERP finance module
to the cloud while keeping other parts of ERP on premises. This hybrid approach is often the
first step in a plan to eventually move all of ERP to the cloud.

With SaaS, multiple customers usually share a single copy of the software, which lowers
costs and helps enforce standardization and good business practices. Acumatica,
FinancialForce, NetSuite and Workday are vendors that specialize in SaaS ERP.

Other prominent ERP brands include DELMIAworks (formerly IQMS), Epicor, IFS,
Kenandy, Plex, QAD, Sage Intacct and Syspro.
Human Resource Management
Managing your team efficiently is key to ensuring success for your business. This requires you
to enable them to do their work in the best way possible, by equipping them with the right tools
and systems. With an HRM module for your ERP, you can cover various tasks and processes
that are linked to administering a team of co-workers or employees. It allows you to keep track
of various employee-relation functions, such as:

1. Recruitment
2. Leave management
3. Lifecycle
4. Payroll
5. Expense claims
6. Attendance

The most widely used feature is payroll processing and generating salary slips. Most countries
have complex tax rules which state the expenses the company can make on behalf of its
employees (e.g., social security, taxes). All of this is taken into account in an HRM/ERP
software.

Breaking down the workflow

Let’s first take a look at some concepts and how they function in Human Resource
Management!

Employee

An individual who works part-time or full-time under a contract of employment, and has
recognized rights and duties of your company is considered an employee. While storing
employee data in an ERP, you can include personal details, demographics, joining and leave
details, type of employment (e.g., intern, contractor, full-time, part-time, probation, etc.),
department, designation, branch, etc.

Along with this, details regarding the employee’s salary payment, leave policy, previous work
experience are also stored.

Moreover, if your company provides health insurance to employees, details regarding it can
also be stored within the system. This helps keep track of the insurance plan that the employee
is on. Upon an employee’s departure from the company, exit details such as their resignation,
exit interview, and leave encashment can also be documented.

Recruitment

Planning your workforce

There are many moving parts when it comes to the recruitment of new employees. For this
process, an HRM system helps you create staffing plans, which help you plan manpower
requirements for your company. You can enter budgeting, vacancies, estimated cost per
position, number of positions, etc. while creating a staffing plan.

The hiring process

When there is a job vacancy in your company, it usually goes through this process:

1. You put out a job opening, people find it.

2. Those who are interested apply for the job (sometimes maybe another employee refers
them to you!).
3. Interviews are conducted.
4. Once you’ve selected someone, you give them a job offer (this states the offered salary
package, designation, grade, department, number of leave days, etc.).
5. If they accept, then they’re given an appointment letter!

With an ERP, you can keep track of each of these individual steps by creating records in the
HRM module for them.

Leave Management

The leave application process

Everyone needs time off. Managing leaves using an ERP enables you to efficiently maintain
The leave schedule of your organization. The number and type of leaves an employee can
request using a leave application are controlled by their individual leave allocation for
a leave period based on the company’s leave policy.

Types of Leaves and Leave Encashment

Leaves Can be categorized using leave types, each of which can have their own set of
guidelines:

1. What are the maximum leaves allowed?

2. How many continuous days of leave are allowed?
3. Do the leaves carry forward?
4. Is the leave considered leave-without-pay?
5. Is the leave optional?
6. Does the leave allow for negative leave balance?
7. Does the leave type include holidays within the leave?
8. Is it compensatory?

Accumulated leaves allow employees to use leave encashment, which is an amount of money
received by an employee for leaves that were left unused by them.

Compensatory Leaves and Additional Leaves

Employees can also request compensatory leaves if they’ve been working overtime or on
holidays, based on your company’s policies. This is generally reliant on
their attendance (more on that in the next section!).
You can also add additional leaves if your employees have run out of their allotted leaves and
are allowed to take more (sometimes unpaid) leaves.

Holiday Lists and Leave Block Lists

You can also maintain a holiday list, which contains the dates of all holidays that the company
follows. Multiple lists can be created and assigned to employees, as different locations or
departments might have variations. On the other hand, having a leave block list consolidates
all the dates in a year on which employees cannot apply for leave.

Leave Ledger

The leave ledger keeps track of all leave-related transactions for an employee. Each such
transaction is a leave ledger entry. This includes leave allocations, leave applications, and
leave encashments made by each employee.

Attendance and Shift Management

Attendance is a record stating whether or not an employee has been present on a particular
day. Most ERP systems have an employee attendance tool which you can use to mark
attendance of multiple employees on a given date. On the off-chance that an employee’s
attendance was not marked, they can submit an attendance request so that the accurate
updates are made.

You can also log details about shifts. Whatever period of time any employee clocks in during
work is considered a shift. Shifts are useful to maintain a consistent uptime of working hours
by rotating the job between different employees during different hours. This lets them relieve
each other of the task but ensures that the work does not come to a halt. (For example, an
employee in the customer support department can have a day shift, and when it’s time for them
to head home, they are relieved by the person who takes over the job in the night.)

Attendance details for each employee can include shift type, which is defined by the types of
shifts in your organization. When someone uses the employee check-in for a shift, it can be
used to mark attendance automatically. Employees can also use shift requests if they wish to
request a particular shift type. Once a shift request is submitted, shift assignments for the
employee are updated.

While setting up the hrm module, or adding bulk attendance, you can use the ERP's in-
built upload attendance tool using the .Csv template that your implementor provides you
with.

Lifecycle and Salary

Lifecycle

The series of changes, growth, and developments that an employee will go through during their
time at your company can be recorded and tracked. This is their lifecycle.

Employee Onboarding Starting with employee onboarding, the process of hiring and
equipping an employee with the training they need to become a productive member of your
organization. For each job application that is approved, a set of tasks gets created. For example,
performing a legal and professional background check, creating an employee document in the
ERP system, creating an email account, creating an identity card, allocating leaves, etc. are all
onboarding tasks.

Appraisals and Employee Skill Maps Then come appraisals, an assessment using which the
job performance of an employee is documented and evaluated. When creating an employee
appraisal, you can set key result areas (KRAs) based on the goals. Some ERP systems let you
create employee skill maps, records which help your organization track and evaluate the
employee’s skill sets and training. This data can be used while making appraisals as well.

Employee Promotions

After appraisals are conducted and evaluations are completed, it’s time for the employee to
grow. The employee promotion document is created when an employee makes a career
advancement within your company and is given a higher share of duties, a higher pay-scale, or
both.

Employee Transfer

When an employee is shifted from one department or unit to another, takes up different roles,
or is moved to a different location, you can make an employee transfer document. Details
about the changes taking place, the transfer date, etc. are entered and stored.

Employee Separation

When the time comes for the employee to leave your organization, there are a few things HR
needs to get done. To simplify the exit process (e.g., collecting company property, clearing
dues, collecting any identity card, disabling access to systems, deleting the email account, etc.),
you can create an employee separation document. It creates a set of tasks that need to be
completed for the separation process.

Payroll

Payroll management and processing is a core part of HR functions. It’s crucial that every
company has a solid payroll process. Employees should always be able to rely on being paid
on a consistent basis. It is the sum total of all compensation a business must pay to its
employees for a set period of time or on a given date.

The HRM module usually allows you to:

1. Define a payroll period.

2. Define the income tax slab.
3. Create a salary structure with salary components (i.e. earnings and deductions).
4. Assign salary structures to each employee.
5. Generate salary slips.
6. Book the salary payments in your accounts.

Payroll Entry
A payroll entry allows for bulk processing of salary slips of employees. This can either be
company-wide or divided into categories such as branch, department, designation, etc. If you’re
using other documents such as attendance, timesheets, etc. then you can adjust salaries based
on them. You can set a cost center (more on this in the accounting module) against which the
expenses will be made. Then, when it’s time for salary payment, you can issue a bank
entry for it.

Additional Salary

Additional salary is something that an employee receives from the company they work
for, other than their usual pay. Performance bonuses, incentives, and deputation allowances
are some examples. These are called salary components, which allow you to add or deduct an
ad-hoc salary for a particular employee while processing the payroll. You can also set up a
recurring additional salary which is applied at a fixed interval.

Employee Benefit Application

Once per payroll period, employees can create applications for their flexible benefits within
the ERP using employee benefit applications. This makes the process easy for both the
employee and HR. They can view the available benefits based on their assigned salary structure
before creating an application.

Human Resource Management Reports

As is the case with every piece of data entered into the ERP, you can generate specific reports
for HRM. Some key reports are employee leave balance, employee holiday attendance,
monthly salary register, vehicle expenses report, monthly attendance sheet, bank remittance
report, and loan repayment report.

Fleet Management

Fleet management helps your organization vehicles and track the expenses that come along
with them. Each vehicle has its own separate document which lets you define the type of
vehicle, license plate, brand and model, odometer value, fuel type, etc. Along with details of
the location, employee managing the vehicle, insurance details, etc.

Once the vehicle document has been created, a vehicle log can be maintained. Updated entries
of odometer readings, fuel expenses, and service expenses are stored in this log.

Expense Claim

When an employee spends their personal money on behalf of the company or to cover company
expenses, they’re entitled to reimbursement. They can request it using the expense claim form.

Setting up a workflow
Saf and Mel have hired Ava to lead their newly expanded Human Resources department. With
Lyn’s expertise on deck, they create thorough HRM workflows for the department’s various
purposes.
1. All employee data is added to the system. This includes their personal details, type of
employment, department, designation, branch, etc. All employees who interact directly
with the ERP are also given user accounts.
2. A recruitment pipeline is set up. This begins with creating a staffing plan for the
financial year. As vacancies open up, a job opening entry is made. Then, the process of
hiring takes place through job applicant entries, finally ending with an appointment
letter to the selected candidates.
3. Leaves and holidays are entered into the system based on the company’s leave policy.
A leave ledger is used to keep track of employee leaves.
4. The employee’s lifecycle is tracked from beginning to end. Starting from employee
onboarding, to appraisals, KRAs, promotions, transfers, all the way to employee
separation.
5. Payroll management is set up. Once the payroll period, income tax slabs, and salary
structures are entered, it allows Ava’s team to generate salary slips for employees.
Payroll entries are used for bulk processing of salary slips.
 Manufacturing Module in ERP

The level of competition in today’s market is so high that for firms to thrive, they need to keep
improving. ERP for manufacturing software is utilized by companies that produce a variety of
goods. The enterprise resource planning (ERP) industry started with manufacturing
requirements planning (MRP) and evolved into its current condition, where enterprise
requirements planning is used. And in the case of manufacturing organizations, ERP
systems manage the companies’ day-to-day operations in the same way that a computer’s CPU
does. An ERP software package must contain a particular collection of modules to provide full-
fledged administration.

What exactly does an ERP system mean when it comes to manufacturing?

A standard ERP system is a piece of software that, among other things, can automate and
manage a company’s finances and its many procedures. ERP is a valuable instrument that plays
a significant role in managing organizations, firms, and corporations worldwide, regardless of
their size or the sector in which they operate. This application comes equipped with a
comprehensive range of general capabilities for managing a corporation. A modified version
of the primary ERP system is the manufacturing ERP system. It possesses both a basic set of
functions and some additional options explicitly tailored to meet the requirements of industrial
organizations. Consequently, numerous businesses have chosen to satisfy their manufacturing
requirements by implementing systems tailored to the manufacturing industry or ERPs that are
more comprehensive, such as eresource Xcel ERP. These modules assist in managing stock
and inventory, production processes, and finished goods.

ERP modules for the manufacturing industry

The ability to manage and keep track of inventory, workflow, workforce management, order
management, asset management, and logistics is why manufacturers want an Manufacturing
ERP software system equipped with manufacturing modules that meet their company’s
demands.
The following are some examples of manufacturing modules that we will examine:
• Administration of manufacturing processes and operations
• Control of the inventory
• management of both purchasing and the supply chain
• Sales and order management
• Capital invested in people
• Management of relationships with customers
• Management of relationships with suppliers
• Business intelligence
• Engineering management

Administration of manufacturing processes and operations

The management of a manufacturer’s operations is the company’s beating heart. Products that
are functional for consumers must be developed and satisfactorily satisfy their requirements.
The control of finances is also associated with ensuring that sufficient cash is available at the
appropriate moment to pay the employees and the suppliers. A final product is created when
raw materials are pieced together one at a time according to a predetermined order, often known
as a routing or bill of operations.
Control of the inventory
Every manufacturer does business with inventories and does so actively. Both process
manufacturers and discrete manufacturers need to have inventory management systems in
place. A factory can avoid discarding material that has no value by maintaining reasonable
inventory control, which enables the manufacturer to eliminate unwanted inventory while still
having some value. To properly preserve the list, it is necessary to store supplies where they
can be easily transported to and from the production area.

Management of both purchasing and the supply chain

Buying and selling goods are the engines driving the manufacturing process. That manager can
keep an eye on the order until it is delivered to the receiving dock with the assistance of the
same module, which provides notifications as required to prompt the necessary follow-up
activities. Additionally, it monitors and keeps a record of all of the transactions.

Sales and order management

ERP for manufacturing notifies operations to schedule work and purchases order component
materials to meet client demands promptly. ERP also reports sales management, advising them
if the order is on track and providing them with the ability to inform the customer whenever
there is any risk. ERP software will record all of the necessary transactions and relate them to
the demand for sales orders.

Management of relationships with customers

This module gives the capabilities necessary to monitor and record every communication
between a client and a manufacturer. These conversations may take place verbally, either over
the phone or in person. CRM keeps track of the campaign results within an organization that is
either a customer or a prospect. In addition, CRM keeps tabs on the campaign’s overall results.

Engineering management
The control that engineering has over Manufacturing ERP software makes it possible for
operations to carry out their work with the assurance that the outputs will satisfy the
expectations of the client and any other compliance needs. When the typical procedures are
unavailable, the engineering module allows engineers to devise alternative routings and bills
of material that conform to the requirements.

Business Intelligence
The configurations and setup records within each ERP for manufacturing modules
drive business intelligence ERP. Establishing linkages to sales orders will happen
automatically when a make-to-order firm is configured. ERP systems keep a record of every
transaction carried out across all modules. Those defaults will be linked to the inventory
replenishment predictions of manufacturers who make their products to stock.

Capital invested in people

The quality module collaborates with the human resources module to keep track of the
education and credentials that an employee must possess to do their current job or be considered
for a higher-level position. Regarding HR modules, management uses future employee
characteristics as a model to assist in the search for and hiring of people who possess the
abilities necessary for the future.
Only by handing over control of your business processes to technology rather than continuing
to rely on manual input can you ensure that there will be no need for redundant data entry and
take complete control of your operations. An enterprise resource planning (ERP) solution will
cover your production needs by managing bills of materials (BOM), routings, shop floor
execution, materials requirement planning, and production orders. This will assist you in
accurately assessing your needs and producing balanced and cost-effective outputs.
 Plant Maintenance
•• maintenance is a type of module that provides an integrated solution which supports
Plant
the operational needs of an enterprise-wide system. This module includes all the products that
covers all aspects for the maintenance of plant or equipment in good operating conditions to
avoid production stoppage and loss. It also becomes integral to access the achievement of the
process improvement.

Figure : Organization Structure Of Plant Maintenance

The major subsystems of a plant maintenance are :

1. Preventive maintenance control : Preventive maintenance control enables the
organization to lower repair cost by avoidance of down time, machine breakage
and process variability. It also provide planning, scheduling and control of
facilities.
2. Equipment tracking : An equipment is a useful thing which needs to be protect
and monitor. It’s cost constitute the single largest expenditure of an organization.
3. Component tracking : Components are the subsets of larger equipment and also
it deserve same amount of cost control expenditure. It enables expenditure
managers to identify components with repair problems.
4. Plant maintenance calibration tracking : It allows organizations to fully use
their investments in the plant maintenance module.
5. Plant maintenance warranty claims tracking : It is an administrative system to
provide control of all items covered by manufacturer and vendor warranties. It
includes the ability to establish the type and length of warranty.
Objectives of Plant Maintenance :
• It helps in minimizing the loss of production time due to any equipment failure .
• It helps in quality and product improvement.
 • It keeps all the assets in proper working conditions.
Advantages of Plant Maintenance :
• It helps in reduction of breakdown losses.
• It helps in reduction of quality defects.
• It increases net quality profits.
• It reduces maintenance cost.
• Increased equipment life: Regular plant maintenance can help increase the
lifespan of equipment and machinery, reducing the need for costly replacements
or repairs.
• Improved safety: Plant maintenance helps to identify potential safety hazards and
address them before accidents occur, reducing the risk of injury to employees and
damage to equipment.
• Compliance: Many industries have regulations and standards related to plant
maintenance, and maintaining compliance can help avoid penalties, fines, and
legal issues.
• Improved efficiency: Well-maintained equipment and machinery operate more
efficiently, which can lead to reduced energy consumption and lower operating
costs.
• Better inventory management: Plant maintenance can help identify and manage
spare parts inventory, reducing the risk of stockouts and ensuring that replacement
parts are readily available when needed.
• Enhanced customer satisfaction: When equipment and machinery are properly
maintained, it reduces the risk of production delays or product defects, improving
customer satisfaction and loyalty.
Disadvantages of Plant Maintenance :
• It increases investments in diagnostics equipment.
• It also increases investment in staff training.
• Saving potential that is not readily seen by the management.
• Downtime: Plant maintenance requires equipment to be taken offline for
inspections and repairs, which can lead to production downtime and lost revenue.
• Cost: Plant maintenance can be expensive, requiring investment in diagnostic
equipment, staff training, and replacement parts, which can reduce short-term
profitability.
• Over-maintenance: Over-maintenance can occur when unnecessary maintenance
is performed, leading to increased costs and reduced efficiency.
• Resistance to change: Resistance to change from employees or management can
make it difficult to implement new maintenance practices or procedures, hindering
progress towards improved plant performance.
• Lack of expertise: In some cases, maintenance technicians may lack the expertise
or knowledge to properly diagnose and repair complex machinery or equipment,
leading to longer downtime and higher repair costs.
• Impact on production schedules: Maintenance activities may need to be
scheduled during specific periods to minimize impact on production schedules,
which can limit flexibility and increase complexity in planning.
• Mismanagement of maintenance activities: Poor management of maintenance
activities can lead to inefficiencies, delays, and increased costs, undermining the
benefits of plant maintenance.
 Material Management Module in ERP System
•••
Material Management Module in ERP System Determines needs, identifies a potential
source of supply, compare alternative quotations, create a purchase order, track the status of
the purchase order, receive goods, and verify invoices upon receipt of goods.
An ERP System provides a needed integration between Material Management System and
other sub-modules. For example, All purchase orders are assigned to a cost center in the
Management Accounting module. In production planning, the inventory function post
component needed to fill Production Orders. This shows purchasing and financial accounting
share common vendor data.
Importance of Material Management Module :
The efficient and structured Material Management Module is very advantageous for many
companies. Also, customer satisfaction is can be noticeably increased because only a well-
functioning material is available at the right time in the right place and in the required
quantity and quality. This in turn is the basis for high adherence to deadlines and the lowest
possible throughput times.
Material management is also important with regard to the warehouse management because
companies will know how many raw material, finished products, and spare parts, etc. are
available in Warehouse at all the time.
Also, with the help of the material management module following below tasks can be
handled much easier:
• Collecting material
• Shipping planning
• Container Management
• Inventory Management
Key Components for setting up Material Management Module
• When multiple projects are being managed then assigning of Unique Project
Number Schema reduces the ambiguity.
• Material Storage Location must be clearly defined and marked.
• Inspection, Certifications, Quality Management, Tracked Digitally.
• The unit of measure and material classifications must be descriptive and accurate
to ensure all material can be found quickly and efficiently.
Objective of Material Management
• Get at Right Price
• High Turnover
• Low Procurement and Storage Cost
• Consistency in Quality
• Continuity Of Supply
• Inter-Department harmony
• New Material and Product
• Product Improvement
Advantages of Material Management System
i) Material Valuation: Material Valuation helps in:
• Determining the price of the material.
• Helps in recording tracking and moving material.
• It provides divergent inventory valuation methods such as LIFO, FIFO, Moving
Average, etc.
ii) Multi-location Inventory: For Manufacturing units that produce goods on large scale and
for consumer goods there are more than one Distribution Unit for making Supply Chain
Management Easier. In different distribution units lot tracking, serialized inventory, and
specific costing, etc. are properly maintained.
iii) Traceability: Consumer goods and Raw Material consist of Lot number or serialized
number which is used to track the location of goods. For example, if the product is sent to the
consumer, importing raw material, amount of goods available in the Warehouse can be easily
traced by an organization which makes the work of organization much easier.
iv) Product Life Cycle Management: New products and old products are the backbones of
an organization. So every organization make the analysis of the new and old product and
measure the demand and supply of that product. So the product which is more demanded
having a high life
span.

For example: Let us take 2 products from a company suppose A and B. Out of its product A
highly demanded and Product B is very less demanded. So in that company Product A is
manufactured more and the company will spend more on Advertising of that Product.
A new product in an Organization when manufactured have gone through five stages:
• Introduction Stage
• Growth Stage
• Maturity Stage
• Decline Stage
• Abandonment Stage
Disadvantages Of Material Management:
• Data integration issue cause when Material is placed in Multi-Location.
• Engineering requisition issues are also caused.
• Inaccurate Inventory level caused due to Shipping and Receiving Error.
 SAP Sales and Distribution

SAP Sales and Distribution is one of the key components of SAP ERP system and is used to
manage shipping, billing, selling and transportation of products and services in an
organization.

SAP Sales and Distribution module is a part of SAP Logistics module that manages customer
relationship starting from raising a quotation to sales order and billing of the product or
service. This module is closely integrated with other modules like SAP Material Management
and PP.

Key Components in SAP SD

The key components in SAP Sales and Distribution module are −

• Customer and Vendor Master Data

• Sales Support
• Shipping of Material
• Sales Activities
• Billing related
• Transportation of products
• Credit Management
• Contract Handling and Management
• Foreign Trade
• Information System

SAP Sales and Distribution Cycle

SAP SD - Organizational Structure

SAP provides many components to complete SAP Sales and Distribution organizational
structure like Sales Areas, Distribution Channels, Divisions, etc. The SAP SD organization
structure majorly consists of two steps −

• Creation of Organization elements in SAP system, and

• second is to link each element as per requirement.

On top of this organization structure in the SD module, sales organization is at highest level
and is responsible for distribution of goods and services. SAP recommends to keep the
number of sales organization in an organizational structure to be minimum. This will help in
making the reporting process easy and ideally it should have a single sales organization.

The next level is distribution channel, which tells the medium by which the products and
services are distributed by an organization to its end users. Division in an organizational
structure, which represents a product or service line in a single organization.

A sales area is known as entity, which is required to process an order in a company. It

comprises of sales organization, distribution channel and a division.

In SAP SD organizational structure, each sales organization is assigned to a company code.

Then the distribution channel and divisions are assigned to sales organization and all of these
comprise to make a sales area.

In the first step of an SD organizational structure, sales organization is assigned to a company

code and then is to define a distribution channel and then division to a sales organization.

The following diagram shows the organizational structure of a Sales and Distribution module
−

Material management

Material Management is one of the key modules in SAP ERP System and covers the day to
day business operations related to inventory and procurement. This module is closely
integrated with other modules of R/3 systems like Finance Accounting and Controlling, Sales
and Distribution, Quality Management, Product Planning.
Integration with Sales and Distribution SD Module

Consider an example of creating a sales order in SAP SD, it involves copying the details of
items from Material Management. Availability check of the item and price details are also
taken from MM, but this can be controlled in the SD module. To create inbound and
outbound delivery of goods for a sales order, shipping details, loading point etc. also comes
from the Material Master.

The item that is placed using a Sales order must be extended to the sales area of an
organization to sales order/customer, otherwise it won’t be possible to transact with this
material. This confirms that there is a link between SAP SD and MM module, when a sales
order is created and fulfilled. Similarly, there are many other links between two modules.

Finance and Accounting

SAP FI stands for Financial Accounting and it is one of the important modules of SAP ERP.
It is used to store the financial data of an organization. SAP FI helps to analyze the financial
condition of a company in the market. It can integrate with other SAP modules like SD, PP,
SAP MM, SAP SCM etc.

For SAP FI-MM, use T-code: OBYC

In case of a standard sales order, you create an outbound goods delivery to the customer.
Here movement 601 takes place. This movement is configured in MM and movement of
goods hit some G/L account in FI. This shows the integration between SAP SD, FI and MM
module.

Document Flow

This shows how a transaction in one system effects the details in other systems of an SAP
module.

Consider the following transaction −

For SAP FI-MM, use T-code: OBYC

Whenever there is a delivery created with reference to a sales order, goods movement takes
place in the system.
Example

In case of a standard sales order in the SD module, you create an outbound goods delivery to
the customer. Availability check and retail price of that product is checked in the MM
module. Here, movement 601 takes place. This movement is configured in the MM and
movement of goods hit some G/L account in FI. Every such movement of goods hits General
Ledger account in FI.

The accounts posting in FI is done with reference to the billing documents like credit and
debit note, invoice etc. created in SD and hence this is the link between SD and FI. This
shows the document flow between different modules.

Process Chain

SD module is closely integrated with other SAP modules. The following tables will give you
a brief idea on how SD is linked with other modules −

Sales Order
 Link Points Module Involved

Availability Check MM

Credit Check FI

Costing CO/MM

Tax Determination FI

Transfer of Requirements PP/MM

Billing

Integration Point Module

Debit A/R FI/CO

Credit Revenue FI/CO

Updates G/l (Tax,discounts,surcharges,etc) FI/CO

Milestone Billing PS

Goods Delivery and Issue of goods

Integration Module

Availability Check MM

Credit Check FI

Reduces Stock MM

Reduces Inventory FI/CO

Reduces Eliminated PP/MM

 Table : various ERP Modules and the sub-systems as given in ERP by Milind Oka

sales and Marketing Project

Forecasting Project Definition
Demand Management Project Budgeting and Estimation
Quotations and Proposals Network planning
Sales Order processing Project Monitoring and Control
Shipping Project Requirements Planning
Despatch and Billing
Sales Analysis

service Materials
Contract Control Inventory Management
Installation Control Materials Accounting
Warranty Operations Materials Requirement Planning
Service Control Purchasing
Service Analysis Vendor Development and Evaluation
Sub Contracting
Contract Control

Distribution & Transportation Quality

Distribution resource Planning Inward Quality Assurance
Electronic Data Interchange Outward Quality assurance
Inventory tracking and control Statistical Quality Control
Invoicing Calibration
Transport Fleet Management Test and Measuring Instruments
Test Records

Finance and Accounting Manufacturing

General Ledger Capacity Requirement Planning
Accounts Payable Master Production Scheduling
Accounts Receivables Production Planning and Control
Management Accounting Plant Operations
Fixed Assets Management Process and Shop Floor Management
Cost Control Tool Management
Cost Management Routing and Work Order
Statutory Costing Bills of Material
Legal Consolidation Engineering Changes Management
Financial reporting Work in Progress
Budgetary control Product Definition
Cash Flow Management Product Configuration
Investment Management
Treasury Management
Funds Management

Human Resource Plant Maintenance

Human Resource Information Equipment
Skills Set Available Maintenance Operations
Development and Training Planning and Execution
Payroll Calibration
Maintenance Stores Management
Maintenance Control