Lec01 - Slides

ERP Fundamentals
Dr. Karim Noreldin

Main Lecture
Rules
• Students must use their AAST email to join zoom with full
name.
• No one allowed to join Zoom after 15 Min from Lecture start
time.
• All participants muted during lecture except when questions
exist or answer needed.
• Max absence allowed 3 lectures.
• 2 sections absence = 1 lec absence.
• Always make sure to have a paper and pen during the
lecture.
Attendance & Mid-Term Final Exam Group Project
Assignments Exam(lec 7) (lec 16)
10 30 40 20
Concepts in Enterprise Resource Planning, Second Edition

Reference Book
Concepts in Enterprise Resource Planning 4th Edition
3
Lecture 1
Business Functions, Processes, and
Data Requirements
Concepts in Enterprise Resource Planning, Second Edition

Lecture Objectives
• Name a business's main areas of operation.
• Differentiate a business process from a business function.
• Identify the kinds of data that each main functional area
produces.
• Identify the kinds of data that each main functional area
needs.
• Define integrated information systems and state why they
are important
Concepts in Enterprise Resource Planning, Second Edition 5

ERP Overview
• Enterprise Resource Planning (ERP) programs are
software used by companies to manage information in
every area of the business.
• ERP programs help manage company-wide business
processes using a common database and shared
management reporting tools.
• ERP software supports the efficient operation of
business processes by integrating activities throughout a
business.

Odoo ERP – CRM Module example
https://www.youtube.com/watch?v=0p_cCMeUcvY
Functional Areas of Operation
Most companies have four main functional areas:
1. Marketing and Sales (M/S)
2. Supply Chain Management (SCM)
3. Accounting and Finance (A/F)
4. Human Resources (HR)
• Each main functional area consists of a number of
narrower business functions specific to the functional area.
• Historically, businesses have organized themselves
according to business functions.
• Business Schools continue to be similarly organized.
• Better integration of functional areas leads to
improvements in communication, workflow, and success of
company
Functional Areas of Operation
Business functions: Activities specific to a functional area of operation

Example of links required between
different functional areas
• all areas still need information and support from each other for the
organization to operate effectively. Constant communication and
cooperation are essential for the business to achieve its aims and
objectives.
Functional Areas Links
Sales and SCM Sales must know production schedules and agree on delivery dates of
orders with Production so customers are not promised dates that
cannot be met. Production must tell Sales about production problems
which will affect customers.
Sales and Finance Finance must know about customer inquiries to check their credit
rating before sales are made.
Finance will be involved when discounts are agreed upon or when
there are problems with customer payments.
Finance and all Finance monitors departmental spending and the achievement of
other departments
financial targets.
Human Resources and Will liaise over salary increases and bonuses.
Finance
Human resources and HR handles job vacancies, promotion opportunities, training courses,
other functional areas
Concepts in Enterprise Resource
and CPD Planning, Second Edition
for all areas/staff. 10
Business Processes
• A business process is a collection of activities that takes
one or more inputs and creates an output that is of value
to the customer.
• The customer may be the traditional external customer
who buys the product or service, or an internal customer
(a colleague in another department)
• The business process view is the customer’s
perspective.
• The customer does not care that different functions are
involved in processing their order, and will not tolerate
mistakes and delays caused by poor coordination of
business functions

Process View of Business
Customer Order Process
Accounting
Purchasing
Production
Logistics
Function
Function
Function
Function
Function
Sales
Material Order Process
Figure 1-3 A process view of business

business processes involve more than one
functional area
Business Processes
• More managers are now thinking in terms of business
processes rather than business functions.

Information System
• An information system includes the:
• Computers
• People
• Procedures
• Software
• Required to store, organize and deliver information
• Information systems are a critical tool for integrating
business functions

Integration of Business Functions
• Sharing data efficiently and effectively within and
between functional areas leads to more efficient
business processes
• Information systems that share data between functional
areas are called Integrated Information Systems

FUNCTIONAL AREAS AND BUSINESS
PROCESSES OF A VERY SMALL BUSINESS
• We will examine the business processes of the coffee shop
and see why coordination of the functional areas helps
achieve efficient and effective business processes.
• Even though just a few people can run a small coffee shop,
the operation of the business requires a number of
processes. Coordinating the activities within different
functional areas requires accurate and timely information.

functional areas inside a coffee shop

Marketing and Sales (M/S)
• Marketing and Sales (M/S) functions include developing
products, determining pricing, promoting products to
customers, and taking customers’ orders.
• Marketing and Sales also helps create a sales forecast to

ensure the successful operation of the coffee shop.
• Product development can be done in such a simple business;

you gather information about who buys which kind of coffee
and note what customers say about each product.
• Deciding whether to sell a product also depends on how

much it costs to produce the product

Supply Chain Management (SCM)
• The functions within Supply Chain Management (SCM) include
developing production plans, ordering raw materials from
suppliers, receiving the raw material into the facility,
manufacturing products, maintaining facilities, and shipping
products to customers.
• Production is planned so that, as much as possible, coffee is
available when needed, without excess that must be disposed
of.
• Production plans are also used to develop requirements for raw
materials (coffee beans, tea bags, sweeteners, cream, and milk)
and packaging (cups, stirrers, straws, plates, and napkins).
• If the forecasts are accurate, you will not lose sales because of
material shortages, nor will you have excessive inventory that
might spoil.

Accounting and Finance (A/F)
• (A/F) performs financial accounting to provide summaries of
operational data in managerial reports, and it is also responsible
for tasks such as controlling accounts, planning and budgeting,
and cash-flow management.
• Raw data of financial transactions are recorded and then
summarized in meaningful ways to determine the profitability of
the coffee shop and to support decision making.
• records from accounts receivable are used to determine whether
to grant credit to a particular customer during sales process.
• You need to be sure you have enough cash on hand to purchase
raw materials, as well as to finance the purchase of new
equipment, such as an additional coffee machine for the
decaffeinated coffee

Human Resources (HR)
• Even a simple business needs employees to support its
operations, which means the business must recruit, train,
evaluate, and compensate employees.
• Human Resources uses sales forecasts to plan
personnel needs. At the coffee shop, the number of
employees needed and the timing of hiring depend on
the level of coffee and tea sales.
• input from M/S, SCM, and A/F is required by HR to
answer questions like:
o how much should a part-time helper be paid?
o should you think about acquiring more automated
ways of making coffee, so a person working alone
could run the shop?

Conclusion from the coffee shop example
• The coffee shop, while a relatively simple business,
has many of the processes needed in larger
organizations, and these processes involve activities
in more than one functional area.
• In fact, it is impossible to discuss the processes in

one functional area without discussing the links to
other functional areas—connections that invariably
require the sharing of data.
• Systems that are integrated using ERP software

provide the data sharing that is necessary between
functional areas.
Assignment
• Each student is responsible to identify a small business and
familiarize themselves with its key business processes and
problems (it could be anonymous/fictitious business).
• student will present a power point (3-5 slides / max 5 mins)

and will provide relevant details about the business and
identify potential business processes and functional
areas.
• Bonus 2 marks for best presentation
• To be presented on 2nd lecture

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ERP Fundamentals

Dr. Karim Noreldin

Concepts in Enterprise Resource Planning, Second Edition

Concepts in Enterprise Resource Planning 4th Edition

Concepts in Enterprise Resource Planning, Second Edition

Concepts in Enterprise Resource Planning, Second Edition 5

Concepts in Enterprise Resource Planning, Second Edition 6

Business functions: Activities specific to a functional area of operation

Concepts in Enterprise Resource Planning, Second Edition 11

Material Order Process

Figure 1-3 A process view of business

Concepts in Enterprise Resource Planning, Second Edition 13

Concepts in Enterprise Resource Planning, Second Edition 14

Concepts in Enterprise Resource Planning, Second Edition 15

Concepts in Enterprise Resource Planning, Second Edition 16

Concepts in Enterprise Resource Planning, Second Edition 17

• Marketing and Sales also helps create a sales forecast to

• Product development can be done in such a simple business;

• Deciding whether to sell a product also depends on how

Concepts in Enterprise Resource Planning, Second Edition 18

Concepts in Enterprise Resource Planning, Second Edition 19

Concepts in Enterprise Resource Planning, Second Edition 20

Concepts in Enterprise Resource Planning, Second Edition 21

• In fact, it is impossible to discuss the processes in

• Systems that are integrated using ERP software

• student will present a power point (3-5 slides / max 5 mins)

• Bonus 2 marks for best presentation

• To be presented on 2nd lecture

Concepts in Enterprise Resource Planning, Second Edition 23

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