MODULE 4

Enterprise Resource Planning

SESSION TOPIC: Support Service Integration

1. Support integration of the accounting, costing, human resources and environmental
management functions.

LEARNING OBJECTIVES:

Learning objectives are expected to be realized at the end of the session:

Discuss enterprise support services, particularly the integration of the accounting, costing, human
resources and environmental management functions.

KEY POINTS

Enterprise Resource Planning Inventory Management ERP Solution

CORE CONTENT
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Introduction

When companies undergo a digital transformation, they are typically trying to gain efficiencies in critical
business processes and also a high level of visibility into those processes. Of all those processes, there are
many that are the fundamental backbone of how an enterprise runs. Therefore, it’s critical to have more
visibility and more control of those workflows than in years past.

IN-TEXT ACTIVITY
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Enterprise resource planning (ERP) systems have become a critical tool for businesses over the past
several decades. An ERP solution automates critical business processes and serves as a shared database
for all financial and operational information from across the company. It pulls this data from a number of
modules built to help various departments, from accounting to supply chain to human resources, perform
their individual functions.

An ERP solution gives all employees access to the information they need to answer important questions
about their department’s current performance and future planning, as well as target areas for
improvement. This single source of information minimizes data accuracy and consistency issues and
ensures everyone is looking at the same numbers, no matter their role. It also drives better decision-
making that leads to more efficient processes and cost savings. Additionally, ERP can automate many
tasks, reducing errors and freeing up employees to focus on more strategic work.

Common ERP modules support back- and front-office functions like finance and accounting,
procurement, manufacturing, inventory management, order management, warehouse management, supply
chain management, customer relationship management (CRM) procurement and workforce management.

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More functionally-rich solutions may also include professional services automation (service resource
management), human resources management, ecommerce and marketing automation.

How Do ERP Modules Help Businesses?

The modular design of ERP allows it to meet the shifting needs of a business and is a big reason this
software has become ubiquitous. An organization can purchase only the modules relevant to its business
model, operations and key challenges. It can then add ERP modules to address new needs or challenges as
the organization evolves.

The beauty of modular ERP software is that a company can add this functionality while keeping the same
foundation in place. There is no need to implement a new ERP system—a lengthy process—when
requirements change, as long as the company chooses an established ERP provider with a wide selection
of module

1. Finance

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The finance and accounting module is the most important ERP module because it allows businesses to
understand their current financial state and future outlook. Key features of this module include tracking
accounts payable (AP) and accounts receivable (AR) and managing the general ledger. It also creates and
stores crucial financial documents like balance sheets, payment receipts and tax statements.

The finance module can automate tasks related to billing, vendor payments and account reconciliation,
helping the accounting department close the books in a timely manner and comply with current revenue
recognition standards. It also has the data that financial planning and analysis employees need to prepare
key reports, including profit and loss (P&L) statements and board reports, and run scenario plans.

2. Procurement
The procurement module, also known as the purchasing module, helps an organization secure the
materials or products it needs to manufacture and/or sell goods. Companies can keep a list of approved
vendors in this module and tie those suppliers to certain items. The module can automate requests for a
quote, then track and analyze the quotes that come in.

Once a company accepts a quote, the procurement module helps the purchasing department prepare and
send out purchase orders. It can then track that purchase order as the seller turns it into a sales order and
ships the goods, automatically updating inventory levels once the order arrives.

3. Manufacturing
The earliest version of ERP, material requirements planning (MRP) systems, were designed for
manufacturers, and manufacturing remains a key piece of ERP. Today, ERP systems typically have a
production management or manufacturing execution system (MES). The manufacturing module helps
manufacturers plan production and make sure they have everything they need for planned production
runs, like raw materials and machinery capacity. During the manufacturing process, it can update the
status of goods-in-progress and help companies track actual output against forecasted production. It also
provides a real-time picture of the shop floor, capturing real-time information on items in progress and
finished goods. It can calculate the average time to produce an item and then compare supply with
forecasted demand to plan adequate production.

4. Inventory Management
The inventory management module enables inventory control by tracking item quantities and location
down to individual SKUs. This module offers a complete picture of not only current but also incoming
inventory, through an integration with the procurement tool. This piece of software helps businesses
manage inventory costs, making sure they have sufficient stock without tying up too much cash in
inventory. An inventory management application can weigh sales trends against available product to
helps companies make informed decisions that boost margins and increase inventory turn (a measure of
how often inventory is sold over a certain period). It can help prevent stockouts and delays, which
enhances customer service.

Businesses that lack other supply chain management modules may also use the inventory management
application to handle purchase orders, sales orders and shipping. Larger organizations will need a version
of this solution that can track inventory across multiple locations.

5. Order Management
An order management module tracks orders from receipt to delivery. This piece of the ERP feeds all
orders to the warehouse, distribution center or retail store after customers place them and tracks their
status as they’re prepared, fulfilled and shipped to the customer. The order management module prevents
orders from being lost and boosts on-time delivery rates to keep customers happy and cut unnecessary
expenses for expedited shipping.

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More advanced order management applications can help a company determine the most cost-effective
option for fulfilling an order—a store vs. a warehouse vs. a third-party fulfillment partner, for example—
based on available inventory and the buyer’s location.

6. Warehouse Management
A warehouse management module can deliver a rapid return on investment for businesses that operate
their own warehouses. This application can efficiently guide warehouse employees through all warehouse
processes based on the layout of the facility, from putaway when shipments arrive to picking to packing
and shipping. It can also help companies plan labor based on expected order volume. The warehouse
management module can support different picking strategies like batch picking, wave picking and zone
picking depending on which is most efficient for a given business, and some modules can show
employees the most efficient pick path.

When the warehouse management module is integrated with inventory management and order
management applications, employees can quickly find the right products and get shipments out the door
quickly. Faster delivery ultimately increases customer satisfaction.

7. Supply Chain Management

A supply chain management module tracks each step in the movement of supplies and goods throughout
the supply chain, from sub-suppliers to suppliers to manufacturers to distributors to retailers or
consumers. It can also manage any materials or products returned for refund or replacement.

As noted earlier, supply chain management can include a wide array of modules like procurement,
inventory management, manufacturing, order management and warehouse management. However, it may
have functionality beyond the core capabilities of those modules.

8. Customer Relationship Management (CRM)

The customer relationship management (CRM) module stores all customer and prospect information.
That includes the company’s communication history with a person—the date and time of calls and emails,
for example—and their purchase history. A CRM improves customer service because staffers can easily
access all the information they need when working with a customer.

Many businesses also use CRM to manage sales leads and opportunities. It can track communication with
prospects and suggest which customers should be targeted for certain promotions or cross-sell
opportunities. More robust CRM modules may support customer segmentation (enabling more targeted
marketing) and advanced contact managers and reporting tools.

9. Professional Services Automation (Service Resource Management)

A professional services automation (PSA) module, also called a service resource management module,
allows an organization to plan and manage projects. Services-based businesses often use this module. The
application tracks the status of projects, managing human and capital resources throughout, and allows
managers to approve expenses and timesheets. It facilitates collaboration between teams by keeping all
related documents in a shared place. Additionally, the PSA module can automatically prepare and send
bills to clients based on rules around the billing cycle.

10. Workforce Management

A workforce management module is similar to a human resource management module but is designed for
companies with more hourly than salaried employees. It can monitor workers’ attendance and hours and
measure things like employee productivity and absenteeism.

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Payroll could also fall under the workforce management module. A payroll sub-module automatically
distributes paychecks to employees on a set schedule with the appropriate taxes deducted and handles
expense reimbursement. It can also provide reports on payroll expenses, total overtime hours and similar
KPIs.

11. Human Resources Management

A human resource management (HRM) or human capital management (HCM) module usually
encompasses all the features of workforce management application and offers additional capabilities.
HRM could be viewed as CRM for employees. This popular module has detailed records on all
employees and stores documents like performance reviews, job descriptions and offer letters. It tracks not
only hours worked but also paid time off (PTO)/sick days and benefits information.

Since the HRM module stores a vast amount of information on every employee across the organization, it
eliminates a lot of duplicate or inaccurate data that many organizations store in various spreadsheets.

12. Ecommerce
Certain ERP vendors offer an ecommerce module for businesses that want to sell online. This module
allows companies to quickly launch a business-to-business (B2B) or business-to-consumer (B2C)
ecommerce website. Leading commerce applications include user-friendly tools that allow employees to
easily add new items, update product content (item descriptions, titles, specs, images, etc.) and change the
look and feel of the website.

When the ecommerce application is integrated with other ERP applications, all payment, order and
inventory information feeds [from the ecommerce module] into the shared database. That ensures all
transactions are added to the ledger, out-of-stock items are removed from the site and orders ship on time.

13. Marketing Automation

Like with ecommerce, certain software providers have developed a marketing automation module. A
marketing module manages marketing campaigns across digital channels like email, web, social media
and SMS. It can automate email sends based on campaign rules and has advanced customer segmentation
features, so customers only receive relevant messages.

Marketing automation software, whether part of the ERP system or a separate solution, can provide
detailed reports on the performance of campaigns to shape future marketing plans and spend. These
applications increase leads, customer loyalty and, over time, sales.

While the ERP modules a business should invest in will vary based on business model, industry, current
obstacles and other factors, there are a few modules that makes sense for most organizations. Every
company needs a finance and accounting module to operate, monitor its financial health and ensure its
bills are paid. It’s difficult to run a business without software that can provide financial information and
execute basic accounting tasks.

Though not as critical as finance and accounting, almost every company—regardless of industry, and
whether it’s product- or services-based—depends on some type of customer, so CRM is another module
that would benefit most businesses. Similarly, the workforce management or HRM module is a worthy
investment for most companies with more than a few employees. Employees must be paid on time, and
employers need a central place to track their information and career development.

Any products company—a category that includes almost all manufacturers, distributors and retailers—
will benefit from a supply chain management module. Most organizations start with inventory and order

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management modules, since those are crucial to daily operations, and might later add solutions for
manufacturing, warehouse management and procurement.

Services businesses like consultancies, agencies and maintenance and repair companies could realize a
fast return on investment with a project management module. It automates complex, time-intensive billing
processes and simplifies resource planning for projects.

Commerce and marketing automation are both pieces of software that some would not put under the ERP
umbrella, though many businesses rely on them to attract and convert customers, especially as the internet
has become a primary driver of new business. Though there are plenty of marketing automation and
commerce solutions available from non-ERP vendors, solutions from your ERP provider offer a tighter,
more reliable integration and may share a common user interface that reduces the learning curve and
increases adoption among employees.

Example of ERP Support Systems

Acumatica
 Acumatica is designed for small and medium sized businesses. Acumatica specializes in several
industries, including distribution, manufacturing, service industries, retail and e-commerce,
construction, agriculture, chemicals, FMCG and transportation. Supported deployment methods
include SaaS (cloud-based) or on-premise.

 The system has capabilities such as self-service reporting, document management and approval
workflows. It supports analyzing data with embedded Microsoft Excel and Power BI capabilities.
All capabilities are fully integrated and built using standard Microsoft tools.

 Acumatica offers a flexible pricing model that’s based on specific requirements such as desired
applications, licensing and projected level of consumption. In June 2019, Acumatica was
acquired by EQT

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BizAutomation
 Next ERP example is a comprehensive cloud software that prides itself on addressing all business
processes within one system, eliminating the need for related applications. BizAutomation
caters to small to medium-sized businesses in the wholesale, retail, e-commerce, services,
distribution and manufacturing industries.

 It comes with tools for ERP, CRM, financials, e-commerce, distribution, order management,
manufacturing, procurement, project accounting and inventory management. It uses a hybrid
cloud approach comprised of a private solution cloud that is a tier 1 SOC and AICPA compliant
data-center, and a public cloud that is used for data redundancy.

 The system’s multi-channel integration feature provides unique sales order management
capabilities that can generate orders by connecting with Shopify, BigCommerce, Woo, Magento
and other platforms.

 Their implementations normally have a timeline of one to three months.

SUMMARY
Each ERP module is designed for specific business functions, providing the data and supporting the
processes that will help those employees do their jobs. Every module plugs into the ERP system, so the
system provides a single source of accurate data, even as the business adds new modules. If the ERP
system is the toolbox, the modules are the screwdriver, wrench, hammer and other tools in the box that
each have specific uses.

References:
See the references listed in the syllabus of the subject.
(https://www.netsuite.com/portal/resource/articles/erp/erp-modules.shtml)
(https://www.selecthub.com/enterprise-resource-planning/erp-examples-features-platforms/)

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ASSESSMENT/EVALUATION

Name: Section:
Instructor: Date:

ACTIVITY 1-MIDTERM

1. What are the major risks associated with ERP systems?

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