Chapter III

ERP MODULES
All ERP packages contain many modules. The common modules which are
available in almost all ERP software packages are as following:
1. Finance Module
2. Sales & Distribution Module
3. Human Resource Module
4. Plant Maintenance Module
5. Quality Management Module
6. Manufacturing & Production Module

1) FINANCE MODULE
1. A set of processes are required so that they can provide the financial information in the
form that is required by the user, such financial solution is provided by the ERP
package.
2. The financial application component of the ERP provides us with the information of
financial functionality across the different business area.
3. The finance business of ERP also provides analysis support to the business.
4. The finance module of the most ERP system will have the following subsystems:
a. Financial Accounting (General Ledgers, Accounts Receivable / Payable, Fixed
Asset Accounting)
b. Investment Management (Investment Planning / Budgeting / Controlling)
c. Controlling (Cash Management, Treasury Management)
d. Enterprise Controlling (EIS, Business Planning and Budgeting)
1. FINANCIAL ACCOUNTING
1. The financial accounting system objective is to provide company-wide
control and integration of financial information which is required for strategic decision
making.

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 2. The Financial Accounting Module of an ERP system, gives you the ability to centrally
track financial accounting data within an international framework of multiple currencies,
companies and languages.
Eg: When raw material moves from inventory into manufacturing, the system reduces
quantity values in inventory and subtracts value for inventory account in the balance
sheet.
I. GENERAL LEDGER
a. The general ledger is essential to both financial accounting system and to
strategic decision making.
b. The general ledger supports all the functions which are required in financial
accounting system. It contains of sub-ledgers.
c. The GL provides document parking, posting, reporting, and an integrated
financial calendar for automating periodic activities.
d. It provides the summary information from the other components at the user
defined level of detail.
e. According to the company requirements, the general ledger is structured in a
number of accounts, according to the requirement.
f. The output generated by the general ledger is the data summary that can be used
in planning, distribution and reporting.
g. In the general ledger we can also create our own database table and non
standard fields as per the requirement of the business organization.

PURCHASING SALES
(QUANTITY AND VALUE) (ORDER AND BILL)

VENDOR (PAYABLE) CUSTOMER (RECEIVABLE)

EMPLOYEES
FIXED ASSETS
(SALARY AND WAGES)

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GENERAL LEDGER
 TYPICAL GENERAL LEDGER
II. ACCOUNTS RECEIVABLE / PAYABLE
a. ERP system provides us a financial overview of business partner relationships
by maintaining accounts payable & receivable.
b. These accounts are integrated with general ledger and it is associated in sales
and distribution & material management.
c. They are performed automatically when related processes take place in other
modules.
d. It uses the standard business rules for the data entry and reporting to processing
payments and bank transactions.
e. The accounts receivable and payable functions include:
i. Internet Integration
ii. Document Management
iii. EDI processing
iv. Automatic Integration with Cash Management
f. The module also provides, enterprise wide credit management with workflow
integration, payment automation with EFT and check processing etc.

III. ASSET ACCOUNTING

a. This module manages the company’s fixed asset. It provides the detailed
information on asset related transactions.
b. The functions performed by this module are:
i. Provides with depreciation charge.
ii. Support throughout the complete lifecycle of the asset.
iii. Management of capital assets.
iv. Integration with Plant Maintenance for management of
machinery and equipment.
c. Fixed Assets: It does not change. Eg: Land & Building
d. Current Assets: It keeps on changing. Eg: Cash

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2.CONTROLLING:
a) This module gathers the functions required for effective internal cost accounting.
b) It offers a versatile information system, with standard reports and helps in analysis.

I. OVERHEAD COST CONTROLLING:-

a) Many organizations experience a significant increase in the percentage of indirect
costs, which cannot be directly assigned to either the products manufactured or to the
services rendered.
b) While cost monitoring and optimization may be quite advanced in production areas;
transparency is often lacking in overhead cost areas.
c) The over head cost controlling system focuses on monitoring and the allocation of
overheads.

II. COST CENTER ACCOUNTING:

a) It analyses where the overheads have occurred in the organization.
b) The cost is allocated to various sub areas of the organization and the techniques are
followed so that we can come to know where the expenses have been incurred.

III. OVERHEAD ORDERS:

a) This system collects and analyses costs and also checks and monitors the budget that
has been assigned.

V. PRODUCT COST CONTROLLING:

a) It determines the cost arising from manufacturing a product or providing a service.

VI. COST OBJECT CONTROLLING:

a) This module helps in monitoring the manufacturing orders.

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 b) Integration with the logistics component results in a logistical quantity flow, that
provides instant information on actual cost object costs, allowing ongoing costing
calculations at any time.
c) Follow up calculations determine and analyse the variances between actual
manufacturing cost, and the plan cost resulting from product cost planning.

VII. PROFITABILITY ANALYSIS:

a) Profitability analysis subsystem examines the sources of returns.
b) Information from profitability analysis, frames important decisions in areas such as
determining prices, selecting customers, developing conditions and choosing
distribution channels.

3. INVESTMENT MANAGEMENT:
a) Investment management process starts from the planning of an organization till the
settlement of an organization.
b) The investment programs are carried out in each and every department and it also tells
us the up to date information about funds, plant cost and actual cost from external and
internal activities.
c) The investment program allows to distribute budgets which help us to monitor the
budget and avoid over run.
d) It also helps us to manage and plan capital projects.
e) The investment measures that need to be monitored are done from time to time
according to the internal order.

4.TREASURY MODULE
a) The organization can gain a significant competitive advantage by efficiently managing
the short term, medium term and long term payment flows and managing the risk.
b) All these operating divisions are linked so that the financial transactions can be
planned and these positions in treasury have a significant impact on the organizations
success.

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 c) It also helps in management and control of cash flow.
d) Manages the risk among all the division of organization.
e) The treasury component provides us with the following sub components:
1. Cash Management
2. Treasury Management
3. Market Risk Management
4. Funds Management

2) SALES AND DISTRIBUTION MODULE

With today’s business environment characterized by growing competition shrinking
cycle times and the accelerating pace of technological innovation companies are increasingly
being forced to streamline business processes.
Here, increased efficiency in sales and distribution is a key factor to insure that
companies retain a competitive edge and improve both profit margins and customer service.

The following are the sales related business transactions:

 Sales queries, such as inquiries and quotations
 Sales orders
 Outline agreements, such as contracts and scheduling agreements
 Delivery/Shipment
 Invoicing/Billing
 After sales support

During sales order processing, the following basic functions are carried out:
 Inquiry handling
 Quotation preparation and processing
 Contracts and contract management(order management)
 Monitoring the sales transactions
 Checking for availability
 Transferring requirements to material planning(MRP)Scheduling the delivery

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  Calculating pricing and taxes
 Checking credit limits
 Invoicing/Billing
 Creating printed or electronically transmitted documents(confirmations and so on)

The sales and distribution module very actively interacts with the material management
and financial accounting modules for delivery and billing.
Typically, a sales and distribution module will contain the following sub systems:
 Master data management
 Order management
 Warehouse management
 Shipping
 Billing
 Pricing
 Sales support
 Transportation
 Foreign trade

MASTER DATA MANAGEMENT

1. Every company will have products, customers and will require raw materials and will
have suppliers.
2. The task of the Master data management module is to keep information about all these
entities, so that these can be made available to the decision makers and also for the
automatic generation of reports, contracts, invoices and so on.
3. Automatic sales processing, using ERP system, requires that the master data has been
stored in the system.
4. In addition to sales and distribution, other departments of the company, such as
accounting or materials management access the master data.

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 Inquiry

Quotation
Sales
Contracts

Order

Shipping Delivery
MATERIALS
MANAGEMENT
Invoice
Billing

FINANCIAL ACCOUNTING

THE SALES AND DISTRIBUTION MODULE.

ORDER MANAGEMENT
This module usually includes sales order management and purchase order
management and supports the entire sales and purchase processes from start to finish.

i. Sales order management.

1. Applications in sales order management represents a company’s most important point of
contact with the customer.
2. These applications allow a company to manage sales operations quickly and efficiently
and provide comprehensive solutions for the management of quotes, orders, contracts, prices,
and customer discounts.

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 Credit checking Inventory availability
Pricing and distribution Checking
Discounting
Margin Analysis Inventory commitment

Materials Management
Sales
Production Planning
Quotations/Contracts
Warehouse Management Order
Invoicing
EDI/Internet
Entry

Change order Order history

Management Statistics
Delivery Status
Monitoring
Returns handling
SALES ORDER MANAGEMENT.

ii. Purchase order management

1. Purchase order management is increasingly essential in today’s even more competitive
business environment because it enables a company to make the correct purchase
decisions about quality and price, where quality refers to supply lead-time as well as to
the (to be purchased) product itself.
2. Purchase order management includes online requisitioning, centralized contract
management, just in time schedules and vendor management.
Purchase order Analysis enables historical as well as statistical data to be used to
assist in the analysis of purchase activities.

iii. WAREHOUSE MANAGEMENT

This module provides real time information about inventory levels across the
enterprise and tools to manage the daily operational needs of single-site or multiple-site four
wall warehouses.

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Components of a good warehouse management application include the following:
 Inventory Planning: Comprises of planned inventory movements, so that customers
receive right order in the right quantity at the right time.
 Inventory handling: Allows for monitoring of all warehouse order scenarios such as
the receipt, issue and transfer of inventory.
 Intelligent location assignment: Used to create intelligent storage put away lists.
 Inventory reporting: This function permits full visibility of inventory at single or
multiple sites.
 Inventory analysis: This module enables the analysis of information that result from
warehousing activities and the use of feedback in process optimization.
 Lot control: This facility offers lot tracking and tracing, so that a company can trace
all the raw materials and the finished goods that its products require.
 Distribution data collection: This is an essential element in paperless warehousing that
provides the communication link between storage and shipping systems and
warehousing equipment like bar coding scanners.
SHIPPING
The shipping module supports the following functions:
 Monitoring dates of orders due for delivery
 Creating and processing deliveries
 Planning and monitoring work lists for shipping activities
 Monitoring material availability and processing outstanding orders
 Picking(can be linked to the warehouse management system)
 Packing deliveries
 Information support for transportation planning.
 Support for foreign trade requirements
 Printing and sending shipping output
 Data update in goods issue.
BILLING

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 A business transaction is completed for sales and distribution once it has been billed.
The ERP systems support billing functions like issue of invoices on the basic of goods and
services, issuing f debit and credit memos.
PRICING
1. The term pricing is used broadly to describe the calculation
of prices (for external use by customers or vendors) and costs (for internal purposes
such as cost accounting).
2. The pricing module keeps the information about the prices of the various items, the
details about the quantity discounts, the discounts to the different customer categories
and so on and enables the organization to generate documents like quotations, delivery
notes, invoices and so on.
3. Also, since this information is available to all the sales people, they can make better
decisions thus improving the sales performance.
SALES SUPPORT
1. The sales support component helps the sales and marketing department to support your
existing customers and, at the same time, to develop new business.
2. Sales support provides an environment where all sales personnel-both the field sales
people and the staff in the sales office-can contribute to and access valuable information
about customers, sales prospects, competitors and their products and contact people.
3. The sales support component functions, both as a source of information for all other
areas of sales and distribution and as an initiating force for acquiring business.
TRANSPORTATION
1. Transportation is an essential element of the logistics chain.
2. It effects both inward and outward movement of goods.
3. Effective transportation planning is required to ensure that shipments are dispatched
without delay and that they arrive on schedule.
4. Transportation costs play a considerable role in determining the price of a product.
5. It is important that these transportation costs are kept to a minimum in order to keep
the price of the product competitive.
FOREIGN TRADE

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 1. The entire logistics chain, from the import of raw materials, finished and unfinished
goods, to the sale of goods and the transfer of data to materials management and
financial accounts, is significantly influenced by foreign trade activities.
2. These main tasks in foreign trade processing can be carried out using the foreign trade
system.
3) HUMAN RESOURCE MODULE
Human resource management is an essential factor of any successful business.
The various subsystems under HR module are:

 Personnel management: (HR master data, Personnel administration, information

systems, recruitment, travel management, benefits administration, salary
administration)
 Organizational management: (Organizational structure, staffing, schedules, job
descriptions, planning scenarios, personnel cost planning)
 Payroll Accounting: (Gross/net accounting, history function dialogue capability, multi
currency capability, international solutions)
 Time management: (Shift planning, work schedules, time recording, absence
determination)
 Personnel development: Career and succession planning, profile comparisons,
qualifications assessments, additional training determination. Training and event
management.)
PERSONNEL MANAGEMENT
Personnel management includes numerous software components, which allow you to
deal with human resources tasks more quickly, accurately and efficiently. You can use these
components not only as part of the company wide ERP solution but also as stand alone
systems.
i. Personnel Administration
Information is no longer owned by specific departments, but is shared by multiple
entities across an organization. This eliminates duplicate entries reduces the chance for error
and improves data accuracy.

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ii. .Employee master data
1. Human resource module has a centralized database with integration to multiple
components for processing employee information.
2. The system provides tools to save time and help you tailor the system to fit your
needs.
3. The HR module contains features for storing any desired information about your
employees.
4. Most systems have the facility to scan the original documents for optical Storage.
5. The HR Information system displays graphical information such as organization charts
or employee data.
6. The system can produce charts and reports-both standard and customer defined.
iii.Recruitment management
1. This function helps in hiring the right people with the right skills.
2. Reducing the cost of recruiting and hiring new employees is a challenge for the HR
professional, who is responsible for placing people in the right job, at the right time,
and with the right skills and education.
3. These requirements are fulfilled only through effective automation of the entire
recruitment process.
4. The recruitment component is designed to help meet every facet of this challenge.
5. This component includes processes for managing open positions/requisitions,
applicant screening, selection and hiring, correspondence, reporting and cost analysis.
Salary Administration
1. This function helps you in simplifying the process of rewarding your employees.
2. Administration of salaries is an ongoing process within your human resource
department.
3. It is particularly important during the review processes, when your goal is to justify
reward good performance.

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 4. The salary administration module assists you in the salary review process by taking
into account standard salary changes within the company as well as individual
competition exceptions.
PAYROLL ACCOUNTING
1. The payroll accounting system can fulfill the payroll requirements and provide you
with the flexibility to respond to your changing needs.
2. Payroll accounting should address payroll functions from a global point of view.
3. You should be able to centralize your payroll processing, or decentralize the data
based on country or legal entities.
4. Most payroll accounting systems give you the options and capabilities to establish
business rules without modifying the existing payroll.
5. Many systems have the features to remind you when transactions are due for
processing.
6. With payroll accounting, you have the ability to tailor the system to your organization
requirement.
7. With country specific versions of payroll accounting, you can fulfill language,
currency and regulatory requirements.
TIME MANAGEMENT
1. It is a flexible tool designed to handle complicated evaluation rules to fulfill regulatory
requirements and determine overtime and other time related data.
2. The time evaluation component stores your organizations business rules and
automatically validates hours worked and wage types.
i. Shift Planning
1. Shift planning module helps you to plan your workforce requirements quickly and
accurately.
2. You can plan your shifts according to your requirements taking into consideration all
criteria, including absences due to leave or sickness, and employee requests for time
off.
3. Shift planning keeps you informed at all times of any staff excess or deficit.

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 4. Another advantage of shift planning is that it enables you to temporarily assign an
employee or employees to another organizational unit where they are needed, allowing
for a temporary change of cost centre.
PERSONNEL DEVELOPMENT
Effective personnel development planning ensures that the goals of the organization
and the goals of the employee are in harmony. The benefits of such planning include
improvements in employee performance, employee potential, staff quality, working climate
and employee morale.
i. Training and Event Management
1. A good HR system will have scheduled seminars, training courses and business
events.
2. On completion of a training course, appraisal forms can be automatically issued.
3. Appraisals can be carried out for instructors, attendees, business events and training
courses.
4) PLANT MAINTAINENCE MODULE
1. The achievement of world class performance demands delivery of quality products
expeditiously and economically.
2. Organizations simply cannot achieve excellence with unreliable equipment.
3. Machine breakdown and idle time for repair was once an accepted practice. Times
have changed.
4. Today when a machine breaks down, it can shut down the production line and the
customer's entire plant.
5. The Preventive Maintenance module provides an integrated solution for supporting the
operational needs of an enterprise wide system.
6. The Plant maintenance module includes an entire family of product covering all
aspects of plant/ equipment maintenance and becomes, integral to the achievement of
process improvement.
7. The major subsystems of a maintenance module are :
1. Preventive Maintenance Control.
2. Equipment Tracking.
3. Component Tracking.

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 4. Plant Maintenance Calibration Tracking.
5. Plant Maintenance Warranty Claims Tracking.
PREVENTIVE MAINTENANCE CONTROL
1. Preventive Maintenance Control provides planning, scheduling and control of
facilities and equipment.
2. Preventive Maintenance Control enables organizations to lower repair costs by
avoiding downtime, machine breakage and process variability.
3. Companies achieve higher machine utilisation and improved machine reliability
and tolerance control, along with higher production yields.

EQUIPMENT TRACKING
1. Equipment is an asset that needs to be monitored and protected.
2. In many situations, equipment maintenance costs constitute the single largest
controllable expenditure of an organization.
3. All facets of plant location history and utilization history are described and tracked.
4. This history includes acquisition and disposition information and associations between
different pieces of equipment to pinpoint operational dependencies.
5. Each piece of equipment is defined by a model and a serial number.
6. All of this information can be used to create equipment specifications, which provide
detailed information for technical specialists working in equipment operations,
maintenance and transportation control.
COMPONENT TRACKING
1. Components are typically subsets of larger equipment and deserve the same amount of
cost controlling scrutiny.
2. Component tracking enables equipments managers to identify components with
chronic repair problems.
3. They can determine whether a repair or replacement should be covered by warranty.
4. Planning component replacements, rather then waiting for components failures to
occur, reduces unscheduled equipment downtime.
5. Component tracking includes repair/exchange history and component service life.

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PLANT MAINTENANCE CALIBRATION TRACKING
Plant Maintenance Calibration Tracking allows organization to leverage their
investment in the Plant maintenance module by providing for the tracking of equipment
calibration in support of ISO9001 requirements.
PLANT MAINTENANCE WARRANTY CLAIMS TRACKING
1. Plant Maintenance Warranty Claims Tracking is an administrative system, designed to
provide control of all items covered by manufacturer and vendor warranties.
2. It enables plant management to recover all of the warranty; reimbursements to which
they are entitled but have not been able to recover in the past.
3. Features include the ability to, establish the type-and length of warranty, for example,
elapsed day, months: mileage stipulation, or operating units.
4. A complete history is performed fur each item covered by the warranty, and
information regarding the warranty service provider is generated.
5) QUALITY MANAGEMENT MODULE
1. The quality management module supports the essential elements of a system.
2. It penetrates all processes within an organization.
3. The task priorities, according to the quality loop, shift from production
(implementation phase) to production planning
and product development (planning phase), to procurement and sales and distribution,
as well as through the entire usage phase.
4. It handles the traditional tasks of quality planning, quality inspection and quality
control.
5. The quality management module’s internal functions do not directly interact with the
data or processes of other modules.
QUALITY MANAGEMENT MODULE – FUNCTIONS:
The quality management module fulfills the following functions:
1. QUALITY PLANNING: Management of basic data for quality planning and
inspection planning, material specifications, etc.
2. QUALITY INSPECTION : Trigger inspections, inspection processing with inspection
plan selection and sample calculation etc.

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 3. QUALITY CONTROL.: Dynamic sample determination on the basis of the quality
level history, quality management information system for inspections and inspection
results and quality notifications, etc.
COMPUTER INTEGRATED QUALITY MANAGEMENT (CIQ)
1. The integration of Quality management in the ERP system provides considerable
advantages because only an integrated system can support all the elements of quality
mgmt system.
2. This integration allows the quality mgmt to influence all processes within a company,
thereby affecting all phases of a products life-cycle.
3. The quality management module is integrated with the master data and processes of
the following applications:
i. MATERIAL MANAGEMENT: Purchasing, Inventory mgmt, Warehouse mgmt,
Material Requirement Planning.
ii. PRODUCTION: Work scheduling, shop floor control.
iii. SALES AND DISTRIBUTION: Delivery, creation of quality certificates.
4. The quality management module supports the exchange of data with the other
applications in order to prevent related data from being recorded and stored
redundantly.
5. For example, the information provided by a goods receipt posting relating to the
material, vendor and lot size is automatically transferred to the inspection lot data
record when an inspection is triggered.
6)MANUFACTURING MODULE:
1. A good manufacturing system should provide for multi mode manufacturing
applications that encompass full integration of resource management.
2. These manufacturing applications should allow an easier exchange of information
throughout the entire global enterprise, or at a single site within a company.
3. The manufacturing module should enable an enterprise to marry technology with
business processes to create an integrated solution.
4. It must provide the information base upon which the entire operation should be run.

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 HOW DOES MANUFACTURING RESPOND TO THE CUSTOMER?
1. The manufactures must respond quickly and effectively to customer demands.
2. While agility is desirable, agility without an effective enterprise manufacturing system
results in speed without purpose.
3. Effective execution provides short cycle tem, quality assurance, continuous
improvement &quick response to process variability.
4. All three elements contribute to a management decision to install an enterprise-wide
manufacturing management system.

5. Some of the major subsystem of the manufacturing module is:

I. Materials and capacity planning
II. Quality management
III. Tooling
IV. Serialization/lot control

MATERIAL AND CAPACITY PLANNING

1. The planning systems of ERP packages are designed to provide the responsiveness
your company needs to meet those customer requirements.
2. With these systems, planners can stimulate alternative plans; gaining the information
they need to determine which parts and assemblies to make, which to buy and when to
manufacture or purchase.
3. Material plans can be developed from a wide variety of sources that include the master
schedule, sales forecasts and dependant and independent demand.
4. The company can customize planning processes because input is described by system
parameters that are easily changed.
5. To reduce effort and accelerate communication across the supply chain, planned
orders can be confirmed and converted automatically (or manually) into production
and purchase orders.
6. Graphical reporting makes potential material and capacity problems easy to identify.

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 7. Depending on the requirements of the company’s product and processes, production
can be scheduled using work orders or repetitive build schedules.
8. Using the shop floor control facility, the company has the visibility necessary for
managing lead-times and for carefully controlling the amount of work-in-process and
the timely release of production orders.

QUALITY MANAGEMENT
1. All manufacturing modules track quality control activities. These systems allow a
wide variety of characteristics and parameters to be specified in a test and inspection
operations and maintain an extensive history to improve product quality and identify
recurring problems.
2. The quality management systems usually support the bench marking on optimal
product design, process engineering and quality assurance data by all functional
departments within the manufacturing enterprise thereby facilitating definitions of
repeatable processes, route cause analysis and a continuous improvement of
manufacturing methods.
3. This documentation supports the job functions of quality assurance and production
managers in validating the manufacturer’s conformance to ISO 9000, good
manufacturing practices GMP world wide, MIL-Q-9858 in the United States and a
variety specific industry standards of quality assurance.
4. Many systems not only provide high volumes repetitive manufacturing functionality,
but also provide for the transition to rate based production by allowing the use of
repetitive scheduling, even for the products are not rate based.
5. This allows a production facility to transition products from the discreet manufacture
into a JIT/repetitive focus. For eg. When the demand pattern for an item begins to
stabilize and shown a repeatable/ predictable pattern, then a productive schedule can
be initiative even though the item may not be designated as rate based.
6. Overtime, as the items demand pattern grows, the item can be switched to full rate
based production scheduling.

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 7. This transition capability enables production facility to adopt process reengineering,
set up production, single minute exchange of die(SMED)programs employee
empowerment work teams etc. with the confidence of knowing that the planning and
control system will effectively support the efforts.
8. GIT/repetitive includes strong analytic capabilities.

Serialization / Lot Control

1. The lot control system provides for the pre-allocation of lot numbers.
2. This Feature is available throughout the product offerings and includes MRP, shop
floor control, order processing and JIT.

Tooling
1. For many manufacturers, ensuring that proper tooling is available is just as critical to
production schedules as the availability of material.
2. The ERP system extends capacity and inventory management to include these
valuable resources.
3. These systems help to ensure that tools and materials arrive together at scheduled
operations by storing tools in inventory and planning and allocating the required tools
as part of the production order.

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