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ERP Market Overview

Enterprise resource planning (ERP) is a business management software system that many enterprises have adapted to better manage the business by automating and connecting different business functions across departments within a company. An ERP system helps employees to do their jobs more efficiently and effectively by breaking down the walls between different departments. It allows employees to access real time and accurate information to make better business decisions. Ultimately, an ERP system could help a business to improve its business insight, reduce operation cost, and enhance information sharing within the company.

ERP system is widely used across different industries such as manufacturing, healthcare, retail, government, and others. There isn’t specific information on the number of companies that are currently using ERP system in the US, however, research conducted by SAP had shown that 75% of the worldwide financial transactions touch an SAP ERP system in 2015. There are various ERP industry research reports showing that the ERP market is expected to reach $41.69 billion by 2020. The worldwide ERP software market has been growing $1 billion every year since 2014.

Some of the popular ERP vendors include SAP, Oracle, Microsoft, Epicor, and Infor. Among all the ERP vendors, SAP has the largest market share of $6.1 Billion in 2013, Oracle is second with $3.1 Billion 2013. Over 50% of companies that are currently implementing new ERP systems to replace out dated ERP software. 30% of the companies are implementing ERP systems to replace legacy systems, and the rest of 20% are new to ERP system. All the companies that are interested in purchasing a ERP system hope to improve integration.

Over the years, large ERP vendors such as Oracle and ERP have been targeting large enterprises with high rates. In the recent five years, with the rising demand of ERP systems from medium and small companies, more and more ERP vendors start to offer web-based ERP system at lower rates. The web-based ERP system is a more affordable option for small businesses. Customization is the new trend in the ERP market. Research has shown that 93% of the organization demanded customization for their ERP system in the last 5 years.

 

Sources:

https://www.quora.com/What-are-some-examples-of-famous-companies-using-ERP-software

http://www.softwareadvice.com/resources/erp-buyer-report-2015/

http://go.panorama-consulting.com/rs/panoramaconsulting/images/2016-ERP-Report.pdf

http://panorama-consulting.com/key-findings-from-the-2015-erp-report/

https://www.oracle.com/applications/erp/what-is-erp.html

https://www.alliedmarketresearch.com/ERP-market

http://www.netsuite.com/portal/resource/articles/erp/what-is-erp.shtml

https://www.forbes.com/sites/louiscolumbus/2014/05/12/gartners-erp-market-share-update-shows-the-future-of-cloud-erp-is-now/#33f5cc461fae

Audi Hungaria’s Expansion and Improvement

Audi Hungaria Motor Kft. was established in 1993 as one of several engine suppliers for the VW Group. In the short span since its founding, Audi Hungaria’s daily engine production has grown from 100 to more than 6,500 and its production expanded to assembly popular cars. These make Audi Hungaria the center of VW group global supply chain and one of fourth largest engine plants in the world.

The pressure to coordinate its engine production with the production needs of the business units increased. This leads to the failure to provide a unit with needed parts and results in a costly and disruptive production shutdown in as little as two days. Moreover, there were more transactions coming from more sources. Its systems can’t handle them.

Audi Hungaria’s existing ERP system cannot meet the company’s new requirements. To solve the problems, it redesigned its ERP system to meet the rigorous demand in VW group.

  • Automatie tracking inbound and outbound delivery.
  • Integration of forecasting, engine production planning, and MRP in real-time
  • Streamline planning by VW group supplier portal. They collaborated on key planning parameters such as data and volumes.

  • Automatte routing, review, and approval fo purchase requisitions and invoice by implementing imaging and document management technology

    reference: ftp://ftp.software.ibm.com/software/solutions/pdfs/AHMFinal10-28.pdf

reference: http://blog.caranddriver.com/wp-content/uploads/2010/11/ng2n4t0y-626x382.jpg
reference: http://blog.caranddriver.com/wp-content/uploads/2010/11/ng2n4t0y-626×382.jpg

“Cracking” the bullwhip effect

Last week we’ve discussed the procurement process in detail and how a vendor managed inventory model would shape an ERP system. One point I’d like to go in a bit more detail is about the vendor managed inventory (VMI) model when it comes to stock management. This model is effective because it gives suppliers a lot of information about how their products are selling and thus be able to coordinate their orders and shipments accordingly.

In supply chains, particularly forecast driven supply chains, one of the hardest phenomenon to control is the bullwhip effect. This happens when small changes in end customer demand causes larger quantities in order placed as it moves upstream in the supply chain. Each participant along the supply chain reacts to the signals from downstream by ordering larger quantities to build up safety stock in order to protect against stock outs. I should highlight that actual end customer demand is hidden to the upstream participants.

bullwhip

When suppliers have access end customer demand information, they can effectively reduce unnecessary inventory, which leads to lower cost all around. In addition, it allows the supplier to develop much better forecasts for future demand of a certain product.

So how is ERP involved? While researching this online, I’ve found that there are actually several ways to implement this process. For instance, SAP offers three different ways:

  • Standard, non-consigned (customer sends stock/sales data from its ERP system to the vendor).
  • Consigned (vendor maintains and manages its inventory at the customer’s site and handles replenishment planning on behalf of the customer).
  • Parallel consigned and non-consigned (for organizations handling both types at the same time).

The key takeaway to successfully using VMI is that ERP systems allow the data that is transmitted between customer and supplier to be accurate, complete, and in real-time. This lets vendors make informed decisions that lead to reduced costs, better customer service, and improved forecasting.

Image Source

OLTP & OLAP: A small clarification

This post is about curious thoughts that I had during one of my internship when I had to implement an Oracle’s Hyperion Reporting software. I understood by that time that I was using an OLAP environment.

Wait, what is OLAP again? The concept surfaced  again the last week. During the previous sessions, we explored the accounting transaction concept within an ERP system. We highlighted the 3 different types of data:

1. Master data
2. Organizational data
3. Transaction data

The ERP generates a huge volume of these data sets that need to be stored in two different ways, depending on the freshness: “Transaction” data for the current processes and “historical” data for past processes.

  • OnLine Transactional Processing (OLTP) to process the current data needed to fulfill a current business process.
  • OnLine Analytic Processing environment (OLAP) to analyze a huge amount of historical transactions.

OLAP environments needs a lot of processing power to aggregate all the historical data in order to provide the analysts with different “Views” of the overall data. Data are arranged by dimensions and can be modeled by a “Cube”.

what-is-a-cube