ERP MODULES (STUDY OBJECTIVE 4)
Exhibits 15-1 and 15-2 depicted simple overviews of ERP systems. The ERP systems used by today's large organizations are actually more complex and encompass more of the enterprise than the systems depicted in Exhibits 15-1 and 15-2. The top-selling ERP system for large corporations and organizations is SAP. SAP describes its current ERP system as having many modules. Exhibit 15-3 is adapted from information provided on the SAP website.
Exhibit 15-3 SAP® View of ERP Modules
The top-selling ERP system for large corporations and organizations is SAP. SAP describes its current ERP system as having many modules. Exhibit 15-3 is adapted from information provided on the SAP website.
This section will not describe each of these modules in detail, but will focus on those modules most closely tied to accounting.
FINANCIALS
The financials module contains what is normally considered the components of an accounting system. This includes the general ledger, special journals, and subsidiary ledgers for processes such as sales, cash receipts, purchasing, cash disbursements, and the remaining processes discussed in earlier parts of this book.
The difference between a typical accounting software system and the financials module of an ERP system is that the financials module is tightly integrated to the other modules on a real-time basis. This means that as events occur in the organizations, and as soon as the transaction is entered at the source by an employee, the data are updated in records that are akin to subsidiary ledgers, special journals, and the general ledger. Management can see the financial effects of those events immediately. This real-time availability of financial data allows managers to have immediate feedback useful for making operating decisions and managing operating events.
This type of real-time integration did not exist in accounting systems before ERP systems were developed. With the type of real-time feedback available to management in an ERP system, management is in a better position to make strategic and operational decisions necessary to make the organization successful.
HUMAN RESOURCES
This module in an ERP system incorporates all human resource and payroll processes and data. This would include all employee information on processes such as performance review, raises, and current wage and deductions.
PROCUREMENT AND LOGISTICS
Included in this ERP module are all processes and data related to the purchase and movement of materials and finished goods. This module incorporates the purchasing processes described in Chapter 9.
PRODUCT DEVELOPMENT AND MANUFACTURING
The planning, scheduling, and management of production are incorporated into this module. The conversion processes of Chapter 12 are included in this module.
SALES AND SERVICES
All processes involved in taking and filling customer orders are incorporated into this module. The revenue and cash collection processes of Chapter 8 are included in this module.
ANALYTICS
Management must examine feedback from the ERP system to assist in the proper management and control of operations and financial conditions. The ERP system is designed to incorporate all enterprise processes into a single database that can be uploaded to a data warehouse. As described in Chapter 13, data mining and analytical techniques can be employed for managers to gain decision-making insights. The Analytics module in the ERP system incorporates the appropriate data mining and analytical tools to provide reports to management.
SUPPLY CHAIN MANAGEMENT (SCM)
Supply chain management has become a critical aspect of many businesses. SCM is described as follows:
Supply Chain Management encompasses the planning and management of all activities involved in sourcing and procurement, conversion, and all Logistics Management activities. Importantly, it also includes coordination and collaboration with channel partners, which can be suppliers, intermediaries, third party service providers, and customers. In essence, Supply Chain Management integrates supply and demand management within and across companies.2
SCM is the management and control of all materials, funds, and related information in the logistics process, from the acquisition of raw materials to the delivery of finished products to the end user (customer). Processes in the supply chain involve trading processes from a supplier to a business, as well as trading processes between the business and its customers and other intermediaries. Similar to internal processes, the efficiency of trading processes can be improved by the use of ERP systems to initiate, record, store, and report these processes.
ERP systems now include SCM modules. An SCM module represents a module that can assist an organization in supply chain management.