Integral Logistics Management — Operations Management and Supply Chain Management Within and Across Companies

9.2.1 Classical MRP II Software / ERP Software

Intended learning outcomes: Present SAP R/3 as a typical example of a classical, generally applicable ERP software package.

Classical software was developed in mechanical engineering and automobile construction companies, with discrete manufacturing, batch production, and production with order repeti­tion as characteristic, and with high utilization of capacity as the entrepreneurial objective. Extension of this functionality resulted in what we now know as MRP II software or ERP software. This type of software essentially supports the concept described in Chapter 5.

The first package in this category was Copics from IBM. Other ex­amples are Manufac­tu­ring from Oracle, J.D. Edwards, Infor XA (in the past Mapics from IBM) and. The actual market leader is SAP, with its R/3, mySAP™ soft­ware and the follow-up products. Software houses like SAP offer a compre­hen­sive and integrated package that supports all the business proces­ses within a company. Figure contains an overview of the R/3 structure.

Fig.         SAP R/3 as a typical example of a classical, generally applicable ERP software package.

The abbreviations that designate the modules, which are oriented toward specific functions within a company, consist of two letters: SD for sales and distribution, MM for procurement and stochastic materials management, and PP for deterministic materials management, scheduling, and capacity manage­ment. The modules contain submodules for the three temporal ranges (long, medium, and short term) and for the individual tasks. The functional separation between MM and PP empha­sizes the distribution of users between trade and produc­tion. It also betrays the fact that R/3 started out as an MRP II package.

SAP developed R/3 with a view to covering and integrating every function within a company. The finance and accoun­ting functions have always been the driving force behind the development of ERP software, since detailed job-order costing requires efficient administration of all types of orders within the company. This simple aspect of corporate policy explains why the emphasis always has to be placed on certain areas when developing ERP software. The decision will ultimately depend on whether the finance function can be integrated, rather than on the quality of support provided for planning & control.

SAP R/3 can be customized to take account of different values for the features relating to planning & control described in Section 4.4. R/3 specialists configure the software by setting a large number of parameters. It is not enough just to have a knowledge of logistics, planning & control, and the actual company, which means that R/3 is rather suitable for medium-sized and large companies. Since the software was developed from the MRP II concept, the limitations of usability indicated in Figure also apply for this kind of ERP software.

The Lean/JIT concept and all the techniques for production with frequent order repetition are oriented toward the needs of manual organizations. In the best-case scenario, such organizations can manage without software altogether. ERP software can be introduced when the volume of data becomes too large, e.g., a package on a PC with a simplified master data management system. This will enable the number of Kanban cards to be calculated, for example. It could also be an ERP software package extended to include this type of function.

In contrast, the variant-oriented and processor-oriented concepts require adequate soft­ware, as discussed in the rest of this chapter. Together with the software for the MRP II concept, such concepts also provide fundamental typologies for ERP software for planning & control.

Course section 9.1: Subsections and their intended learning outcomes