It online Exam

6. ERP


Lesson No. 6 – ERP



Important Statements are highlighted with yellow/blue background & terms are underlined that can come in Objective questions - Fillups, True or False, Multiple Choice Questions..

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Short Question Answers

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Answer the following

1.   Give any four benefits of ERP system -  Page  105 - 106

2.   List down different modules of ERP system. – Page No. 101-102 (only names)

3.   Define Enterprise and Resource.   – Page No. 99 - 100

4.   Explain any 2 ERP related technologies.  -  Page No. 102-103-104 (two points per technology)

5.   What is Planning?  - Page No. 100


Lesson Summary for Objective Questions

Information Technology and its related technologies can be used for planning and organizing resources and information of an enterprise.

Enterprise – An enterprise is a group of people and other resources working together for a common goal.

An enterprise acts as a single entity.

An Enterprise consists of sections: manufacturing/production, planning, sales, purchase, distribution.

Each department is working to achieve the objective which is set for the enterprise.

Resource Types like men, material, money and machine

Planning – helps to improve future performance, by establishing objectives and selecting a course of action in the organization.


Concept of Enterprise Resource Planning:

The ERP system often integrates accounts payables, stock control systems, order monitoring systems and customer database into one system.

An enterprise can be considered as a system and all its departments as its sub systems.

Information about the entire enterprise can be stored in a centralized database.

ERP replaces the old stand-alone computer systems in each area of an enterprise.

The ERP system helps the management in making the planning process more productive and efficient.


ERP Functional Units/Modules :


a)     Financial module – It collect financial data from various functional departments and generates financial reports – balance sheets, general ledger, trial balance.

Financial Module also includes financial accounting, investment management, enterprise controlling and treasury.


b)    Manufacturing module – It contains business rules to manage the entire production process/planning methods.


c)     Production Planning module – It is used for optimizing the utilization of available resources and helps the organization to plan their production.


d)    HR module – It maintains updated and complete employee database including personal information, salary details, attendance, performance, promotion of all employees in an enterprise.


e)     Inventory Control Module – It convers processes of maintaining the level of stock in the warehouse.


f)      Purchasing module – It helps for generating purchase order evaluating the supplier, and billing. Purchasing module is closely connected with the inventory, finance and production planning module.


g)     Marketing module  - It is used for monitoring and tracking customer orders, increasing customer satisfaction and for eliminating credit risks.



h)    Sales and distribution module – It helps for tracking enquiries, order placement, order scheduling, dispatching and invoicing.

Sales and distribution module is closely integrated with the E-commerce website of the organization.


i)       Quality management module – It is used for managing the quality of the product.

The quality management module fulfills the following functions : Quality planning, Quality inspection and Quality Control.


ERP and related technologies:


1.       Product Life Cycle Management (PLM) – It is the process of managing the entire life cycle of a product. PLM is used for determining the life span of a product.

PLM consists of four stages : - Introduction, Growth, Maturity, Decline


2.       Management Information System (MIS)  

- MIS has three components – Management, Information and System.

- MIS collects relevant data from inside and outside an enterprise.

- MIS has the capability to generate reports as and when the user demands it.

- Management is the end user of the data.


3.       Supply Chain Management (SCM)

It consists of all the activities associated with moving goods from the supplier to the customer.

SCM begins with collecting raw materials and ends with receiving the goods by the consumer.


4.       Customer Relationship Management (CRM)

It is a term applied to processes implemented by a company to handle its contact with its customers.

CRM covers methods and technologies used by companies to manage their relationships with clients.

It includes the capture, storage and analysis of customer information.


5.       Decision Support System (DSS)

DSS are interactive, computer-based systems that aid users in judgement and choice activities.

It is a computer program application that analyses business data and presents it so that users can make business decisions more easily.

DSS needs a strong database management system to provide the support in decision making.


ERP and Internet

The communication between the server where an ERP system is installed and many clients (End-user PC) is done through the Internet.

ERP suites run in the cloud as SaaS (Software as a Service)

ERP runs on a company’s data center.


Benefits of ERP

a)     Improved resource utilization

b)     Better customer satisfaction

c)     Provides accurate information

d)     Decision making capability

e)     Increased flexibility

f)       Information Integrity



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