What is SAP? Why do we need ERP? Beginner Tutorial

What is SAP? Why do we need ERP? Beginner Tutorial


The very basic [question] is why Enterprise resource planning? Also called erp is required to answer let’s examine this typical business scenario A client approaches the sales Team to buy a particular product The sales team approaches the inventory Department to Check the availability of the product in this case the product is out of stock the sales team approaches the production planning Department to manufacture the product the production planning team checks with the inventory department for availability of raw material If raw material is not available within the inventory the production planning team buys the raw material from the vendors Then production planning forwards the raw materials to the shop floor execution for actual production Once ready the [shop] floor team forwards the goods to the sales team who in turn deliver it to the client the sales Team updates the finance Department with revenue generated [by] the sale of the product The production planning team updates the finance department with payments to be made to different vendors for raw materials All departments approach Hr. For any human resource related issue That is the typical business process of any manufacturing company some key inferences one could derive from the scenario would be a Typical Enterprise has many departments or business units These departments or business units continuously communicate and exchange data with each other the success of any organization lies in its effective communication and Data exchange Within these departments as well as associated third parties such as vendors outsources and customers Based on the Manners in Which communication and Data exchange is managed Enterprise software systems can be broadly classified as decentralized systems Or centralized systems which are also called [erp], let’s look at decentralized systems first in a company with a decentralized system of Data Management data Is maintained locally at the individual departments? Departments do not have access to information or data of other departments to identify the problems arising from Decentralized Enterprise management systems let’s look at the same business process again the customer approaches the sales team for a product But this time he needs the product on an urgent basis The sales team do not have real-time information access to the products inventory So they approach the inventory Department to check the availability [of] the product This process takes time and the customer chooses another vendor leading to loss of Revenue and customer dissatisfaction Now suppose the product is out of stock and the sales team approaches the production planning team to manufacture the product for future use The production planning team checks the availability of the raw materials required Raw Material information is separately stored by production planning as well as the inventory department Thus data maintenance cost goes up a particular raw material Required to manufacture the product is available in the inventory but according to the database of [the] production planning team the raw material is out of stock, so They go ahead and buy the raw material Thus material as well as inventory costs go up Once the raw material is available the shop floor department suddenly realizes. They are short of workers They approach the hr. Who in turn hire temporary employees and higher than market rates thus labor cost increases The production planning department fails to update the Finance Department on the materials they have purchased the Finance Department Defaults the payment deadline set by the vendor causing the company loss of its reputation and even inventing a possible legal action These are just a few of the many problems with decentralized systems Some major problems with the decentralized system are Numerous disparate information systems that are developed individually over time and are difficult to maintain Integrating the Data is time and money consuming inconsistencies and duplication of data lack of timely information leads to customer dissatisfaction loss of revenue and reputation High inventory Material and human resource costs These are just some of the major drawbacks [for] which we need a solution Well the solution lies in Centralized systems that is e rp in a company with a centralized system of information and Data Management data Is maintained at a central location and is shared with various departments? Departments have access to information or data of other departments Let’s look at the same business process again to understand how a centralized enterprise system helps overcome problems posed by a decentralized Enterprise system In this case all departments update a central information system When a customer approaches the sales team to buy a product on an urgent basis the sales team has real-time information access to the products in inventory Which is updated by the inventory department in the centralized system? The sales team responds on time leading to increased revenue and customer delight In case manufacturing is required the sales team updates the centralized database Production planning Department is auto updated by the centralized database for requirements The production planning team checks the availability of the raw materials required Via central database Which is updated by the inventory department? Thus data duplication is avoided and accurate Data is made available The shop floor team updates their manpower status regularly in the central database which can be accessed by the Hr. Department In case of a shortage of Workforce the Hr Team starts recruitment process with considerable lead time to hire a suitable candidate at market price thus labor costs go down Vendors can directly submit their invoices to the centralized Enterprise system Which can be accessed by the finance department? Thus payments are made on time and possible legal actions are avoided The key benefits of the centralized system are it eliminates the duplication? Discontinuity and Redundancy in Data it provides information across departments in real time it Provides control over various business processes it increases productivity provides better inventory Management promotes quality reduces material cost allows for effective human resources management and reduces overhead while boosting profits better customer interaction increased throughput and Improved customer service Hence a centralized Enterprise management system is required Si p is a centralized enterprise management system also known as Enterprise resource planning

Danny Hutson

91 thoughts on “What is SAP? Why do we need ERP? Beginner Tutorial

  1. Come on that's bullshit regarding decentralized management. Just because it's decentralized doesn't mean it's slow or ineffective @microservices

  2. ERP Software has become quintessential for businesses, whether it is a large enterprise or a small business. I would recommend ebizframe ERP Software, which comes with shortest implementation time.

  3. The information is very useful but there are some disadvantages to ERP system. such as Sales directly access the shared Information and know about raw material and labor cost which is completely unnecessary. production team can access the revenue made by the sales team and accumulate the profit and loss, this ERP systems are sometimes not good with company's secrets.

  4. I worked in a company where SAP was the beginning and the end of the selling process when I entered a purchase order. Watching this video, it makes doublefold sense… by the way, I used to work in a resin manufacturing company.. I've been enlightened…

  5. I've worked in distribution and worked with manufacturers for many many years. I could not count the horror stories I've heard from my counterparts in other companies who integrated SAP and damn near went belly up. One of our best and largest vendors saw their service level plunge from the high nineties to the low seventies and they've been struggling for months to bring it back up to an acceptable level.

  6. But there is another scenario when Non ERP systems are also connected with each other and sharing data with each other.

  7. I guess the 'decentralized sucks' argument doesn't stand anymore with blockchains… exactly a decentralized system that solves all the abovementioned problems.

  8. I love it when someone explains SAP in 10 minutes or less…goodness. This is an oversimplified overview. I would like to point out that in an SAP system, production doesn’t directly interface with vendors. There is also no shop floor execution, unless you have an MES system, which SAP doesn’t really have an offering. You can also have an ERP without production, but you will need purchasing in your overview. I’m not clear why production and shop floor are separated. There is so much more to this, that I literally am not clear where to start. Keep in mind, sales is not the only driver of demand, you do not need production in all systems, there is also controlling and profitability (finance is so much more than a bubble). I’d just wrap this in a big disclaimer bow.

  9. SAOP is the worst ERP I have ever used. Very unintuitive, very slow, full of icons that are not applicable for the user and located in places you never expect them to be.

  10. Production floor will not dispatch the finished goods directly to sales dept. F/G will be picked up by the inventory and then inventory will deliver the F/G to sales. Wrong flow shown here in this video

  11. Garbage, that it is.
    The day after turing invented the computer, every beginner programmer though how to organize enterprices with software.
    Nothing interesting here.

  12. we have SAP and we still can't get product out the door… not sure how this helped too much but maybe it was worse before who knows! 😀

  13. SAP is a heavy legacy of the past. Products are very backward. Many firms suffered huge losses from the introduction of this system.

    This system has a very powerful advertising campaign. And before you decide on its purchase and implementation, you need to very well examine independent sources.

    I would not recommend this system to anyone.

  14. Solution? Centralized Data management.
    Problem? Single point of failure.

    Honestly I don't see how ERP or SAP is anything else than automation of manufacturing management processes. There are no new paradigms or ideas brought within, yet this video tries to impress us that there is some revelation included.

    Video tackles artificial issues brought into picture out of nowhere. Where did the delay to access the data come from in decentralised system compared to previous situation? Are you telling me that accessing the Inventory Data by Sales department in decentralised system is taking so long that customer has time to change his mind? Are we talking about days or what?

    This nothing more than dishonest ad mixed with tech babble.

  15. Run time minute ~1:45

    The success of any organization lie's in effective communication and data exchange within the departments/ BU as well as associated Third Party

    Should be

    The success of any organization lies in effective communication and data exchange within the departments/ BU as well as associated Third Party

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