1. What is an Enterprise Resource Planning (ERP) system?
→ Integrated Business Management System
An Enterprise Resource Planning (ERP) system is software that helps a
business manage its core activities in one place. These include:
● Accounting
● Inventory
● Sales and Marketing
● Human Resources (HR)
● Customer Management
ERP connects all departments, so data flows easily between them. This improves
efficiency, accuracy, and decision-making across the organization.
2. Describe the lifecycle of ERP implementation.
→ Planning → Selection → Implementation → Operation → Maintenance
3. What are the major challenges in ERP implementation?
→ Cost Overruns, Resistance to Change, Data Migration
Here are the major challenges in ERP implementation (in simple wording):
1. High cost: ERP systems are expensive to buy and set up.
2. Time-consuming: Implementation can take months or even years.
3. Employee resistance: People may not want to change their old work
methods.
4. Data migration issues: Moving old data into the new system can be hard.
5. Lack of training: Users may not know how to use the new system properly.
6. Poor planning: Without clear goals and steps, the project can fail.
7. Customization problems: Too many changes to the system can cause
delays or errors.
4. How does ERP integrate various business processes?
→ Process Integration, Centralized Data, Cross-Functional Visibility
ERP integrates business processes by using a single system that connects all
departments like:
● Finance
● HR
● Sales
● Inventory
● Production
ERP systems connect all departments of a business into one unified system,
allowing them to share information and work together smoothly.
Key Ways ERP Integrates Business Processes:
● Process Integration
→ All departments (like sales, HR, finance, inventory) follow connected
workflows using shared tools.
● Centralized Data
→ One common database stores all company data, removing duplicates and
ensuring accuracy.
● Cross-Functional Visibility
→ Employees and managers can see real-time updates from other
departments, improving coordination and decision-making.
●
When one department enters data (e.g., a sale), it updates for all others in real time.
This helps with faster decisions, less errors, and smooth coordination across the
whole business.
5. Compare features of SCM, CRM, and Financial modules in
ERP.
→ SCM: Logistics | CRM: Customer Data | Finance: Accounting
Feature SCM (Supply Chain CRM (Customer Financial Module
Management) Relationship
Management)
Main Manage flow of Manage customer data Handle accounting
Purpose goods & materials & relationships & financial tasks
Key Inventory, order, Sales, support, Invoices,
Functions shipping, suppliers marketing, customer payments, budgets,
service reports
Users Warehouse, Sales, marketing, Accountants,
logistics, purchasing customer service teams finance managers
teams
Data Stock levels, delivery Customer info, sales Transactions,
Managed dates, vendors history, interactions ledgers, financial
data
Goal Improve product Increase customer Track money,
delivery and cost satisfaction & sales ensure financial
health
6. What are the core features of CRM in ERP?
→ Customer Interaction, Lead Management, Service Automation
7. Describe the importance of SCM module in ERP.
→ Procurement, Inventory Tracking, Supplier Management
The SCM (Supply Chain Management) module in ERP is important
because it helps a business manage the flow of products, from raw materials
to final delivery.
It ensures:
● Right products are available at the right time
● Inventory is well managed (not too much or too little)
● Orders are processed and shipped quickly
● Costs are reduced through better planning
Overall, it improves efficiency, customer satisfaction, and profitability in the
supply chain.
8. How does the Financial module support
decision-making?
→ Accounts, Ledger, Budgeting, Financial Reporting
→ Accounts:
ERP's financial module manages all company accounts like accounts payable
(money to pay) and receivable (money to receive). This helps decision-makers know
current cash positions and outstanding payments, aiding in short-term and long-term
planning.
→ Ledger:
The general ledger in ERP records every financial transaction from all departments.
It keeps data organized and updated in real time. This helps managers view a
complete and accurate financial picture at any time.
→ Budgeting:
ERP allows companies to create and monitor budgets. Decision-makers can
compare actual spending with budgeted values to control costs and plan resources
effectively.
→ Financial Reporting:
ERP systems generate detailed reports like balance sheets, income statements,
and cash flow reports. These reports help top management make informed decisions
about investments, cost-cutting, growth strategies, and compliance.
9. Why align ERP systems with IT architecture?
→ System Compatibility, Scalability, Tech Alignment
Aligning ERP systems with IT architecture is important because it ensures:
1. Smooth integration: ERP works well with other systems (like HR, CRM,
etc.).
2. Better performance: Uses hardware, software, and networks efficiently.
3. Scalability: Easy to upgrade or expand in the future.
4. Data consistency: All systems share the same, accurate data.
5. Lower cost and risk: Avoids duplication and system conflicts.
This alignment helps the business run faster, smarter, and more reliably.
10.Explain product/platform strategies of ERP vendors.
→ Vendor Lock-in, Modular Design, Ecosystem Building
1. Vendor Lock-in:
ERP vendors often design their systems so that once a company starts using them,
it's hard or costly to switch to another vendor.
● This includes using proprietary software, unique data formats, or custom
features.
● It ensures long-term customers but can reduce flexibility for the business.
2. Modular Design:
ERP systems are built in modules (e.g., Finance, HR, Sales).
● Companies can start with a few modules and add more as needed.
● This strategy attracts all business sizes and supports easy scaling.
● It also allows step-by-step implementation, reducing cost and risk.
3. Ecosystem Building:
Vendors build a full ecosystem around their ERP platform.
● Includes app stores, developer tools, training, certified partners, and
integration with third-party tools.
● This creates a community where businesses can find add-ons, support, and
services.
● Example: SAP’s Business Technology Platform or Oracle’s Cloud
Marketplace.
These strategies help ERP vendors increase customer loyalty, flexibility, and
market reach.
11.What factors are considered in ERP vendor selection?
→ Cost, Customization, Vendor Reputation, Support
1. Vendor Lock-in:
ERP vendors often design their systems so that once a company starts using them,
it's hard or costly to switch to another vendor.
● This includes using proprietary software, unique data formats, or custom
features.
● It ensures long-term customers but can reduce flexibility for the business.
2. Modular Design:
ERP systems are built in modules (e.g., Finance, HR, Sales).
● Companies can start with a few modules and add more as needed.
● This strategy attracts all business sizes and supports easy scaling.
● It also allows step-by-step implementation, reducing cost and risk.
3. Ecosystem Building:
Vendors build a full ecosystem around their ERP platform.
● Includes app stores, developer tools, training, certified partners, and
integration with third-party tools.
● This creates a community where businesses can find add-ons, support, and
services.
● Example: SAP’s Business Technology Platform or Oracle’s Cloud
Marketplace.
These strategies help ERP vendors increase customer loyalty, flexibility, and
market reach.
You said:
What factors are considered in ERP vendor selection? → Cost,
Customization, Vendor Reputation, Support
ChatGPT said:
Here’s a simple explanation of key factors in ERP vendor selection based on your
points:
1. Cost:
Total cost includes software, hardware, licenses, training, and maintenance. Choose
a vendor that fits your budget without hidden charges.
2. Customization:
Check if the ERP can be tailored to your specific business needs (workflows, reports,
forms). Too much customization can increase cost and delay.
3. Vendor Reputation:
Look at the vendor’s experience, past clients, market position, and reviews. A trusted
vendor is more likely to deliver a stable and reliable system.
4. Support:
Make sure the vendor provides strong technical support, updates, and training. Good
support ensures the system runs smoothly over time.
12.What is Business Intelligence (BI) in ERP?
→ Dashboards, KPIs, Predictive Analytics
Business Intelligence (BI) in ERP refers to tools and features that help turn ERP
data into useful business insights for better decision-making.
Key BI Features:
→ Dashboards:
Show real-time visual summaries (charts, graphs) of business data, like sales,
revenue, or inventory.
→ KPIs (Key Performance Indicators):
Track important metrics (e.g., profit margin, order delivery time) to measure
business performance.
→ Predictive Analytics:
Uses past data to forecast future trends like sales growth or demand, helping in
planning and strategy.
BI in ERP helps managers make faster, data-driven decisions and improve overall
business performance.
13.Explain the Performance Management module and CPM.
→ Strategic Planning, Performance Metrics, CPM Tools
Performance Management Module and CPM (Corporate Performance
Management)
The Performance Management module in ERP helps a company track and
improve its business goals. It collects data from different departments and shows
how well the company is performing compared to its targets.
Key Functions:
● Goal Setting: Helps define company objectives (e.g. increase sales, reduce
costs).
● Monitoring: Tracks performance through key performance indicators (KPIs).
● Analysis: Provides reports and dashboards to find problems and areas for
improvement.
● Decision Support: Gives data-based suggestions for managers to make
better decisions.
CPM (Corporate Performance Management):
CPM is a broader concept that includes tools and processes to manage the
performance of an organization. It works closely with the performance module and
includes:
● Budgeting and Forecasting
● Financial Planning
● Strategy Management
● Balanced Scorecards
In short:
The performance module shows “how the business is doing,” and CPM helps
“improve how the business runs” by aligning operations with strategic goals.
14.What are analytical capabilities of ERP systems?
→ Real-Time Reports, Trend Analysis, Data-Driven Decisions
15.Discuss the evolution of software in manufacturing
control.
→ Legacy Systems → MRP → ERP → Cloud ERP
Software for manufacturing control has evolved step by step to improve planning,
production, and efficiency in factories.
1. Legacy Systems
→ Early systems were manual or basic software used for separate tasks like
inventory or payroll.
→ No integration between departments.
2. MRP (Material Requirements Planning)
→ Introduced in the 1960s–70s to plan materials based on production schedules.
→ Helped reduce waste and manage raw materials better.
3. MRP II (Manufacturing Resource Planning)
→ Expanded MRP to include other resources like machines and labor.
→ Integrated production planning, scheduling, and financials.
4. ERP (Enterprise Resource Planning)
→ Added more modules like sales, HR, and finance.
→ Provided full business integration with a central database.
5. Cloud ERP & Smart Manufacturing
→ Latest phase includes cloud-based ERP systems with real-time data access.
→ Supports IoT, AI, and automation for smart factories
16.What are the phases in ERP implementation?
→ Pre-Evaluation → Evaluation → Implementation → Go-Live
2. Evaluation and Selection Phase
→ Compare ERP vendors, check features, cost, support, and choose the best-fit
system.
3. Implementation Phase
→ Install the ERP system, customize modules, migrate data, and train users.
4. Design & Customization Phase
3. Project Planning Phase
Testing phase
Data mitigation
Training & change management phase
17.What are common issues in ERP implementation?
→ Training Gaps, Integration Problems, User Resistance
18.Why is Material Requirements Planning (MRP) important?
→ Inventory Control, Scheduling, Demand Forecasting
19. What is the role of architecture and integration in ERP?
→ System Design, Interfaces, Seamless Data Flow
The architecture of an ERP system defines how its components (database,
application, user interface) are structured and how they work together.
Integration ensures that different modules (like HR, Finance, Sales)
communicate and share data smoothly.
20.What is SAP R/3 and its significance in ERP?
→ Modular ERP System, Real-Time Processing, Industry Standard
SAP R/3 is an enterprise resource planning (E RP) software developed by SAP, a
leading German software company. The "R" stands for Real-time data processing,
and "3" refers to its three-tier architecture:
1. Database Layer
2. Application Layer
3. Presentation Layer
Key Features:
● Modular Design: Includes modules like Finance (FI), Sales (SD), Production
(PP), and Human Resources (HR).
● Real-Time Updates: Data is updated instantly across all departments.
● Integration: All business functions are connected and use a shared
database.
Significance in ERP:
● Standard in Industry: Used by large companies globally for business
operations.
● Highly Customizable: Can be adapted to fit various industries.
● Reliable & Scalable: Suitable for both small and large enterprises.
In short: SAP R/3 is a powerful, modular, and real-time ERP system that became a
global standard for managing business processes efficiently.
