ERP Systems: Production and Materials Management
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What are the objectives of production systems?

  • Create production plan (correct)
  • Acquire raw materials (correct)
  • Schedule equipment, facilities, human resources (correct)
  • Design products (correct)
  • Produce appropriate quantities and expected quality level (correct)
  • All of the above (correct)

    • What are the daily activities that fall under operational-level processes?

  • Purchasing (correct)
  • Receiving (correct)
  • Quality control (correct)
  • Inventory management (correct)
  • All of the above (correct)

    • How are production planning and manufacturing processes supported?

  • Data collection systems (correct)
  • Material management systems (correct)
  • BOM systems (correct)
  • Inventory management systems (correct)
  • Cost accounting systems (correct)
  • All of the above (correct)

    • What are some key processes within material resource planning?

    <p>Identify stock needed</p> Signup and view all the answers

    What does MRP take inputs from?

    <p>Master Production Schedule (MPS)</p> Signup and view all the answers

    What is the definition of BOM?

    <p>The recipe of materials needed to make a product</p> Signup and view all the answers

    What is the definition of lead times?

    <p>The time for the supplier to receive and process the order, and ship it to the manufacturer</p> Signup and view all the answers

    What is the definition of lot sizing?

    <p>Production quantities</p> Signup and view all the answers

    What is the definition of MPS?

    <p>Master Production Schedule</p> Signup and view all the answers

    What is the definition of grossirements?

    <p>Raw materials needed for production</p> Signup and view all the answers

    What is the definition of planned orders?

    <p>Sufficient raw materials for production</p> Signup and view all the answers

    What are some advantages of just-in-time systems?

    <p>Both A and B</p> Signup and view all the answers

    What is capacity planning?

    <p>All of the above</p> Signup and view all the answers

    What are some benefits of ERP systems with regards to production planning and materials management?

    <p>Extends information distribution</p> Signup and view all the answers

    What does MES stand for?

    <p>Manufacturing Execution Systems</p> Signup and view all the answers

    What does APS stand for?

    <p>Advanced Planning &amp; Scheduling</p> Signup and view all the answers

    What is the activity cost driver often used for materials handling in Activity-based costing?

    <p>&quot;number of pallet moves&quot;</p> Signup and view all the answers

    Activity-based budgeting can help anticipate demand on a process, estimate practical capacity, and estimate the quantity of direct materials and direct costs.

    <p>True</p> Signup and view all the answers

    ERP systems can collect nonfinancial measures for use as drivers in Activity-based costing.

    <p>True</p> Signup and view all the answers

    Traditional production systems were known for seamless integration within an organization.

    <p>False</p> Signup and view all the answers

    What are some problems typically associated with traditional production systems?

    <p>Lack of integration between divisions in the organization</p> Signup and view all the answers

    What is one of the major issues with traditional production systems?

    <p>Lack of integration between production and supply chain management</p> Signup and view all the answers

    Which of the following reflects a benefit of just-in-time (JIT) systems?

    <p>Delivers supplies only as needed to minimize storage costs</p> Signup and view all the answers

    In material resource planning (MRP), which factor is crucial for determining safety stock levels?

    <p>Sales forecasts from the MPS</p> Signup and view all the answers

    What does the MPS utilize to form its production schedules?

    <p>Sales forecasts</p> Signup and view all the answers

    Which statement best describes ERP systems in terms of production planning?

    <p>They enhance information distribution to support various manufacturing processes.</p> Signup and view all the answers

    Which role does data collection play in production and materials management systems?

    <p>It provides real-time data for decision-making and process improvement.</p> Signup and view all the answers

    Which of the following is an aspect of capacity planning in production systems?

    <p>Estimation of necessary human resources</p> Signup and view all the answers

    What is a primary goal of manufacturing execution systems (MES)?

    <p>To provide real-time feedback and information communication</p> Signup and view all the answers

    How do eBusiness strategies enhance communication throughout the supply chain?

    <p>By facilitating quick exchanges of information through internet capabilities</p> Signup and view all the answers

    What impact do excess inventories have on an organization?

    <p>They can significantly hamper cash flow and profit margins.</p> Signup and view all the answers

    What is a key benefit of integrating ERP systems in relation to activity cost drivers?

    <p>Increases the availability and reliability of data</p> Signup and view all the answers

    How does activity-based budgeting improve managerial decision making?

    <p>By estimating demand and practical capacity</p> Signup and view all the answers

    Which statement correctly describes a feature of SAP’s R/3 system?

    <p>It links production planning with materials management.</p> Signup and view all the answers

    What primary aspect is limited in traditional production systems?

    <p>Integration within the organization</p> Signup and view all the answers

    What role do nonfinancial measures play in activity-based costing systems?

    <p>They serve as drivers when collected through formal processes.</p> Signup and view all the answers

    Why is the 'number of pallet moves' significant in materials handling?

    <p>It serves as an activity cost driver for specific products.</p> Signup and view all the answers

    What does activity-based costing primarily rely on to enhance cost management?

    <p>Correct identification of the activity cost driver</p> Signup and view all the answers

    Which of the following is NOT typically associated with ERP systems?

    <p>Supporting multiple unintegrated systems</p> Signup and view all the answers

    Which characteristic is essential for the reliability and integrity of data in ERP systems?

    <p>Formal process for collecting nonfinancial measures</p> Signup and view all the answers

    Study Notes

    ERP Systems: Production and Materials Management

    • ERP systems encompass production management and materials management systems
    • Objectives include examining production management, understanding materials management, and recognizing the interconnectedness of production and materials management processes
    • Case study: Atlantic Manufacturing faced issues like inconsistent raw materials and finished product levels, delayed change specifications, long lead times, inadequate information sharing, and lost purchasing requests
    • Manufacturing Systems Background:
      • Early systems focused on re-ordering inventory, adapting to customer orders, and high-volume production, often with limited product variety.
      • Mainframe-based databases emerged to handle growing product variety and customer demands in the late 1980s.
      • Manufacturing Execution Systems (MES) provided continuous feedback and control during the 1990s
      • ERP systems integrated processes and data for more holistic operational efficiency and supply chain integration
    • Traditional Production Systems Problems:
      • Lack of integration between organizational divisions
      • Inaccurate production forecasts leading to incorrect purchasing decisions and either shortages or excess raw materials or finished goods
      • Excess inventory impacting cash flow and profitability
    • Production System Objectives:
      • Create production plan
      • Acquire raw materials
      • Schedule equipment, facilities, and human resources
      • Design products
      • Produce appropriate quantities
      • Maintain expected quality
    • Production Planning and Manufacturing Processes:
      • Operational-level processes encompassing daily activities, purchasing, receiving, quality control, and inventory management
      • Essential components for maintaining proper raw materials and production output
    • Information Systems Support:
      • ERP production planning and manufacturing processes rely on various information systems
      • Key systems involved in this support include data collection systems, material management systems, BOM (Bill of Materials) systems, inventory management systems, and cost accounting systems
    • Material Resource Planning (MRP) Processes:
      • Identify stock needs, calculate lead times, determine safety stock levels, assign cost-effective order quantities.
      • Produce purchase orders
      • MRP takes inputs from the Master Production Schedule (MPS)
      • MPS uses sales forecasts to identify needed products
    • MRP Vocabulary (Table 6-3):
      • MRP: Amount and timing of raw materials.
      • BOM: Recipe of materials.
      • Lead times: Time for supplier processing and delivery.
      • Lot sizing: Production quantities
      • MPS: Master Production Schedule
      • Gross requirements: Raw materials for production
      • Planned orders: Sufficient raw materials for production
    • Just-in-Time (JIT) Systems:
      • Ideal production, maintaining only necessary inventory
      • Supplies delivered only as needed
      • Continuous replenishment of raw materials
      • Reduces storage costs and improves supply chain and value chain management
    • Capacity Planning:
      • Evaluates production capacity against goals
      • Requires specific information and creates time-phased plans for products
      • Includes production scheduling, human resource needs and allocation of facilities and product design integration with cost information
    • Production Planning and Materials Management Modules:
      • ERP extends material requirement planning, inventory management, and capacity planning.
      • Integrates multiple databases, eliminating manual procedures and decreasing costs
      • Sales forecasts are used along with MPS for production plans, detailed and efficient materials plan, work orders for production, and ERP systems for integration
    • Materials Management Modules:
      • Manufacturing Execution System (MES): factory floor information and communication systems that provide real-time feedback
      • Advanced Planning and Scheduling (APS) systems: for business analysis and support, leveraging data for decision making, and using real-time data with mobile devices for data collection
    • eBusiness Strategies:
      • Facilitates communication along the supply chain (B2B)
      • Supports many suppliers, quick information exchange, e-marketplaces for buyer aggregation, cost reductions, and improved communication
    • Featured Article: What ERP Can Offer ABC:
      • Manufacturing data use within ERP
      • Applying data to control costs, maximize productivity, and streamline operations
      • Data integration supporting managerial decision making
      • Discusses relationship of activity-based costing (ABC) systems and ERP.
      • ERP systems are valuable in ABC because they support more accurate activity-cost drivers and improve data accuracy
      • SAP R/3 system links production planning and materials management
      • Allows establishment of standards for materials handling
      • Accurate direct costs can be calculated (instead of considering them as overhead)
    • Summary
      • Traditional manufacturing lacked integration
      • ERP systems integrate production planning and materials through various processes and information flows.
      • Facilitates better communication and manages business opportunities along the supply chain

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    Description

    This quiz focuses on the role of ERP systems in production and materials management. It explores the objectives of understanding these processes and their interconnections, using case studies like Atlantic Manufacturing to highlight practical challenges. Test your knowledge of the evolution of manufacturing systems and the integration provided by modern ERP solutions.

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