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Enterprise Resource Planning (ERP) systems are the standard business systems for large corporations who manufacture goods for sale.
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This is a sketch of the differences between the Value Flows vocabulary and ERP systems.
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## Organization
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This is the probably the biggest difference. An ERP system, like the name Enterprise Resource Planning says, is for one Enterprise. The ERP system for an enterprise will include records for its direct customers and direct suppliers, and its employees, internal departments, projects. etc.
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Value Flows is a vocabulary for economic networks. An economic network is composed of nodes, which we call Agents in VF. Those can be individual people or organizations of any kind. They can be a traditional company, an informal group, another network, a project with team members from many different organizations, etc. The same agent can be both a supplier and a customer to other agents: sometimes both a supplier and a customer to the same other agent.
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The agents can have traditional business relationships like employee, manager, etc. Or they can have any other relationships. Some we have seen include harvester, steward, custodian, and exchange firm.
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So you could map the organization of an ERP system into a VF model just as it is, or you could expand your horizons. For example, your whole supply chain could be part of the same system.
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## Products and Inventory Items
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ERP systems have objects they call Product Masters or Item Masters which are something like Resource Classifications in VF. But Resource Classifications include a lot more: labor skills, designs, and currencies, for example. And they are deliberately looser and more flexible than Product Masters in ERP, so different communities can define them very differently.
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A VF-based system will keep inventories of designs, or cash in bank accounts, as well as finished goods, component parts, and raw materials.
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The advantages of such a unification include combined MRP and CRP (explained below) and the automatic generation of accounting reports.
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Mapping from an ERP system is pretty easy here: the Product or Item Masters become Resource Classifications, and the Inventory Items become Resources. (But probably some other things become Resources, too, depending on the ERP system's model.)
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## Bills of Material and Routings
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BOMs and Routings will be combined in Value Flows into an Input-Process-Output structure called a Recipe (not fully specified in VF yet, but used in NRP, one of the predecessor systems). This type of structure emerged in manufacturing systems in the 1990s, also called a Routed Bill, Bill of Manufacturing or Supply Chain Bill.
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Mapping from an ERP system will work fairly cleanly if your BOM components are attached to Routing steps. Otherwise, you could attach all the components to the first step. But the output of one routing step which is the input to the next step is usually not defined in ERP systems, except for those who handle food processing or similar domains, where those items are sometimes called Stream Resources. VF-based software should be able to generate those intermediate Resource Classifications automatically.
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Value Flows systems will also be able to create recipes that span whole supply chains, not just single companies.
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## MRP (Material Requirements Planning)
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VF-based systems can use a pretty standard Material Requirements Planning algorithm, but it can include all resources in the plan, not just materials.
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## CRP (Capacity Requirements Planning)
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VF-based systems will be able to do CRP at the same time as Material Requirements Planning, potentially including resource leveling and finite capacity scheduling.
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## Accounting
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Most ERP systems do Double Entry Accounting. What that means is that every Economic Event (often called a Transaction in ERP) generates at least two Journal Entries into at least two different General Ledger accounts. Those Journal Entries interpret the Event from the viewpoint of one party, The Enterprise.
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Parties, companies, enterprises, etc. in ERP are Economic Agents in VF (nodes in the network). So are people and informal organizations and whole networks that have an identity.
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VF-based systems will records raw Economic Events, just as they happened, and record explicitly which Agents were involved in each Event. So they can automatically generate all of the usual accounting reports, along with some new ones, from the viewpoint of any of the Agents in a network. The logic for doing so has been proven in the REA community.
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### Chart of Accounts
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ERP systems and other business software that does accounting usually require you to design a Chart of Accounts. VF doesn't. It can generate a standard Chart of Accounts automatically.
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This feature has pluses and minuses. You don't need to know accounting or to design a Chart of Accounts. On the other hand, if you **want** to design your own Chart of Accounts, you would need to add it to a VF-based system and attach account IDs to various VF objects like Resource Classifications. That is, in fact, how many ERP systems do it. Nobody in the ERP system created journal entries by hand; they are automatically generated by the ERP software. |
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