| dc.description.abstract | In the assembly & manufacturing sector, production costs—encompassing direct
materials, labor, and overhead expenses—represent a major component of total
operational expenditures. Accurate estimation and management of these costs are
critical for ensuring profitability, optimizing resource allocation, and supporting
strategic decision-making. However, traditional budgeting methods, which often rely
on manual calculations and disconnected systems, are prone to errors, delays, and
inefficiencies, limiting their usefulness in fast-paced production environments. This
study proposes the design and implementation of an Enterprise Resource Planning
(ERP)-based budgeting and performance evaluation system, specifically tailored to
manufacturing organizations. The system integrates budgeting with key ERP modules
such as Production Planning (PP), Materials Management (MM), Human Capital
Management (HCM), Finance (FI), and Controlling (CO). This integration enables
centralized control, real-time data access, automated workflows, and transparent
reporting, thus addressing many limitations of manual systems. A core feature of the
proposed system is its ability to compare budgeted costs with actual expenditures and
perform variance analysis at multiple responsibility center levels—such as departments,
production units, or cost centers. This allows managers to identify inefficiencies,
investigate root causes, and implement corrective actions proactively. To validate the
system, this research presents a step-by-step methodology, including requirement
analysis, ERP module configuration, process flowchart design, dummy data creation,
and variance computation using simulated production scenarios. The system’s
architecture, user interaction design, class diagrams, and data models are documented
in detail. Sample reports and dashboards—such as Budget vs. Actual summaries, cost
breakdowns, and center-wise performance charts—demonstrate the practical benefits
of ERP-based cost control. The findings confirm that ERP systems can significantly
enhance accuracy, responsiveness, and transparency in production budgeting processes,
providing a strong foundation for informed decision-making in manufacturing
enterprises.
Keywords: ERP, budgeting system, variance analysis, production cost, labor cost | en_US |
