Open ERP, a modern approach to integrated business management

Open ERP, a modern approach to

integrated business management

Release 6.0.0

Fabien Pinckaers

Geoff Gardiner

Els Van Vossel

2011-01-21

2

3

CONTENTS

I Foreword 9

1 Open Source software at the Service of Management 13

2 The OpenERP Solution 15

2.1 Why this book? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

2.2 Who is it for? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

3 Structure of this book 17

4 Dedication 19

II First steps with OpenERP 21

5 Subscribe & Start 25

6 Installation and Initial Setup 27

6.1 The architecture of OpenERP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28

6.2 The installation of OpenERP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29

6.3 Database Creation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40

6.4 New OpenERP functionality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42

7 Guided Tour 45

7.1 Database creation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45

7.2 To connect to OpenERP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46

7.3 Installing new functionality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53

7.4 What’s new in OpenERP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56

7.5 Getting started with OpenERP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58

8 How does it apply to your Business? 71

8.1 Business Example . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71

8.2 Basic Settings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71

8.3 Get your Database Up and Running with Demo Data . . . . . . . . . . . . . . . . . . . . . . . . 72

8.4 Fit your Needs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73

8.5 Database setup . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74

8.6 Driving a Purchase / Sales Flow . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82

III Boost your Sales & Deliver Great Services 89

9 Tracking Leads & Opportunities 93

9.1 What is in it for you? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93

10 Keep track of your Customers & Suppliers 107

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10.1 Organize your Partners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107

10.2 Advanced Customer Relations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110

10.3 Helpdesk Calendars . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111

10.4 Analyzing Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112

10.5 Automating actions using rules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113

10.6 Using the e-mail gateway . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 116

10.7 Supplier relationship management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 117

10.8 Profiling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 119

11 Communication Tools 121

11.1 Microsoft Outlook interface . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 121

11.2 Mozilla Thunderbird interface . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 125

11.3 Marketing Campaigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 129

IV Manage your Books 135

12 How to keep track of your Invoicing & Payments 139

12.1 Invoicing Workflow . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 139

13 From Invoice to Payment 145

13.1 Accounting Workflow and Automatic Invoice Creation . . . . . . . . . . . . . . . . . . . . . . . 145

13.2 Invoices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 147

13.3 Accounting Entries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 155

13.4 Payment Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 160

14 Financial Analysis 165

14.1 Reporting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 165

14.2 Statutory Taxes and Chart of accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 169

14.3 Company Financial Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 176

15 Configuring Accounts from A to Z 181

15.1 Chart of Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 181

15.2 Journals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 184

15.3 Periods and Financial Years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 185

15.4 Payment Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 186

15.5 Opening Entries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 187

V Effective Management of Operations 189

16 Analytic Accounts 193

16.1 To each enterprise its own Analytic Chart of Accounts . . . . . . . . . . . . . . . . . . . . . . . 194

16.2 Putting Analytic Accounts in Place . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 198

16.3 Analytic Entries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 200

16.4 Financial Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 203

17 Lead & Inspire your People 209

17.1 Managing Human Resources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 209

17.2 Timesheets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 212

17.3 Keeping Track of Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 218

17.4 Hire New People . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 221

17.5 Inspire your People . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 222

18 Deliver Quality Services 225

18.1 Managing Service Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 225

19 Drive your Projects 229

19.1 Project Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 229

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19.2 Long Term Project Planning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 234

19.3 Planning to Improve Leadership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 236

19.4 The Art of Productivity without Stress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 239

VI Manage your Warehouse and Get your Manufacturing done 243

20 Your Warehouse 247

20.1 Understanding Double-Entry Stock Management . . . . . . . . . . . . . . . . . . . . . . . . . . 248

20.2 From Supplier to Customer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 250

20.3 Stocks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 254

20.4 Basic Logistics Configuration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 262

20.5 Logistics Configuration in a Multi-Company Environment . . . . . . . . . . . . . . . . . . . . . 268

20.6 Import / Export . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 272

20.7 Warehouses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 275

20.8 Scheduling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 277

20.9 Management of Lots and Traceability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 279

20.10 Management by Journal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 282

20.11 Advanced Elements of Stock Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 284

21 Manufacturing 293

21.1 Management of production . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 293

21.2 Bills of Materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 294

21.3 Multi-level Bills of Materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 297

21.4 Manufacturing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 301

21.5 Workflow for complete production . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 302

21.6 Production order in detail . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 308

21.7 Scheduling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 310

21.8 Calculation of lead times . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 310

21.9 Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 312

21.10 Events and barcodes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 317

21.11 Treatment of exceptions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 319

21.12 Manual procurement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 320

21.13 Management of waste products and secondary products . . . . . . . . . . . . . . . . . . . . . . 321

21.14 Management of repairs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 322

VII Manage your Business 327

22 Driving your Sales 331

22.1 Sales Quotations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 331

22.2 Packaging . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 335

22.3 Alerts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 336

22.4 Control Deliveries and Invoicing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 338

22.5 Management of Carriers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 339

22.6 Keep Track of your Margins . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 341

22.7 Pricing Policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 344

22.8 Rebates at the End of a Campaign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 350

22.9 Open Orders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 351

22.10 Layout Templates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 352

23 Driving your Purchases 355

23.1 All the Elements of a Complete Workflow . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 355

23.2 Purchase Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 363

23.3 Analytic Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 364

6

VIII Process and Document Management 365

24 Process 367

24.1 Process Integration in the Management System . . . . . . . . . . . . . . . . . . . . . . . . . . . 367

24.2 Workflows and User Processes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 369

25 Integrated Document Management 375

25.1 The importance of good document management . . . . . . . . . . . . . . . . . . . . . . . . . . 375

25.2 Classic document management solutions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 376

25.3 The OpenERP Solution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 377

25.4 Internal and External Access using FTP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 378

25.5 Mapping between OpenERP Resources and Directories . . . . . . . . . . . . . . . . . . . . . . 379

25.6 Managing Attachments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 381

25.7 Virtual Files . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 381

25.8 Standardizing Structures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 382

25.9 Searching for documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 383

25.10 Integration with emails . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 384

25.11 Working with users’ changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 384

25.12 Version Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 385

26 Synchronizing your Calendars (CalDAV) 387

26.1 OpenERP Server Setup . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 387

26.2 DNS Server Setup . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 387

26.3 SSL Setup . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 387

26.4 Calendars on iPhone . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 388

26.5 Calendars on Android . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 388

26.6 Calendars in Evolution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 389

26.7 Calendars in Sunbird/Lightning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 389

IX System Administration and Implementation 391

27 Configuration & Administration 395

27.1 Creating a Configuration Module . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 396

27.2 Configuring the menu . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 396

27.3 User Login . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 400

27.4 Managing access rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 400

27.5 Groups and Users . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 400

27.6 Configuring workflows and processes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 404

27.7 Configuring reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 405

27.8 Importing and exporting data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 410

28 Implementation Methodology 417

28.1 Requirements Analysis and Planning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 417

28.2 Deployment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 418

28.3 User training . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 421

28.4 Support and maintenance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 421

X Google Modules 425

29 Google Translate 429

30 Google Calendar 431

31 Google Blogger 433

32 Google Earth 435

7

XI Conclusion 439

33 You are not alone 443

33.1 Bypass the technical difficulties by using the SaaS offer . . . . . . . . . . . . . . . . . . . . . . 443

33.2 Consult the available resources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 443

Index 445

8

9

Part I

Foreword

11

Information Systems have played an increasingly visible role over the past several years in improving the com￾petitiveness of business. More than just tools for handling repetitive tasks, they are used to guide and advance all

of a company’s‘ daily activities. Integrated management software is today very often a key source of significant

competitive advantage.

The standard response to a need for responsiveness, reliability, and rapidly increasing expectations is to create an

organization based on departments with a clear linear structure, integrated around your operating processes. To

increase efficiency amongst salespeople, accountants, logistics staff and everyone else you should have a common

understanding of your problems.

For this you need a common language for shared references, policies and communication. An ERP (Enterprise

Resource Planning) system provides the ideal platform for this common reference point.

12

13

CHAPTER

ONE

OPEN SOURCE SOFTWARE AT THE

SERVICE OF MANAGEMENT

Risks and integration costs are important barriers to all the advantages you gain from such systems. That is

why, today, few small- and medium-sized companies use ERP. In addition, the larger ERP vendors such as SAP,

Microsoft and Oracle have not been able to reconcile the power and comprehensive cover of an ERP system with

the simplicity and flexibility wanted by the users. But this is exactly what small and medium enterprises are

looking for.

The development processes of Open Source Software, and the new business models adopted by their developers,

provide a new way of resolving such cost and quality issues for this kind of enterprise software.

To make an ERP system fully available to small and medium enterprises, cost reduction is the first priority. Open

source software makes it possible to greatly reduce development costs by aggressive reuse of open source software

libraries; to eliminate intermediaries (the distributors), with all of their expensive sales overhead; to cut out selling

costs by free publication of the software; and to considerably reduce the marketing overhead.

Since there is open interaction among thousands of contributors and partners working on the same project, the

quality of the resulting software greatly benefits from the scrutiny. And you cannot be everything at once: accoun￾tant, software developer, salesperson, ISO 9001 quality professional, specialist in agricultural products, expert in

the customs and habits of pharmaceutical vendors, just as a start.

Faced with these wide-ranging requirements, what could be better than a worldwide network of partners and con￾tributors? Every single person adds own contributions according to his or her professional competence. Through￾out this book you will see that the results exceed any reasonable expectations when such work is well organized.

But the real challenge of development is to make this solution simple and flexible, as well as complete. And to

reach this level of quality you need a leader and co-ordinator who can organize all of these activities. So the de￾velopment team of Tiny ERP, today called OpenERP, is responsible for most of the organization, synchronization

and coherence of the software.

And OpenERP offers great performance in all these areas!

14

15

CHAPTER

TWO

THE OPENERP SOLUTION

Because of its modularity, collaborative developments in OpenERP have been cleanly integrated, enabling any

company to choose from a large list of available functions. As with most open source software, accessibility,

flexibility and ease of use are important keywords for development. Experience has shown that there is no need to

train users for several months on the system, because they can just download it and use it directly.

So you will find modules to suit all kinds of needs, allowing your company to build its customized system by

simply grouping and configuring the most suitable modules. Hundreds of modules are available.

They range from specific modules like the EDI interface for agricultural products, which has been used to interface

with Match and Leclerc stores, up to the generic demonstration automation module for ordering sandwiches, which

can take care of the eating preferences of your staff.

The results are rather impressive. OpenERP (once called Tiny ERP when it started out) is a Management Software

that is downloaded more than any other in the world, with over 600 downloads per day. Today it is available in 18

languages and has a worldwide network of partners and contributors. More than 800 developers participate in the

projects on the collaborative development system.

To our knowledge, OpenERP is the only management system which is routinely used not only by big companies

but also by very small companies and independent companies. This diversity is an illustration of the software’s

flexibility: a rather elegant coordination between people’s functional expectations of the software and great ease

of use.

And this diversity is also found in the various sectors and trades which use the software, including agricultural

products, textiles, public auctions, IT, and trade associations.

Last but not least, such software has arisen from the blend of high code quality, well-judged architecture and use

of free technologies. In fact, you may be surprised (if you are an IT person) to find that the download size of

OpenERP is only around 6 MB. When that is expanded during installation its size is mostly attributable to all the

official translations that are packaged with it, not the operating code. We’ve moved a long way from the days

when the only people who could be expected to benefit from ERP were the owners of a widget factory on some

remote industrial estate.

2.1 Why this book?

Many books set out to tell readers about the management of enterprise, and equally many aim to instruct the

reader in the use of a piece of specialized software. We are not aiming to add to those lists because our approach

is intended to be different.

Having restructured and reorganized many businesses, we wanted our management experience to generate a work

that is both instructive and practical. It was important for us not to write a manual about OpenERP, but instead

a work that deals with advanced management techniques realized through these IT tools. You will see what

management practices might be useful, what is possible, and then how you could achieve that in Open ERP.

This is what we will consider OpenERP to be: not an end in itself but just the tool you use to put an advanced

management system into place.