Chapter 8

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Enterprise Systems

ESSENTIALS OF ENTERPRISE SYSTEMS AND SUPPLY ESSENTIALS OF ENTERPRISE SYSTEMS AND SUPPLY CHAINSCHAINS

• ERP or enterprise systems control all major business processes with a single software architecture in real time.

• ERP are systems or processes that involve the entire enterprise or major portions of it.

• Contrasts the functional systems that are confined to one department/function.

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ESSENTIALS OF ENTERPRISE SYSTEMS ESSENTIALS OF ENTERPRISE SYSTEMS AND SUPPLY CHAINSAND SUPPLY CHAINS

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What is a Supply Chain?

• Defined as a set of relationships among suppliers, manufacturers, distributors, and retailers that facilitate the transformation of raw materials into final products.

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Supply Chain Includes

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Supply Chain

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Configuration level includes

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Cash Flow decisions

ERP and Supply Chains

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It is comprised of a set of applications that automate routine back-end operations such as:

financial managementinventory managementschedulingorder fulfillmentcost controlaccounts payable and receivable

ERP or enterprise systems control all major business processes with a single software architecture in real time.

ERP & Supply Chain

• It includes front-end operations such as:– POS– Field Sales– Service

• It also increases efficiency, improves quality, productivity, and profitability.

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Supply Chain Problems

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Adding value along the chain is essential for competitiveness, however, problems exist especially in complex or long chains and in cases where many business partners are involved. These problems are due to uncertainties and the need to coordinate several activities, internal units, and business partners.

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• Demand forecasts are a major source of uncertainties– Competition– Prices– Weather conditions– Technological development– Customer confidence

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• Uncertainties exist in delivery times– Machine failures– Road conditions– Shipments

• Quality problems may also create production delays

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Supply Chain Problems (Continued)

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•The bullwhip effect refers to erratic shifts in orders up and down the supply chain because of poor demand forecasting, price fluctuation, order batching, and rationing within the chain.•Even slight demand uncertainties and variability become magnified if each distinct entity, on the chain, makes ordering and inventory decisions with respect to its own interest above those of the chain.

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• Distorted information can lead to tremendous inefficiencies, excessive inventories, poor customer service, lost revenues, ineffective shipments, and missed production schedules.

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Supply Chain Challenges List

• Trust and collaboration• Global SCM issues• Outsourcing : Make-Buy Decision• Man-supplier strategy• Vendor selection• Difficulty in forecasting demand• Cost or reverse logistics

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Reverse Logistics

• Process of continuously taking back products and/or packaging materials to avoid waste.

• Costly • Create difficulties

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Supply Chain Opportunities

• Managing:– Information– E-business– Logistics– Inventory– E-procurement– collaboration– Other IT assisted solutions

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Supply Chain Solutions

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Information sharing among supply chain partners (c-commerce) sometimes referred to as the collaboration supply chain is one method to overcome problems in the flow. Others are:

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Supply Chain Solutions (Continued)

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Supply Chain Collaboration Management

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Every company that has business partners has to manage the relationships with them. Information needs to flow between the firms and must be constantly updated and shared.

Global Supply Chains

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Supply chains that involve suppliers and/or customers in other countries are referred to as global supply chains.

Global supply chains are usually longer than domestic ones, and more complex. Therefore, additional uncertainties are likely.

Supply Chains Benefits

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There are many benefits to integrating functional systems. Tangible benefits:

Inventory reduction Personnel reduction Productivity improvement Order management improvement Financial-close cycle improvements IT cost reduction Procurement cost reduction Cash management improvements Revenue/profit increases Transportation logistics cost reduction Maintenance reduction On-time delivery improvement.

Supply Chains Benefits (Continued)

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Intangible benefits: Information visibility New/improved processes Customer responsiveness Standardization Flexibility Globalization Business performance Reduction in duplication of entries Controls and reconciliation are enhanced Rapid assimilation of data into the organization

Enterprise Resource Planning

• ERP is an integrated software solution that integrates:– Planning– Management– Use of all resources in the entire enterprise.

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ERP

• ERP is comprised of sets of applications that:– Automate routine back-end operations

• Objectives– To integrate all departments and functional

information flows across a company onto a single computer system that can serve all of the enterprise’s needs.

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Capabilities of ERP

• Combining logistics across business units with neighboring facilities.

• Combining distribution centers and less than truckloads to fill trucks, reduce pick-up/delivery lanes and eliminate un-needed facilities.

• Dynamically sourcing products from different manufacturing & distribution facilities.

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-cont..

• Shared services for manufacturing• Global order management• Consolidation of global operations• Co-ordination of procurements• Creating supplier portals

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Issues

• ERP system selection• ERP and processes• ERP development & implementation• Open source ERP5• Switching ERP systems• Value from ERP systems

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Business Process Management

• BPM refers to activities performed by businesses to optimize and adapt their processes.– A business process is a collection of related

activities that produce something of value to the organization, its stakeholders, or its customers.

– Cuts across departments of business.

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-cont…

• A process has both inputs and outputs with activities and tasks that can be measured.– Cuts across functional areas of the enterprise.– Can be broken down into lower-level processes,

has goals, and feedback.

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The need to Re-engineer BPs

• To achieve quality improvement in business processes.

• Improved productivity• Improved efficiency

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Why use BPM?

• Reduce product design time by 50%.• Result in faster time-to-market of competitive

products.• Reduce order fulfillment time by 80%.• Improve customer satisfaction with ordering

process.• Help organizations achieve efficiency gains of

60% in call centers.

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Process modeling

• Business process modeling includes techniques and activities used as part of of the larger BPM discipline.

• It’s a blueprint.

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Re-engineering

• Re-engineering: the radical redesign of an organization’s business.

• Takes the current process model and makes changes to processes to increase efficiency and create new process models.

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Measuring Processes

• ISO 9000• Six Sigma• TQM

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Re-engineering Principles

• Add a new process• Delete a process• Expand a process• Reduce a process• Combine a process• Split a process

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IT support for BPM

• Case Tools: Computer-aided software engineering.

• BPM software

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Business Value of BPM

• Improve:– Processes– Process flow– Productivity– Efficiency

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Product Life Cycle

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Product Life Cycle (cont’d)

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PLM

• A business strategy that enables manufacturers to control and share product-related data as part of product design and development efforts and to support supply chain operations.

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Phases of PLM

• Conceive– Imagine, specify, plan, innovate

• Design– Describe, define, develop, test, analyze, validate

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-cont….

• Realize– Manufacture, make, build, procure, produce, sell,

deliver

• Service– Use, operate, maintain, support, sustain, phase-

out, retire, recycle, dispose.

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Business value of PLM

• Significant beneficial impact on:– Engineering change– Cycle time– Design reuse– Engineering productivity– Reduce costs– Speedy sharing of information

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Customer Relationship Management (CRM)

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•CRM recognizes that customers are the core of a business and that a company’s success depends on effectively managing relationships with them.

• It focuses on building long–term and sustainable customer relationships that add value both for the customer and the company.

•An enterprise wide effort to acquire and retain profitable customers.

Types of CRM

• Operational CRM: related to typical business functions involving customer services, management, invoice/billing & sales/marketing automation & management.

• Analytical CRM: involves activities that capture, store, extract, process, interpret & report customer data to a corporate user for analysis.

• Collaborative CRM: deals with all the necessary communication, co-ordination and collaboration between vendors & customers.

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Customer Relationship Management (CRM) (Continued)

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Classification of CRM Applications

• Customer-facing applications• Customer-touching applications• Customer-centric intelligence applications• Online networking applications

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THE SCOPE OF E-CRM

Foundational service. This includes the minimum necessary services such as Website responsiveness (e.g., how quickly and accurately the service is provided), site effectiveness, and order fulfillment.

Customer-centered services. These services include order tracking, product configuration and customization, and security/trust. These are the services that matter the most to customers.

Value-added services. These are extra services such as online auctions and online training and education.

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Customer Relationship Management CRM Activities

• Customer Service on the Web – Search and Comparison Capabilities– Free Products and Services– Technical and Other Information and Service– Allowing Customers to Order Products and

Services Online– Letting Customers Track Accounts or Order

Status

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Tools for Customer Service

– Personalized Web Pages– FAQs– Chat Rooms– E-Mail and Automated Response– Call Centers– Troubleshooting Tools– Wireless CRM

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CRM Failures

• Measurement difficulty• Failure in identification of business problems• Lack of management support• Poor user acceptance• Automating poorly defined process

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