GB 310
An ERP system may single-handedly:
1. Check product availability 2. Provide an electronic order form 3. Apply business rules 4. Route the purchase order for approvals 5. Send the order to a vendor 6. Check received goods against order quantity and invoice amount 7. Pay invoice 8. Analyze vendor performance
EXTENDED ERP
Scheduling Forecasting Ecommerce Logistics
Porter's Five Forces Model
a tool to aid in understanding competition and it's implications for business strategy
Enterprise Resource Planning (ERP):
Systems are software packages that integrate all departments and functions throughout an organization. This single IT system allows employees to make decisions by viewing enterprise-wide information on all business operations
Describe Rivalry Amongst Existing Competitors
1. Competitive Rivalry: Driven by the nature of a firm's relationship with buyers, sellers, substitutes and new entrants 2. High: when competition is fierce in a market 3. Low: when competitors are more complacent
Role of Enterprise Systems in Organizations
1. Execute the Process 2. Capture and Store Data 3. Monitor Preformance
The Different departments within a company
1. Finance 2. Accounting 3. Human Resource 4. Operations Management 5. Sales 6. Marketing
Five Basic SCM Activities
1. Plan: Prepare to manage all resources required to meet demand 2. Source: Building relationships with suppliers to procure raw materials 3. Make: Manufacture products and create production schedules 4. Deliver: plan for transportation of good customers 5. Return: support customers and product returns
Phases of CRM
1. Reporting: Customer identification, asking what happened 2. Analyzing: Customer Segmentation, asking why it happened 3. Prediction: Customer Prediction, asking what will happened
5 Forces
1. Threat of New Substitutes 2. Buyer Power 3. Supplier Power 4. New Entrants 5. Rivalry Amongst Existing Competitors
Data and Document Flow: Three way match:
1. Vendor's Invoice 2. Purchase Order 3. Receiving report
Customer-facing processes:
A Product or service that is received by an organization's external customer example: Sale of Goods
Management Information System (MIS)
A business function, like accounting and human resources, which moves about people, product, and processes across the company to facilitate decision making and problem-solving
Business Process Model
A graphic description of a process, showing the sequence of process tasks, which is developed for a specific purpose and from a selected viewpoint
Business Process Management (BPM)
A holistic approach that seeks to integrate all of an organization's business processes in an effort to make individual processes more efficient
Business Process:
A standardized set of activities that accomplish a specific task, often used to transform inputs into outputs
System Thinking
A way of monitoring the entire system by viewing multiple inputs being processed or transformed to produce outputs while continuously gathering feedback on each part
Core ERP components
Accounting & Finance Human Resource Production Management
Supply Chain
All parties involved, directly or indirectly, in obtaining raw materials or product
Continuous process improvement (CPI):
Attempts to understand and measure the current process, and make (often technology-focused) performance improvements accordingly
Extended ERP components
Business Intelligence E-Business Supply Chain Management CRM
Process-level information
Checking where things are in the their processes
Procurement Process (Buy)
Create Purchase Requisition Create and Send Purchase Order (PO) Receive Goods Receive invoice from Supplier Send Payment to supplier
Steps in Procurement Process
Create Purchase Requisition Create and Send Purchase Order (PO) Receive Goods Receive invoice from Supplier Send Payment to supplier
Types of Business Process:
Customer-facing processes Business-facing processes
ERP Evolution
ERP- EXTENDED ERP - ERP-II
Enterprise systems
Execute processes, capture process data, and monitor process performance
Steps for (CPI)
Improvement is gradual/incremental Document as-is Process Establish Measures observe process Measure Performance Identify & Implement Improvements
Describe the role Information plays in enterprise resource planning (ERP) systems.
Information is in the heart of all ERP systems that is called a central database, the database collects information from and feeds information into all the ERP system's individual application components, called modules
Information Process flow:
Instance-level vs Process-level information
Explain the business value of integrating supply chain management (SCM), customer relationship management (CRM), and enterprise resource planning (ERP) systems
Integrating SCM, CRM, and ERP systems together allows for information in all systems to be available to all departments for access and changed/updated by any user of the system
Business-facing processes
Invisible to the external customer but essential to the effective management of the business example: Performance Feedback
Silo Effect:
Leads to process delays, increased costs, data inconsistencies, and lack of process visibility
Process Flows
Physical flow, data and document flow, and information flow
Steps for BPM
Process Identification -> Process Modeling -> Process Analysis -> Process Improvement -> Process Automation -> Process Monitoring -> Process Modeling
Information flow
Purchase Requisition History Purchase Order History
Instance-level
Purchase Requisition History, Purchase order history
Data and Document Flow:
Purchase Requisition Purchase Order Packing list and Goods Receipt Document Invoice and Payment
Fulfillment Process (Sell)
Receive Customer order Prepare Shipment Send Shipment Send Invoice to Customer Receive Payment
Most Valued Customers =
Recent purchases + Frequency of purchases + the Monetary value of their purchases
Differences between CPI and BPR
Relies on a different school of thought than continuous process improvement. In the extreme, BPR assumes the current process is irrelevant, does not work, or is broken and must be overhauled from scratch. Improvement is Radical
Production Process (Make)
Request Production Authorize Production Issue Raw Materials Create product Receive Finished Goods
Steps for (BPR)
Set Project Scope -> Study ->Create New Processes -> Implement Solution
Stages of Silo Effect
Stage 1: Remove the paper based process Stage 2: support the process by inputting functional systems Stage 3: support everything with an Enterprise System
Importance of (Business Process Modeling)
The activity of creating a detailed flow chart or process map of a work process showing its inputs and tasks/activities in a structured sequence
Why must departments within a company work together to achieve success
These business departments need to communicate with each other because each department relies on the other to complete business functions and make sound business decisions
Importance of Business Process
To stay competitive in today's marketplace companies are forced to constantly improve their business processes
ERP-II
Workflow Management Project Management
Competitive Advantage
a product or service that an organization's customers place a greater value on than similar offerings from a competitor
Porter's 3 Generic Strategies
a. Cost Leadership: Low cost with a broad market (Example: Walmart) b. Differentiation: High Cost with a broad market(Example: Neiman Marcus) c. Focused Strategy: Narrow market with high cost or a Narrow Market with low costs(Example: Tiffany & Co. or Payless Shoes)
How a company can add value by using Porter's value chain analysis
a. Primary Value Activities: b. Support Value Activities
Key Business Processes:
a. Procurement Process (Buy) b. Production Process (Make) c. Fulfillment Process (Sell)
How can Business Process Reengineering improve its business?
a. the analysis and redesign of business processes within and between enterprises i. BPR relies on a different school of thought than continuous process improvement. In the extreme, BPR assumes the current process is irrelevant, does not work, or is broken and must be overhauled from scratch. Improvement is more radical.
Value Chain Analysis:
a. views a firm as a series of business processes that either directly create value (Primary value activities) or that support the creation of value (Support value activities)
Knowledge Worker
an individual valued for their ability to interpret and analyze information
Information
data converted into meaningful and useful context
Examples of Tasks Workers
i. Customer service Representative ii. Purchasing Clerk iii. Accounting Clerk iv. Insurance claims processor
Support Value Activities:
i. Firm Infrastructure ii. Human Resource Management iii. Technology Development (and R&D) iv. Procurement
Benefits of introducing an ERP systems
i. Integrate financial information: to understand an organizations overall performance, managers must have a single financial view ii. Integrate customer order information: with all customer order information in a single system it is easier to coordinate manufacturing, inventory, and shipping to send a common message to customers regarding order status iii. Standardize and speed up manufacturing processes: ERP systems provide standard methods for manufacturing companies to use when automating steps in the manufacturing process. Standardizing manufacturing processes across an organization saves time, increases production, and reduces head count iv. Reduce inventory: with improved visibility in the order fulfillment process, an organization can reduce inventories and streamline deliverables to its customers v. Standardize human resource information: ERP's provide a unified method for tracking employees' time, as well as communicating HR benefits and services
Examples of Knowledge Workers
i. Product Manager ii. Sales executive iii. Production Manager iv. Financial Analyst
Primary Value Activities:
i. Receive and Store raw Materials ii. Make the product or service iii. Deliver the product or service iv. Market and sell the product or service v. Service after the sale
Describe Threat of New Substitutes
i. Refers to the competitive risks brought on by alternative products or services that customers can turn to 1. High: When there are many alternatives to a product or service 2. Low: When there are few alternatives 3. To reduce threat of substitutes: a. Make their products more widely available b. Buy substitute companies c. Create add-ons to differentiate a product from its competitor
Describe New Entrants
i. Refers to the competitive risks brought on by new companies entering the market 1. High: when it is easy for new competitors to enter a market 2. Low: When there are significant entry barriers 3. Entry Barrier: a feature of a product or service that customers have come to expect and entering competitors must offer the same for survival
Risks of introducing an ERP system
i. Software costs: Purchasing the software ii. Consulting fees: hiring external experts to help implement the system correctly iii. Process rework: Redefining software package does not meet all of the company's needs, customizing the software may be required iv. Integrating and testing: Ensuring all software products, including disparate systems not part of the ERP system, are working together or are not integrated. Testing the ERP system includes testing all integrations v. Training: Training all new users vi. Data warehouse integrating and data conversion: Moving data from an old system into the new ERP system
Steps for ERP Modules
i. When a user enters or updates information in one module, it is immediately and automatically updated throughout the entire system ii. ERP systems provide a foundation for collaboration between departments, enabling people in different business areas to communicate iii. Core ERP components are included in most ERP systems and primarily focus on Internal operations iv. Extended ERP components meet the organizational needs not covered by the core components and primarily focus on External operations
Describe Buyer Power
i. the suppliers ability to influence the prices they charge for supplies (Materials, Labor, and Services) 1. Influenced by: a. Number of suppliers b. Size of Suppliers c. Uniqueness of Service d. Availability of alternatives
Describe Supplier Power
i. the suppliers ability to influence the prices they charge for supplies (Materials, Labor, and Services) 1. Influenced by: a. Number of suppliers b. Size of Suppliers c. Uniqueness of Service d. Availability of alternatives
Business Intelligence
information gathered from multiple sources such as suppliers, customers and competitors in order to analyze for trends and patterns for strategic decision making
Customer Relationship Management (CRM)
involves managing all aspects of a customer's relationship with an organization to increase customer's loyalty and retention and an organization's profitability
Information Age
is the present time, during which infinite quantities of facts are widely available to anyone who can use a computer
Knowledge worker:
one who uses information and communication technologies (ICT) to create, acquire, process, synthesize, disseminate, analyze, and use information to be more productive
Fast Followers
organizations with the size and resources to generate a competitive advantage by capitalizing on innovations by first-movers
Data
raw facts that describe the characteristics of an event
Supply Chain Management (SCM)
refers to the management of information flows between and among stages in a supply chain to maximize effectiveness and profitability
Knowledge
skills, experience, and expertise coupled with information and intelligence that creates a person's intellectual resources
Business Process Reengineering (BPR)
the analysis and redesign of business processes within and between enterprises
Procurement Process (requisition-to-pay or procure-to-pay Process)
the series of steps that a company takes to obtain or acquire necessary materials
First-Mover Advantage
when an organization can significantly impact its market share by being first to market with a competitive advantage