Exam 2 Study Guide

Project Justification

-compliance projects -operational projects -strategic projects

Operational Project Justification

-cost/benefit analysis -payback period -Return on investment ROI

Return on Investment (ROI)

-frequently calculated -how much money is gained relative to the amount spent on the project

Payback Period

-may be calculated - the amount of time it will take to get back the money invested in the project

Project Monitoring and Control/ Completion (closure) stage

-project deliverable are completed and turned over to project owners -all contractual obligations of the project are completed -the project is formally designed as complete

Center of Excellence (CoE)

Adopters of SAP enterprise applications are encouraged to establish a center of excellence. An ES center of excellence (CoE) is as a team, entity, or shared facility that provides ongoing leadership, research, best practices, support and/or training for the ES. A CoE is established to provide a support organization and governing body for the ES that will oversee the provision of resources, funding, and enterprise systems strategy and roadmaps.

ERP Instances

An ERP instance is a distinct version of an ERP system within an organization. When ERP systems were first introduced, it was widely thought that an organization should have a single ERP system that ran on a single database to serve the entire organization. Many organizations have multiple ERP instances including companies with multiple product divisions, multinational companies, with divisions on several continents, and companies created through mergers and acquisitions. Single-instance ERP systems continue to be observed as ERP best practices.

BPMN Flow Objects

Flow objects are basic building blocks of BPMN diagrams; they represent the process concepts being modeled. Examples of flow objects are events symbols and activity symbols. Event symbols represent the start and end of a business process as well as important processes in between Circles are used to represent process events. Event symbols can be styled to represent process details. For example an envelope may be used to represent a message.

Business Process Flows

Four types of "flows" can be observed for business process tasks/activities: -Physical flow encompasses the physical activities associated with the business process including the physical movement (flow) of products or materials. -Document flow is the sequence of business documents that are created by the process's tasks/activities. -Data flow corresponds to the data used and/or generated by the process's tasks and activities. -Information flow consists of information that is processed/harvested from business process data flows.

PMBOK

a project is a "temporary endeavor to create a unique product, service or result"

Initiate Phase Activities

project is defined and permission to begin the process is obtained

Project management is carried out through the application of ____________ ____________________ ____________

project management processes

Projects are justified based on

type

During the initiate phase Project stakeholders

are identified

Project Management

"application of knowledge, skills, tools and techniques to meet project requirements"

Compliance projects

"must do" projects completing them with the least amount of resources

Project Planning/ Plan phase

- management process, project scope is delineated and project objectives are specified -interactive process working with stakeholders establishing timetables creating budgets identifying risks determining resource levels establishing communication plans

Multi criteria Scoring models

-determine which projects to start and which to delay -balance different selection criteria against project characteristics to provide a way to compare projects against one another

Benefits of a Formal Project Management Process

-development of work systems -deliver desired business benefits -are implemented for the best cost -execution pf feasible projects -reduced risk of failure by ensuring top management support -assurance that work systems requirements are correct by acquiring stakeholder approval

Strategic Projects

-implement a corporate strategy or create new capability -evaluated on their ability to contribute to the execution of company strategy

Operational Projects

-improve existing business operations -getting maximum concern for resources expended

Cost/benefit analysis

-typically used to justify operational projects -considers project return for the resources that are invested in completing the project

Project Execution/ Execute Phase

-work defined in the project management plan is completed -coordinating work activities -managing stakeholder expectations -issuing communication -updates may occur in response to: resource availability changes resource cost changes activity duration changes risk or opportunity changes

Agile Development Methods

1. Agile methods focus on being adaptive to changes and maximizing opportunities to deliver value rather than adhering to a plan. 2. Unlike the waterfall approach, work is not determined up front, it is determined as the project unfolds through continuous interaction with projects owners. 3. Agile methods feature incremental, iterative, and evolutionary development. 4. Instead of one big software release, there are numerous smaller releases.

CRM Evolution

CRM systems have their roots in sales force automation systems that were designed to support the various steps in sales process which are summarized in Figure 7-5.

Business Process Flowcharts

A business process flowchart provides a picture of the separate steps of a business process in sequential order. It illustrates the sequence of tasks/activities, decisions that must be made, process inputs and outputs (materials or services entering or leaving the process). It may also illustrate the people and/or time involved with each step in the process. High level business process flowcharts, such as that illustrated in Figure 6-18, typically visualize only the major steps for process and leave out details such as inputs and outputs, decisions made, and people or time involved.

Integration Points

A business process integration point is as a point/activity within one business process at which data/information moves to another process or system. This means that data/information in a document created by one process triggers changes to one or more other processes. A classic example of an integration point is a vendor's receipt of a customer order via an EDI (electronic data interchange) link and its entry into the vendor's ERP system for processing. There are numerous integration points among the businesses processes supported by an ERP system. For example, the creation of a delivery document in the fulfillment process results in finished goods inventory reductions that trigger changes in planned production orders (in the production process) to replenish finished goods inventory.

Business Processes

A business process is a set of linked tasks designed to deliver a service or product to a client (customer). A business process can also be defined as a set of activities and tasks that accomplish a specific organizational goal. When the process's sequence of tasks/activities are completed, the business objective is achieved.

Data Flow Diagrams

A data flow diagram (DFD) graphically represents the "flow" of data through an information system A DFD visualizes the sequence of data processing tasks/activities involved in a business process including data inputs and outputs (where data comes from and where it goes) and where it is stored. It does not show information about people involved with data processing or time delays between data processing steps. -Hence, DFDs are often used in conjunction with business process flowcharts. Figure 6-19 depicts a DFD diagram that illustrates some of the data processing tasks/activities associated with the fulfillment process.

Developing Work Systems

A work system is designed to: Produce a product or service for customers, and to operate in: A particular environment Within an infrastructure Under a particular strategy When a work system is developed, processes and activities are designed to be operated by specific participants (people and/or machines) using specific information and technology to produce a particular product or service. So, work system develop boils down to: Designing processes and activities Acquiring required technology Implementing the work system

system definition

During the system definition phase of the SDLC, system components, parameters, and costs are identified. These are articulated in a scope document that includes system: objectives, deliverables, technical parameters, limits, exclusions

Supply Chain Management (SCM)

A supply chain consists of all the entities (organizations) directly or indirectly involved in the procurement of a raw material or product. Supply chain management (SCM) involves the management of information flows between and among supply chain entities to maximize supply chain profitability and effectiveness. An entity in a supply chain has links to its suppliers and customers. An entity's role in the supply chain is to transform materials received from suppliers into semi-finished or finished products and/or to distribute materials, semi-finished, or finished goods received from supplies to its customers. A simple supply chain is depicted in Figure 7-6.

Capital Goods & Services Procurement

A third type of procurement focuses on the acquisition of the facilities, equipment, tools, and services that the organization needs to produce the finished goods and services that its sells to customers. These types of materials are called capital goods and services. The procurement of capital goods and services is more strategic in nature than direct or indirect procurement.

Requirements documentation

A variety of models are used to describe objects that exist in the system and how the system functions. These include: Unified Modeling Language (UML) which records system functions in: Use case diagrams - these illustrate how users interact with the system when performing system functions Activity diagrams -- these show how use cases are accomplished Class diagrams - summarizes system entities, their attributes, and what they can do or have done to them Interaction diagrams -- show how classes work together to accomplish use cases Behavioral machine state diagrams - shows the conditions or states that an object can go through within the system

Well-Designed Business Processes

A well-designed business process is effective when its product or service is valued by the customer. -When this happens, the process is value-adding A well-designed business process is efficient when it does not include unnecessary tasks and when it does not consume more resources than needed to produce the product or service. -Since business processes consume resources (time, labor, energy, etc.) it is possible to assign costs to particular process tasks/activities and to the process as a whole.

What is a Value Chain?

According to Michael Porter, a value chain is the set of activities performed by an organization competing in a specific industry to deliver a valuable product or service to customers. An organization's costs and profits are affected by how well it executes its value chain activities. Porter's value chain concept is grounded in systems theory and the idea that business organizations are open systems that interact with elements in their environments in ways to remain viable across time. The business system and its subsystems acquire and consume resources, such as energy, money, labor, materials, and equipment, to create outputs (products or services) that are valued by the market.

Cost vs. Differentiation

According to Porter's Competitive Forces Model, organizations competing within an industry will typically strive to achieve a cost or differentiation advantage in the market. To achieve a cost advantage, the organization would first identify the cost drivers (such as labor-intensiveness, activity completion rates and wage rates) for its primary and support activities. It would then identify opportunities to reduce costs in its primary or secondary activity. Reducing the costs of its primary and support activities may help the organization achieve a cost advantage in its industry. Creating a differentiation advantage begins with identifying the activities that create the most value for customers. These may be specific primary activities, support activities, or some combination of both. Once the greatest value-adding activities are identified, the focus should shift to identifying ways to improve the value of each activity in ways that contribute to sustainable differentiation within the market.

ES Management & Governance

After implementing an ES, the adopter organization is faced with managing and governing the system. The primary reasons for adopting an ERP system are often strategic in nature. Many organizations desire a system that will be the backbone of its business computing platform and that will help it be more competitive in its industry. While an ERP system will change the technical platform, the main drivers of adoption are the desire to transform business processes, performance, and competitiveness. Hence, after implementing an ERP system (or any other ES), it is important to establish ES management and governance structures that are more business than technically focused.

Procurement Process

Almost every organization has a procurement process to support its inbound logistics (value chain) activity. This is sometimes called the procure-to-pay or requisition-to-pay depending on whether the initial process tasks/activities include creating purchase requisitions. Procurement is a cross-functional business process; its tasks/activities are performed by multiple functional areas.

ERP System Landscapes

An ERP instance provides support for integrated business processes for part of an organization or the entire organization. The system landscape an ERP instance includes a production platform (environment), the "live" system used to process ERP transactions and run the business. The system landscape also typically includes a development platform (environment) and a testing platform (environment). Ideally, each of these platforms (environments) is isolated from one another as much as possible. Organizations with mature ERP systems may add other platforms (environments) to its ERP instances such as training and database development platforms (environments).

ERP Software Architecture

An ERP system's software architecture has traditionally been depicted as consisting of three layers (see Figure 7-15). Users interact with the ERP system at the presentation layer, typically via a graphical user interface (GUI). Support for integrated processes is provided at the application layer. An organization-wide database is found at the data management layer.

Core Business Processes

An organization's core business processes is the set of processes that must exist for its proper functioning. These contribute directly to providing value to customers. . Core processes are typically operational processes rather than support or management processes. Because they are critical to the long-term success and survival, core processes are sometimes described as mission critical processes. Essentially, these are processes that the organization must do correctly and/or efficiently to be sustainably competitive.

Enterprise System Architecture (ESA)

An organization's enterprise systems architecture (ESA) includes the architectures of all the IT systems that support the organization's business functions. It provides a comprehensive summary of the organization's major IT systems and the relationships among them. The ESA plays a key role in managing and evolving an organization's IT systems and business operations. It captures both static and dynamic aspects of the organization's IT systems as they evolve in response to changes in the business environment.

Complicating Factors - SC Scope

An organization's procurement process be quite complicated when its supply chain is international in scope. When buyers and suppliers are in different countries, complexity may be increased by different currencies, tax systems, tariffs, and duties. Shipments from suppliers in other countries may be delayed by customs clearing processes. Number of supply chains that are international in scope is increasing in response to the globalization. e overlooked.

What is a Value Stream?

An organization's value chain is part of larger stream of activities called a value system or industry value chain. A value system includes the value chains of suppliers that provide inputs to the organization and the value chains of distributors through which the organization's products or services reach customers. An organization must understand each component in its value stream to acquire and sustain competitive advantage and to be positioned to support its advantage with information systems. Today, we usually use "supply chain" to describe an industry value chain or value system.

ESA Benefits

Architecture-level analysis of IT systems by assisting ES planners and designers in performing system analysis at the architectural level. Enhanced business/system understanding by providing a vehicle for understanding an organization's business operations. Improved business/system planning by providing a vehicle for business and IT systems planning, both strategically and in enhancing IT system support for business functions. Easier restructuring and system integration in response to changes in business operations, and changes that result from mergers or diversification. Enhanced system evolution -- an ESA provides a means for evaluating the impacts of major IT systems transformations such as replacing legacy systems, decommissioning outdated systems, and adding new systems.

Enterprise Data Management

Because ES are data-centric, ES adopters are challenged to develop data management and governance structures to ensure that data provides business value. Enterprise data management has emerged as a priority for many organizations. Its overall objective is to ensure that the organization has trust and confidence in the data that is essential to achieving its business strategy. Enterprise data management (EDM) is essentially an organization's ability to effectively create, integrate, disseminate and manage data for its ES, business processes, and entities that require accurate and timely data delivery. An overriding goal of EDM is the elimination of organizational conflicts and issues that result from the mismanagement of data and information.

Master Data Management

Because it can be shared across business processes and applications, it is important for an organization's master data to be accurate and up-to-date. This means that master data management is often a key aspect of its EDM processes. Master data management (MDM) includes operational and governance processes, policies, standards, and tools that an ES adopter deploys to ensure consistent data definitions and management of its critical data. MDM is a systematic approach for improving an organization's data quality that is operationalized through the policies and procedures established by data governance group. MDM strives to ensure that an organization does have competing and potentially inconsistent versions of the same master data. In many organizations, the overall goal of MDM initiatives is to provide ES users with "single version of the truth" that can be trusted and used to inform business decisions.

CRM System Benefits

CRM is based on the premise that organizations that understand the needs of individual customers are best positioned for sustainable competitive advantage and to reap the benefits summarized in Figure 7-3.

Procurement Process Automation

Before computers, purchasing and procurement processes were largely paper-based and purchase orders were sent by buyers to suppliers by mail or a courier service or via phone calls. The advent of fax machines meant that POs could be transmitted to vendors, and invoices could be transmitted to purchasing organizations as facsimile documents. Bank process automation, including Automated Clearing House (ACH), enabled buyer payments to be deposited in vendor bank accounts. Several specialized forms of procurement process automation have emerged. This includes e-procurement as well as vendor-managed inventory (VMI) systems and procurement support by ERP and SRM systems.

BPMN Diagrams

Business Process Model and Notation (BPMN) is a standard for visually representing and modeling business processes in business process diagrams (BPDs) that can be easily understood by both business and IT managers. BPMN diagrams are similar to business process flowcharts but are arguably superior to flowcharts for representing cross-functional business processes. The symbols used in BPMN diagrams are grouped into four main categories: flow objects, connecting objects, swimlanes, and artifacts.

Business Process Diagrams

Business process diagrams illustrate how business processes are implemented. They help managers and employees understand processes within the organizational context and help them envision potential exception scenarios for the process. Business process diagrams help identify process improvement opportunities, including process automation opportunities. The diagrams are visual aids that help ensure that everyone is on the same page.

Business Process Documentation

Business process documentation can range from narrative descriptions of the sequence of tasks/activities that make up a process to diagrams that visualize all or parts of the business process. Best practices in business process documentation includes starting with the big picture, and then drilling down. -The big picture identifies how the process fits into the organization's overall operations. -Drilling down involves identifying the details, technical specifics, and procedures associated with each step in the process's sequence of tasks/activities. Flowcharts, data flow diagrams, and business process diagrams are used to document the specifics associated with process steps.

Operational vs. Analytical CRM

CRM software support both operational and analytical processes. Operational CRM supports front-office operations that deal directly with customers; this often includes customer order transaction. Analytical CRM supports back-office operations, including data analysis (trend analysis, predictive analysis, sales forecasting, etc.). Analytical CRM relies on CRM data storage repositories (such as data warehouses) and business intelligence tools to gain insights into customer preferences and behaviors. The insights are used to personalize the organization's interactions with the customer, such as providing a personalized e-commerce experience at the organization's web site. CRM software often includes collaboration systems that facilitate communication and coordination among the front-office and back-office systems (see Figure 7-4).

Business Process Management

Business process management (BPM) is a systematic approach for making an organization's business processes more efficient, effective, and adaptive to changes in the business environment. BPM is sometimes described as the subset of business infrastructure management that focuses on optimizing and maintaining the equipment used in core operations. BPM strives to reduce miscommunication about business processes within organizations. -Within many businesses, it interconnects the IT function with the business units that produce the organizations goods and services. -Since BPMN was created to facilitate communication among IT and business unit managers, it is widely used by organizations with BPM programs. -Business Process Execution Language (BPEL) is also widely used in conjunction with BPM because like BPMN, it can be easily understood and interpreted by both technical and non-technical personnel.

Business Process Reengineering

Business process reengineering (BPR) shares many of the characteristics of BPM, but typically results is more extreme revisions to business processes than the incremental process improvements that occur in well-executed BPM programs. Business process reengineering can be described as radical redesign of business processes in order to achieve dramatic improvements in process cycle times, productivity, and the quality of the goods/services produced by business processes. BPR strives to help businesses restructure how they are organized by fundamentally redesigning their business processes. BPR is sometimes called business transformation because of its focus of making extreme changes to business process designs. .In BPR, managers and employees are essentially handed a blank sheet of paper and are tasked with rethinking, redesigning, or replacing existing processes in order to deliver more value to customers.

Business Processes and Work Systems

Business processes are best understood within the context of value chain activities and work systems needed to achieve strategic objectives.

Chapter 7 summary

Businesses adopt ES (CRM, SRM, SCM, ERP) for a variety of reasons. Due diligence should be conducted before adopting an ES. It is important to know the ES's capabilities, infrastructure requirements, potential benefits and risks, ongoing maintenance realities and costs, and ecosystem before making an adoption decision. ERP systems are the core, backbone, transactional systems in many businesses organizations. CRM, SCM, and SRM systems can be integrated with ERP systems, however, integration is optional rather than required. ERP system implementation involves considerable change and adaptation, and top management commitment is critical. Three ERP implementation strategies are used: Big Bang, phased, and parallel. ES and enterprise data management governance is important post-implementation.

ERP & Integrated Business Processes

Businesses are attracted to ERP systems because of their ability to integrate business processes. Today's full-fledged ERP systems support/integrate manufacturing, human resources, accounting and finance, sales, purchasing, and inventory management processes. Many organizations also use their ERP systems to integrate their SCM, CRM, and SRM systems. ERP systems support/integrate core business processes including procurement, fulfillment, and production.

Legal Issues

Buyers and suppliers often establish legally binding contracts before transacting business with one another. This means that a purchase order is often considered to be a legally binding document. When a buyer sends a PO to a supplier, the buyer is legally bound to pay the supplier for the goods/materials that are shipped in response to PO. Legal requirements require a buying organization to exercise discipline in its purchasing and procurement process to ensure that it does not violate its supplier contracts.

ES Ecosystem Consultancies

Consultancies provide a bridge between the software vendors and adopting organizations. Their presence in the ecosystem serves as a useful division of labor, which allows everyone else to focus on what they do best. Consultants are often employed by adopting organizations to oversee ES adoption, implementation, maintenance, and upgrade processes. They often bring valuable ES project management expertise and experience to the ecosystem.

Determination Process Information Sources

Consulting agencies - the "Big Four" and numerous other consultancies assist clients with software selection and implementation. Research firms - such as Gartner and Forrester research and publish white papers comparing the capabilities of business software packages. Trade publications such as CIO and ComputerWorld publish articles on business software packages and trends. Business periodicals such as Forbes and Fortune and HBR frequently publish articles on technology and software trends. Contacts within the industry - determining what software packages are used most widely in the organization's industry can also provide insights

FOB Points

Contractual agreements between buyers and suppliers often specify a FOB point. FOB is a shipping term stands for "free on board". When the specified FOB point is the supplier's location, the buyer takes ownership of the goods/materials being shipped as soon as the shipment leaves the supplier's location. When the specified FOB point is the buyer's location, the buyer does not take ownership of the goods/materials until the shipment arrives at its location and is inspected and accepted. It is in the supplier's best interest to have its location as the FOB point and it is in the buyer's best interest to have its location as the FOB point.

System Feasibility

Cost feasibility - is the system affordable? Key consideration: cost and benefit comparison Schedule feasibility - is there sufficient time to build the system? Key consideration: can system be completed by a specific date Technical feasibility - can the system be built? Key consideration: are skills and infrastructure in place to build the system Organizational feasibility - is organization ready for this system? Key considerations: are personnel appropriately skilled? Is organization appropriately structured? Does organization need the system?

Cross-Functional Business Processes

Cross-functional business processes require multiple departments (functions) to work together to achieve the business objectives. Benefits include: -improved communication, coordination, and relationships among departments -Better and more widespread understanding of the processes' business objectives -Greater upstream/downstream task/activity awareness -Increased visibility/understanding of organizational processes -Better and more widespread understanding of how the organization works. -Cross-training and horizontal movement of employees is another potential benefit. Examples include procurement, production, and fulfillment processes. Other examples are included in Figure 6-4.

Customer Relationship Management (CRM)

Customer relationship management (CRM) involves managing all aspects of a customer's relationship with an organization to increase loyalty, retention, and the organization's profits. Three major aspects of CRM are sales force automation, customer service management, and marketing automation. -Sales force automation uses software to automate sales activities including sales order processing, customer contacts, and customer order tracking. -Customer service management uses software to coordinate all facets of an organization's customer service efforts. -Marketing automation uses software to automate marketing activities such as e-mail marketing, social media marketing, and online e-commerce content. It also uses software for coordinating marketing and branding efforts across sales channels and for analyzing marketing campaign effectiveness.

Returns

Damaged, incorrect, or incomplete shipments initiate a returns process. This involves the buyer physically shipping the deficient goods/materials back to the supplier and verifying that the supplier needs to send another shipment to overcome the deficiency. Return processes are exceptions to the supplier's fulfillment process and the buyer's procurement process. This is costly and frequently unpleasant on both buyers and sellers, so steps are typically taken on both sides to minimize returns.

Production Process Data Flow

Data flow during the production process includes data about finished goods, production orders, materials and resources used during production, and storage locations of finished goods that are produced. When production is requested, the needed quantity of the finished good is identified along with when it is needed. The finished good's BOM specifies the quantities of raw materials and components needed to produce one unit of the finished good.

Major ERP Software Vendors

In terms of market share, the top ERP software vendors include: SAP Oracle Infor Microsoft Epicor

Direct vs. Indirect Procurement

Direct procurement focuses on acquiring the materials and goods that a manufacturer consumes in its production process. The quantities of materials and goods in a direct materials PO is typically high; purchase order frequency for direct materials is also high. Indirect procurement involves acquiring the materials need to maintain or repair production equipment. It also involves acquiring materials used in the organization's general operations, such as office supplies. Indirect materials are often called MRO (maintenance, repair, and operations) materials. The purchase order frequency for MRO materials can be moderate to high depending on how rapidly they are consumed by the organization.

Design Phase

During design, models developed during requirements analysis (of SDLC) are converted into specifications used by programmers for coding. User interface and report layouts are determined. Database construction specifications are spelled out as part of data management design. The hardware and operating system that the application will run on are specified in the system's physical architecture. Program code specifications are spelled out as part of class and method design.

Implementation

During the implementation phase of acquisition, software is placed in production in the work system. The software can be: Vendor software that is modified or implemented vanilla Custom developed software (whether in house or outsourced) Acceptance testing is completed Users are trained Data from systems being replaced are moved to the new system

ERP Software

ERP software links business processes and systems across an enterprise in order to streamline workflow, facilitate information sharing among different functional areas/business units, and to provide sufficient insight into a business's operations to enable data-driven decision-making. ERP software eliminates the need for functional area information systems/software to support the needs of specific business units (such human resources software, accounting software, and warehouse management software). Instead of having separate databases to support different functions, an ERP system stores all company data in a single database that is used organization-wide.

Procurement and ERP Systems

ERP systems automate the creation and transmittal of documents created by buyers during the procurement process. This is illustrated in Figure 8-11. Vendor (supplier) and vendor products/materials data are stored in ERP databases as master data. After it is in the database, master data can be used in any process where it is needed. A vendor's banking information may also be stored as master data. In general, master data contributes to the automation of a business process by populating fields in a process's electronic documents.

ERP Infrastructures

ERP three-tier architectures can be implemented as fully on-premises, fully cloud-computing, or as a combination of on-premises and cloud-computing infrastructures. ERP adopters in the 1980s and 1990s typically implemented their ERP systems on-premises In the 2000s and 2010s, some degree of cloud computing has been typically incorporated with ERP infrastructures. Fully-hosted ERP systems are available from software-as-a-service (SaaS) solution providers. Infrastructure-as-a-service (IaaS) is another cloud-based option for ERP adopters.

Enterprise Resources Planning (ERP)

Enterprise resource planning (ERP) is a process/system used by an organization to manage and integrate the important parts of its day-to-day operations such as: -Purchasing Inventory Sales Marketing Accounting/finance Human resources. When automated by software, ERP enables real-time integrated management of core business processes.

Enterprise Systems Adoption

Enterprise systems (ES) are large-scale application software packages that support business processes, information flows, reporting, and data analytics. They enable an organization to track and control all of its complex business operations. They are used as central command systems for automating the business and facilitating reporting and decision making. Organizations adopt ES to: Operate efficiently Improve business processes Improve workflow and customer facing processes

ES and Procurement

Enterprise systems (ES), including SCM, SRM, and ERP systems provide automated support for numerous procurement process and purchasing activities. SCM systems provide support for purchase order processing, inventory management, goods receipt processing, warehouse management, and supplier management. SRM systems provide targeted support for the procurement process that often results in increased process efficiency, reduced costs, enhanced communication and coordination with suppliers, and continuous process improvement.

Procurement Process Identifiers

In many organizations, procurement is referred to as the "procure-to-pay" process or cycle. Other organizations use "requisition-to-pay" to describe their procurement processes. The "procure-to-pay" process is more likely to include both strategic and operational procurement activities, while "requisition-to-pay" is more likely to be limited to operational procurement activities.

BPM Execution & Monitoring

Executing activities involve performing or enacting process steps. -For to-be processes, a computer program or simulation may provide insights into how process steps might unfold. Monitoring activities involve tracking business processes and aggregating statistics about process performance. -Tracking enables the identification of the current state of process instance. -Tracking also enables process level questions to be addressed such as: What is the average time or cost to complete each step? -Monitoring measures fall into three categories: *cycle time measures, *defect rate measures, and *productivity measures. Processing mining tools are processing monitoring methods and tools that enable discrepancies between actual and ideal process execution to be identified. -These assist in identifying bottlenecks and other factors that inhibit process performance.

Fulfillment Process

Fulfillment is a process that organizations strive to do correctly and efficiently because it: -Directly interfaces with customers -Affects customer perceptions of the organization -Affects customers' willingness to do repeat business It is often an organization's only revenue generating process. The fulfillment process maps most directly to the outbound logistics activity in the value chain. -However, it also is related to the sales and marketing activity. The fulfillment process is a cross-functional process whose tasks/activities involve (at a minimum) the organization's sales, finished goods warehouse, and accounting functions.

Requirements Analysis

Functional requirements are determined. Multiple method may be used including : interviewing users and managers, joint application development, analyzing the existing system, business process modeling

Benefits of ERP 3-Tier Architecture

Having a distinct user interface (UI) enables users to interact with the ERP software using a variety of client devices. The distinct application processing layer enables adopter organizations to implement the ERP software on computer hardware that their needs. The distinct database layer provides adopter organizations with choices about the database management system (DBMS) and storage technologies. The ERP three-tier software architecture maps directly to client-server architectures.

Kanban

In software development, Kanban is used to visualize work to be done and to manage work in progress. A Kanban Board summarizes all the tasks that the development team should be focusing on along with their status. When a task is completed by the development team, it is removed from the Kanban Board, and new work is added.

When the Decision is Make ...

If no suitable software packages are available, the only option may be to build the software. Like purchase decisions, there are several questions that have to be answered, including: Does the organization have the technical and project management skills needed to develop the software? Is outsourcing some or all of the development work necessary? Is the application part of the organization's core competency?

ES and Decision Making

Improved decision-making often occurs in organizations that adopt enterprise systems. This stems from improved data/information flow, visibility, and transparency. Real time access to enterprise systems data and information facilitates data-driven decision-making and better informed decisions. Some organizations claim that the data/information improvements promote an organization-wide "single version of the truth" about business operations and performance.

ERP & SCM Integration Benefits

Improved efficiency across multiple departments and organizations within the supply chain Improved customer service and retention; greater chance of repeat business from existing customers Automation of workflow that reduces overhead and operational costs IT issues/problems are less likely to create bottlenecks or impede efficiency Quicker adaptation to changes in customer needs/requirements; quicker adaptation to business expansion and growth Products and services can be delivered to customers with greater speed, efficiency, and quality. ERP systems can be programmed to automatically generate purchase orders when inventory levels drop below specified minimums -- such automated purchasing can improve supply chain efficiency. ERP systems can track vendor performance through metrics such as cycle time, cost, and error rates and can be used to negotiate better terms or to justify switching vendors.

ES Ecosystem Software Vendors

In addition to the ES software vendors, there may be dozens (or hundreds) of other software vendors in the ecosystem. Many are designated as "partners" of the ES software vendor, often with some measure of the closeness the partnership with the ES vendor, such as the distinction of being a "gold" or "platinum" partner. Partners often have add-on or bolt-on software products that extend the functionality of the ES product or perform functions that the ES product does not perform very well.

Porter's Value Chain: Summarized

In essence, Porter is saying that competitive advantage can be achieved when an organization adopts an appropriate competitive strategy in response to competitive forces within its industry and subsequently configures its primary and support value chain activities to ensure that they align with the competitive strategy. Sustainable competitive advantage relies on the alignment of value chain activities with the competitive strategy. Porter's Value Chain Model helps to tie open systems (discussed in Chapter 2) and competitive strategy (discussed in Chapter 3) concepts to an organization's daily operations (primary and support activities. It also serves as a useful bridge for understanding business processes, many of which are best understood within the context of the value chain activities that they support.

ES Adoption Evolution

In the 1980s and 1990s, ES adoption was primarily occurred large organizations. -This was due, in part, to the cost of the software and the infrastructure needed to run it. Enterprise system adoption among small and medium size enterprises (SME) became more widespread during the 2000s and 2010s after the introduction of less expensive cloud-based enterprise systems software products. Today, smaller businesses adopt enterprise systems for many of the same reasons as large corporations: to gain company-wide access to business knowledge, increase employee productivity and minimize the duplication of company data. Organizations of all sizes often realize improved teamwork support, improved responsiveness to the marketplace, increased work quality, and greater employee collaboration.

Procurement Instance-level Information

In the procurement process, instance-level information includes the information associated with an individual purchase order. For example, the purchasing organization may want information/answers that address questions such as: Has the vendor received the purchase order? Has the vendor shipped the goods/materials specified in the purchase order? Do quantities shipped match the quantities in the PO? Are there any backorders? Has the vendor sent invoice for goods/materials shipped in response to the PO? Has the vendor received payment for the invoice associated with the PO?

Procurement Process Physical Flow

In the procurement process, products/materials are physically transferred (shipped) from a vendor (supplier) location to the purchasing organization's location Once the shipped products/materials are inspected and compared to products/materials specified in the PO, they are often moved from the point of receipt to inventory storage locations.

Instance-Level Information in the Production Process

Information about the status of a particular production order enables the organization to address customer questions such as: Has the production order been approved? Has production been scheduled? Have the ordered products been produced

Fulfillment Process Instance-Level Information

Information associated with a particular customer order enables the organization to answer questions such as: Has the order been received? Has the order been picked? Packed? Has the order shipped? Has the invoice been sent? Has payment for the order been received?

Process-Level Information for the Fulfillment Process

Information generated from the aggregation of iterations of the fulfillment process can be used to address questions such as: -What is the average time between order receipt and shipment? Is this average time increasing or decreasing over time? -Which customers place the most orders? What do they typically order? -Which products are ordered most often? Which products are ordered least often? -What is the average revenue for a customer order? On average, how much does it cost to fulfill a customer order? -Which customers have the best payment history? Which customers habitually make late payments?

SCM and IT

Information technology is used in a supply chain to create process and information linkages within and between supply chain entities. IT is often used to enhance supply chain visibility -the ability to see what is happening upstream and downstream in the supply chain. IT facilitates integrated supply chain planning and control including supply chain planning, demand/supply management, and collaborative product development. IT facilitates event monitoring, inventory visibility, and SCM business intelligence. IT also enables collaborative logistics and the creation of vendor-managed inventory (VMI) systems.

Process-Level Information for the Production Process

Information that can be aggregated from multiple production orders to identify opportunities to improve the process. Questions that can be addressed include: -What is the average time needed to produce each finished good? -What is the average time needed to complete each operation in the production of a finished good? -Which finished goods are produced most frequently? -What percentage of production orders are completed on time? What percentage are delayed? -What are the common causes of production delays?

Instance Level Information in the Procurement Process

Instance-level information includes the information associated with an individual purchase order. Such as: Has the purchase order been received? Have the ordered goods been shipped? Do quantities received match the quantities ordered in the PO? Are there any backorders? Has the invoice been sent? Has the payment been received?

Business Process Information

Instance-level information is information related to a specific iteration of business process. -Examples include information related to a particular purchase, production, or customer order. Process-level information is aggregated from multiple process instances/iterations. -This enables the organization to address larger questions about the process, some of which may provide insight into how the process might be improved.

Procurement Cost KPIs

KPIs for procurement process costs include: Total cost: This considers the total amount of procurement cost savings from one year to the next after controlling for changes in the volume of procured goods and services. This serves as a measure of procurement's contribution to the organization's financial success in terms of P&L. Cost avoidance: Costs savings realized by delaying an increase in supplier prices or similar mechanisms that result in procurement spending be less than it would have been. Pipeline cost reductions: Cost reductions realized from negotiated cost savings with suppliers. This may result from resourcing a good/service or supplier or from negotiated contract changes.

Fulfillment Process Data Flow

Key data flows in the fulfillment process include data about the goods/materials items included in customer orders. This include each item's product ID, product description/name, product attributes (e.g. weight, color, size), unit price, and order quantity. Much of this data also flows to the order's picking list, shipping document (packing list) and invoice.

Procurement Process KPIs

Key performance indicators (KPIs) are established by many organizations to analyze data related to procurement performance goals. KPIs for supplier performance quality include: Contract compliance: The extent to which the supplier complies with pricing and delivery agreements. Delivery time: Comparing actual delivery times to those quoted in the contract. This might consider the percentages of on-time, late, and early deliveries. Defect rate: This considers the percentage of defective goods received in supplier deliveries. This might be measured in faults per unit or defects per million. Procurement cycle time: This might measure the average time between PO submission and goods receipt or the time between PO submission and supplier payment.

Determining the Acquisition approach

Key questions: Are there existing packages? How well do they match our needs? Do we have the skills needed to implement the software? Do we have the skills needed to modify the software? Is in house custom development an option? Do we have the programming skills? Do we have custom development project management skills? Do we have the technical infrastructure needed to run the software? What upgrades or enhancements will be required? What external help is available to assist with software selection, modification, development, and implementation?

Lean Software Development

Lean software development is based on lean enterprise movement principles and practices. It emphasizes waste reduction and optimizing efficiency within the organization's value stream - the mechanisms that create customer value. Waste is eliminated by focusing work on the most valuable parts of the system, prioritizing them, and delivering them in small batches. Efficiency is emphasized by striving to eliminate bottlenecks and dependencies in the system and through the efficient use of team resources. Because lean believes that those closest to the work are best able to decide how it should be done, lean development teams have significant control over their work flow. Just-in-time lean philosophy is illustrated in fast development speeds and constructing unit tests as program code is written.

Software Development: Waterfall Approach

Like the SDLC, the traditional approach to in house software development can be described as a waterfall model. -The products of the work completed in one phase flow to the next phase. The three phase of traditional in house software development are: -Design Construction Testing

Major CRM Software Vendors

Major CRM software vendors include: Salesforce Oracle SAP Adobe Systems Microsoft.

Additional ES Ecosystem Components

Major ES vendors often create education partnerships with colleges and universities to facilitate the adoption and use of ES software in university-level courses. One of the most extensive and successful education partnership programs has been established by SAP; it is called the SAP University Alliances (UA). In 2017, the SAP UA included more than 3100 institutions in 110 different countries. The goals of the UA include exposing students to current versions of SAP products and promoting the integration of SAP software into degree curricula. SAP also has created an organized network of user groups within its ecosystem. In North America, the user group is called ASUG (Americas SAP User Group). ASUG chapter members tend to be clustered around major cities, but numerous chapters are state-wide or multi-state. ASUG meetings are typically held quarterly at SAP customer venues. These are usually day-long events that include presentations by SAP ecosystem members (customers, consultancies, and partners). SAP encourages ASUG chapters to embrace SAP UA institutions in their region and to invite students to their meetings to network with SAP customers, partners, and consultancies.

SCM Software Vendors

Major SCM software vendors include: SAP Oracle JDA Software Manhattan Associates Epicor IBM.

Enterprise System Ecosystems

Major enterprise systems vendors, including SAP, Oracle, and Microsoft develop extensive ecosystems around their products. These help establish market leadership. Ecosystems are also developed to lock in existing customers and attract new ones. An enterprise system ecosystem is comprised of three major parties: software vendors, consultancies and adopting organizations (ES software customers). These parties work closely with one another to achieve common goals, such as improving the operating performance of the enterprise ES software adopter.

Which Acquisition Approach Offers the Least Risk at the Lowest Cost?

Make versus Buy It is typically less risky and expensive to purchase a software package, but several questions should be considered. Are packages available that provide at least 75% of the needed functionality? Do we have the technical skills to modify and implement the package? Do we have the infrastructure needed to operate the software? How much will it cost to implement the software package?

Types of Business Processes

Management processes - processes used to govern business systems. These include: -Governance processes - such as those used by a Board of Directors to oversee the business -Strategic management processes - such as strategic planning processes used by senior executive -Tactical management processes -- translate strategic plans into shorter-term actions Operational processes - core business processes within primary value chain activities. -Such as procurement, production, and fulfillment processes. Support processes - support core processes. -Such as accounting, HR, and technical support processes.

ERP Vendor Selection & Implementation

Many factors should be considered by an organization when choosing an ERP vendor. An appropriate level of due diligence is required because deploying an ERP system can be an expensive and time-consuming process. Implementing an ERP system often involves considerable organization change and adaptation, so the change management aspects of ERP implementation cannot be overlooked.

Online Marketplaces

Online marketplaces are business websites that serve as intermediaries between buyers and sellers; they are sometimes called supply chain enablers. Many online marketplaces require both buyers and suppliers to purchase/lease specialized software that enables them to access and use online marketplaces services. Some online marketplaces levy entry fees to join the marketplace and all levy fees on buyer-seller transactions. In addition to establishing relationships and providing a venue for transacting business, online marketplaces typically provide inventory management, shipment tracking, financing, and process improvement services. Some e-procurement providers offer hosted applications that enable buyers to manage requests for quotations (RFQs), POs, invoices, and goods receipts. Online B2B auction sites also have e-procurement roles for some organizations.

Operational Procurement Goals

Operational procurement includes the creation of purchase orders, goods receipt, and accounting activities including supplier payments. Operational procurement and purchasing goals include: Providing an uninterrupted flow of needed materials, supplies, and services. Minimizing inventory investment and loss. Finding and retaining competent suppliers. Reducing procurement process cycle time. Improving vendor payment processing time. Minimizing the number/percentage of "emergency" procurement orders.

Drivers of ES Adoption

Organizations implement enterprise systems to improve business performance, replace legacy systems, integrate systems across multiple locations, position organizations for growth, and to remain competitive in their industries. Organizations are also attracted to enterprise systems' potential to reduce costs and increase process efficiencies. -Cost savings are often realized from more efficient supply chains, reduced inventory levels, process efficiency improvements, process automation, and process integration.

BPR Benefits

Organizations who embrace BPR often experience reduced costs and cycle times for their business processes. By eliminating unproductive activities and the employees that perform them in the business processes that are most important to customers, BPR helps reduce costs and cycle times. Reorganizing into cross-function teams decreases the need for management layers, improves information flows, and reduces errors and rework caused by multiple handoffs among functional areas. Reducing work fragmentation and establishing clear process ownership enables workers to improve of products and services.

Outsourcing

Outsourcing is the delegation of work (IT or otherwise) from one party to another for a specified period of time, fee, and level of service. When software development is outsourced, design, construction, and some testing is performed by the contracted vendor. Acceptance testing is performed by the organization doing the outsourcing. When outsourcing occurs across national boundaries, it is called offshoring. Outsourced relationships for an IS include: Outsourcing complete IS operation Outsourcing IS development Numerous questions must be addressed for any outsourcing relationship.

PCO Benefits

PCO structures are considered to be best practice in industries where information flows and lean, rapid material flows are critical for sustained competitiveness. The multidisciplinary teams that are created are typically empowered to be self-managing. When PCO structures work as intended, core business processes can be run by fewer layers of management. -This reduces administrative costs and can increase overall efficiency and profitability. PCO structures enable increased communication and information sharing across the organization.

____ _____________ _______________ validate the project management experience and knowledge

PMI certified programs

Payment Terms

Payment terms are typically specified when contracts are created between buyers and sellers. Negotiated payment terms may be included on POs sent by buyers and on invoices sent from suppliers to buyers. Some common types of business-to-business payment terms include: Net nn, where nn specifies the number of days before the full amount specified in the invoice is due. For example, if the invoice stipulates Net 10, payment is due 10 days after the invoice date. X% mm/Net nn where X is a discount expressed as a percent of the total invoice amount - the buyer receives the discount if payment is made within mm days. For example, if the invoice stipulates 1% 10 Net 30, the buyer will receive a 1% discount if payment is made is 10 days; otherwise the total invoice amount is due 30 days after the invoice date.

Implementation Approaches

Plunge (Big Bang) - old systems are shut down and new system is used. -Most risky; back out strategy may be needed Pilot - one part of the organization gets access to the new system -Allows for system to be fully checked out before implementing it in other parts of the organization. Phased - one part of the system is used organization-wide -Other parts of the system are rolled out later, often one at a time. Parallel - both old and new system are used for a period of time, then the old system is shut down. -Least risky, but most expensive implementation approach

Primary Activities

Primary activities have an immediate effect on the production, maintenance, sales, and support of the products/services that the organization provides to market. In Porter's model, Inbound Logistics, Operations, Outbound Logistics, Marketing and Sales, and Service are primary activities. Inbound Logistics encompasses the activities associated with the inbound movement of materials, parts (components), and/or finished goods from suppliers to manufacturing or assembly facilities, warehouses, or retail stores. Essentially, these include all processes involved in receiving, internal distribution, and storing of the raw materials or basic ingredients of a product or service. Operations is concerned with managing the process that converts inputs (e.g. raw materials, energy, labor) into outputs (products and/or services). In a manufacturing organization, operations (aka production) includes all the activities that convert inputs into semi-finished or finished products. Outbound Logistics includes the activities associated with storing and moving finished products/services from the end of the production line to end users. Essentially, outbound logistics includes all the activities associated with delivering products and services to customers including storage, distribution, and transport activities. Marketing and Sales include the activities associated with selling a product or service to customers. Essentially, these include all processes associated making prospective customers aware of products/service and managing relationships with customers. Service encompasses the activities associated with ensuring the product/service works effectively for the buyer after it is sold and delivered. This encompasses the activities required to maintain the value of the products and/or services that customers buy from the organization.

BPM Design & Modeling

Process design includes the documentation of existing ("as-is") processes using process narratives, process flowcharts, data flow diagrams, and BPMN diagrams. -It also involves the design of "to-be" processes to improve or replace existing processes. -Proposed process improvements target workflow, regulatory, market, or other competitive challenges that the organization faces. Modeling activities take process designs and apply combinations of variables (such as cost changes) to determine how the proposed process might operate under different conditions. -It also typically involves running "what-if" analyses on the proposed processes to determine how the process might operate.

BPM Process Optimization

Process optimization activities involve the analysis of process performance data/information to identify real or potential bottlenecks, cost-saving, opportunities, and process improvement opportunities. It also involves leveraging the results of these analyses to make changes to the process design to bring actual process performance closer to ideal performance. Process optimization outcomes may result in changes to the process design, which, in turn, will result in another round of process modeling, execution, monitoring and optimization activities. The iterative nature of BPM activities illustrates that BPM is concerned with continual process improvement, which, over time, should help develop sustainably competitive business processes.

Process-Centered Organizations

Process-centered organization (PCO) structures have emerged as an alternative to traditional functional and product-oriented organization structures installed by organizations during the Industrial Age. PCO structures align organization structures with a business's value-adding processes. In process-centered organizations, employees are organized into multidisciplinary teams whose goals are focused on managing end-to-end tasks/activities of business processes that deliver value to customers.

Process-level Information

Process-level information is information aggregated from multiple process instances/iterations to address larger issues or provide insights for process improvement. Examples of questions that can be addressed from process-level information about the procurement process include: What is average time from sending a PO to goods receipt? What is the average time from PO submission to goods receipt per vendor? What is the average time from PO submission to goods receipt per good/material? Which vendors consistently deliver on time? Which vendors habitually deliver late? What goods/materials to we order most often? Which vendors do we buy from most often?

Supply Management

Procurement is often a part of an organization's supply management function The supply management function encompasses the activities associated with identifying, acquiring and managing the products and/or resources needed to run the organization including physical goods, information, services, and other needed resources. Inbound logistics, procurement, and materials management are key aspects of an organization's supply management function. Procurement is also widely viewed as a form of business-to-business (B2B) commerce because it involves the process of buying goods and services from another company

Procurement vs. Purchasing

Procurement is the overarching function that includes the activities and processes to acquire needed goods and services. Procurement is broader in scope than purchasing which includes the activities used by the organization to order and receive goods and services. Purchasing is the process used by the organization to order goods and typically includes activities for requesting goods, request approvals, purchase order creation, and receipt of ordered goods. Procurement goes beyond purchasing by encompassing the establishment of fundamental requirements for goods and services, and sourcing activities such strategic vetting, vendor selection, establishing payment terms, and contract negotiation.

Construction Phase

Program code is written Any needed hardware is acquired and installed The database is designed Conversion programs - programs that extract data from systems being replaced for movement to the new system - are written and run Routines for manually loading data into the new system are developed

Work system Implementation Process

Project Management Designate the Work System Developing the Technology Implementing the Work System

PMI has produced ________ _______________________ ______ __ _________________

Project Management of Body of Knowledge(PMBOK)

Chapter 5 Summary

Project management is used throughout systems acquisition to ensure that the system is acquired in a timely and cost effective manner. System design and requirements analysis precedes systems acquisition. Acquired software may be vendor packages (modified or not), developed in house (with or without external help), or outsourced development. In house custom development may follow the traditional waterfall model or agile and/or lean methodologies. Thorough software testing includes unit, systems, stress, and acceptance testing. System implementation approaches include plunge (Big Bang), pilot, phased, and parallel implementation.

Process-Level Information for the Procurement Process

Questions that can be addressed about the procurement process from process-level information include: What is average time from sending a PO to goods receipt? What is the average time from PO submission to goods receipt per vendor? What is the average time from PO submission to goods receipt per good/material? Which vendors consistently deliver on time? Which vendors habitually deliver late? What goods/materials to we order most often? Which vendors do we buy from most often?

CRM & ERP Integration

Robust CRM and ERP integration enables organizations to streamline their sales-oriented. business processes. Providing visibility into both frontend (CRM) and backend (ERP) systems can lead to business process simplification and increased productivity. Some ES vendors (including SAP and Oracle) facilitate CRM and ERP integration via including both CRM and ERP solutions as part of the same suite of ES software. Other ES vendors forge partnerships with one another to ensure that their CRM and ERP products can communicate and share data. A key question with CRM and ERP systems is which system will handle customer billing.

Major SRM Software Vendors

SAP, ORACLE, IBM, Infor, Mercateo

SCM Software

SCM software includes: -Demand planning software uses statistical tools and forecasting techniques to generate product and material demand forecasts. -Supply chain planning (SCP) software uses sophisticated mathematical algorithms to improve material/product flow and overall efficiency. -Supply chain execution (SCE) software automates materials and product handoffs among supply chain entities. Other SCM software includes warehouse management systems (WMS), global inventory management systems, transportation planning software, & distribution management software.

SRM & ERP Integration

SRM and ERP systems can be integrated in various ways to support the procure-to-pay process (see Figure 7-19). When a SRM user selects a vendor's product from the web catalog, places it in the shopping cart, and chooses "buy", one of two things may happen. In one scenario, the shopping cart item is converted to a purchase requisition in the ERP system and the ERP system assumes responsibility for the remaining steps in the procurement process. In the second scenario, a purchase order is created for the shopping cart item within the SRM system and the PO is replicated in the ERP system. In either scenario, the responsibility for creating the other major documents in the procurement process can be the responsibility of either ERP or SRM users.

SRM Software Categories

SRM software categories include: Sourcing software helps and organization find, evaluate, and engage suppliers. Supplier management software enables an organization to centrally manage and control supplier engagements and to improve buyer-vendor risk management. Electronic procurement software enables organizations to aggregate their suppliers' Web catalogs; it also facilitates electronic invoicing and payment activities. Operational procurement software facilitates the creation, verification, approval, transmission, and confirmation of purchase orders; it is also used to maintain adequate inventory levels and to execute inventory-related transactions. Spend and performance analysis software is used to analyze procurement expenditure data in order to identify opportunities to decrease procurement costs, improve efficiency, and monitor vendor performance. It also helps an organization gain insight into what they are buying and from whom, and to determine the extent to which expected savings from sourcing efforts are being realized.

SRM Software

SRM software includes the use of digital tools to manage relationships between buyers and suppliers and service contractors. SRM software grew out of earlier accounting applications that focused on tracking suppliers' expenses and contracts. SRM software is often in conjunction with SCM software because SCM focuses on relationships with upstream supply chain entities. Purchasing/buyer personnel use SRM software to delineate resupply strategies, administer contracts, assess supplier performance, and establish strategic supplier relationships. SRM software typically supports alerts/notifications for event monitoring/management and to minimize inventory shortages or excesses. SRM collaborative planning tools enable purchasing and/or buyer managers to exchange forecasts with vendors and to maintain historical buyer-supplier data. `

Sales Force Automation Systems

Sales force automation systems include: Opportunity management systems automate the tasks/activities associated with identifying/finding new customers for future sales. Contact management systems maintain customer and prospective customer contact information. Sales management systems automate each phase/step in the sales process, including generating sales quotations and processing customer orders; these also help sales representatives organize and coordinate their accounts.

Agile Scrum Methodology

Scrum is a lightweight project management framework for product development using one or more cross-functional, co-located, self-organizing teams that are four to nine in size. The teams are referred to as scrum development teams Each team is facilitated by a ScrumMaster who ensures that the team has everything it needs to succeed (resources, training, isolation from outside interference, etc.) Product features are collected in a product backlog that lists the system's potential features, functions or uses, or needed bug-fixes. The product backlog is prioritized by the product owner

ERP Systems & Procurement

Since first introduced, ERP systems have offered strong support for procurement processes. Over time, they have evolved to interact with other enterprise systems (including SCM and SRM) and procurement automation systems (such as EDI) to improve procurement process efficiency and effectiveness. Procurement process data/information generated and saved by ERP systems is often used to create procurement process dashboards and analytics that can contribute to continuous process improvement.

Six Sigma

Six Sigma is a set of tools and techniques for organization-wide business process improvement that has been adopted by numerous organizations in a wide-range of industries. It strives to improve process output quality by minimizing variability in business and manufacturing processes, especially variability caused by defects in process outputs (products or services). By identifying and eliminating the causes of output defects, process output quality is increased and the process as a whole is improved.

Process Maturity & Lean Six Sigma

Six Sigma uses a set of quality-focused empirical statistical methods to drive process improvement. Within organizations who have adopted Six Sigma, process "maturity" is measured by a sigma rating that identifies the percentage of defect-free outputs. A process that achieves a six sigma rating is one in which 99.99966% of process iterations produce outputs that are defect-free. Six Sigma ideas have been combined with lean manufacturing to create a methodology named Lean Six Sigma. Numerous organizations use Lean Six Sigma to drive efficiency and organization-wide innovation within their business processes.

Social Media CRM

Social media have had major impacts on both the marketing management and customer service management aspects of CRM. Social media marketing has emerged as an important component of marketing campaigns and in some campaigns, this overshadows traditional marketing channels (television, radio, and print media). Social media listening has emerged as an important aspect of customer service management; knowing what customers and prospective customers are saying about an organization's products and services on social media positions the organization to quickly identify and respond to customer service needs.

Purchase and Implement "vanilla"

Software is purchased from a software vendor and used "as-is" "Vanilla" means to use the software without modifying it This acquisition approach is feasible when the software matches the processes and activities in the work systems where it will be used This may also be used when it is acceptable to the organization to modify its work system processes and activities to align with the software

Business Process Decomposition

Some business processes are more complex than others. Complex business processes can be broken down into sub-processes. Each sub-process has its own trigger(s), sequence of tasks/activities, and outcomes.

ERP Vendor Selection Phases

Some organization's address the vendor selection questions summarized above within a systematic vendor selection process that includes the following phases: Research and requirements analysis Vendor comparison Request for proposals/quotations Technical validation Financial due diligence

ES & Business Transformation

Some organizations have purposely adopt and implement ERP systems and other ES to achieve dramatic improvements in productivity, efficiency, and process outputs. In essence, top managers of the organizations leverage ES to force the organization to make major or radical changes in business processes and operations that the organization might otherwise be unwilling or unable to make. This is essentially a strategic decision to make changes that top management thinks are necessary to ensure sustained competitiveness and survival. Because this is top-down organizational change that borders on being (or is) radical in nature, it typically stirs significant resistance among organizational employees. Such top-down, heavy-handed business transformation shares some of the goals of business process reengineering (BPR).

Strategic Procurement

Strategic procurement includes the development of long-range plans for ensuring timely supply of critical goods and services. It also includes: The assessment of the organization's demand for a product or service, Establishing a strategy for acquiring needed goods and services, Supplier evaluation and selection, Contract negotiation, and Supplier integration These are summarized in Figure 8-2.

Supplier Relationship Management (SRM)

Supplier relationship management (SRM) is a comprehensive approach for managing an organization's engagement with organizations that supply the goods and services that it uses. The goal of SRM is to streamline the processes that connect an organization to its suppliers and to make those processes more effective. SRM includes procurement processes as well as a variety of related processes such as forging mutually beneficial strategic partnerships with specific suppliers. SRM involves separating suppliers into categories based on the value (or risks) that they can bring to the organization

SRM & Strategic Procurement

Supplier relationship management (SRM) systems are frequently described as strategic procurement systems because they focus on joint value creation and collaboration with a limited number of suppliers. SRM software helps procurement managers complete the activities summarized in Figure 8-2. It also helps organizations monitor supplier performance after strategic partnerships are formed. SRM systems help organizations reduce procurement costs and reduce supply disruption risks. SRM can help an organization become a "preferred" customer by its suppliers and reduce price volatility for the materials that it needs.

Support Activities

Support (secondary) activities assist the primary activities and make up the basis of the organization. In Porter's model, support activities include Firm Infrastructure, Human Resource Management, Technology Development, and Procurement. Firm Infrastructure encompasses the support activities that enable the organization to maintain its daily operations. Accounting, finance, legal, public relations, quality assurance, and both general and strategic management are examples of firm infrastructure activities that keep organizations operating on a day-to-day basis. Human Resource Management includes the support activities that develop the organization's workforce. Recruiting, hiring, training/developing, and compensating are examples of human resource management activities. Downsizing activities (dismissing or laying off) personnel are also examples of human resource management activities. Technology Development includes the activities associated with the internal and external development and optimization of the organization's products and/or services. IT, technological innovation, and the development of new products from new technologies are examples of technology development activities. This includes the support activities associated with the equipment, hardware, software, procedures, and technical knowledge used by the organization to transform inputs into outputs. Procurement activities are the support activities involved with the acquisition of goods and/or services from external sources. Procurement activities include establishing and managing relationships with suppliers and negotiating prices and purchasing contracts for the materials and resources consumed by the organization's operations/production processes.

Procurement Process Strategic Goals

The alignment of procurement and corporate strategy is a goal in many businesses. Improving the organization's competitive position within its industry is another strategic goal for procurement. Procurement can contribute to the organization's competitive strategy (e.g. cost leadership or differentiation). It can contribute to corporate strategy is by creating sustainable advantage within the industry. Strategic procurement can also help an organization reduce risk and improve supplier performance.

EDI Evolution

The central idea of EDI has always been direct connections among buyer and vendor computer systems When EDI was first introduced, electronic documents were exchanged over telephone lines using modems or via point-to-point dedicated circuit that connected the buyer's computer system to the supplier's computer system. To reduce telecommunication costs, many organizations now use value-added networks (VANs) or virtual private network (VPN) connections to exchange EDI documents. Since the 2000s, the public Internet has become the dominant network for EDI connections among buyers and sellers.

Sprints

The functionality of the product is delivered in a series of sprints. A sprint is a short development period (less than 1 month) in which a working, testable, product increment is delivered. The product own creates a sprint backlog by selecting items from the product backlog that can be completed within the sprint period. At the end of the sprint, an iteration review and retrospective is done. Stakeholders review the delivered functionality and make suggestions and identify corrections and/or additional functionality to add to the product backlog. The agile process is illustrated in Figures 5-6 and 5-7.

Production Strategies

The make-to-stock production strategy is driven by finished goods inventory levels. -Finished goods are stored in one or more warehouses until they are needed to fulfill customer orders. -When warehouse inventories fall below predefined levels, the production process is triggered to bring inventory back to acceptable levels. In the make-to-order production strategy, the production process is triggered by the receipt of a customer-order. -This strategy is best suited for low volume, high profit margin situations where products are custom-produced to customer specification.

Three-Way Match

The procedure used by accounting/personnel to reconcile the data/information in an invoice with the data/information in the purchase order and goods receipt document is called the three-way match. It is an internal, accounting control procedure used when processing a supplier. Its purpose is safeguard the organization's assets by avoiding making payments for incorrect or fraudulent invoices. The "three-way" refers to the three documents involved in the matching process: The invoice which received from the supplier. This becomes part of the organization's accounts payable when it is approved. The purchase order that sent to the supplier. The goods receipt document (receiving report) created by the organization after receiving the shipment of goods specified in the PO.

Chapter 8 Summary

The procurement process is found in virtually every organization. There are two forms of procurement: strategic and operational. Manufacturing organizations have two major types of procurement: direct and indirect. Procurement process KPIs for supplier performance quality and costs are frequently used. Procurement process actors include business unit personnel, purchasing personnel, warehouse personnel, and accounting personnel. The process's document flow includes purchase requisition, purchase order, goods receipt, vendor invoice, and invoice payment. The process's physical flow is the shipment of goods/materials from supplier to buyer. Key data/information flows include the descriptions, quantities and prices of goods/materials in purchase orders, shipments, and invoices. Instance-level information enables questions related to a specific purchase order to be answered. Process-level information enables the identification of ways/opportunities to improve the procurement process. Complicating issues include supply chain scope, legal issues, FOB points, payment terms, and returns. EDI, online marketplaces, VMI software, SRM systems, SCM systems, and ERP systems provide automated support for procurement process activities.

Procurement Process Overview

The procurement process is the sequence of activities used by an organization to obtain needed materials. Virtually every organization has a procurement process. The procurement process is associated with the inbound logistics component of Porter's value chain. Purchasing is an important aspect of the procurement process; purchasing is identified as a secondary activity within Porter's value chain model. There are three fundamental activities associated with an organization's procurement process: (1) ordering needed materials from suppliers; (2) receiving ordered materials; and (3) paying the supplier. In most organizations, these activities are carried out by actors in multiple departments or functions which means that procurement is a cross-functional business process.

Production Process

The production process includes the tasks/activities used by an organization to transform inputs (raw materials and/or components) into outputs (products and services) that are valued by customers. It is more complex than the procurement and fulfillment processes and it is typically integrated with both. The production process supports the operations activity in Porter's Value Chain model. Because it shares integration points with procurement and fulfillment, the production process can also be mapped to the inbound logistics, marketing and sales, and outbound logistics activities in the value chain.

Systems Development Life Cycle

The systems development life cycle (SDLC) is a well known approach for acquiring or developing work and information systems. The development/acquisition phases of the SDLC includes: system definition, requirements analysis, system design, system construction, testing,implementation The SDLC is a waterfall model because each phase is completed in sequence and is completed before the next one begins (see Figure 5-3).

Testing

The testing phase ensures that the system functions as specified and designed. As individual program models are completed, they are subject to unit testing to ensure that it functions correctly. After passing unit tests, program models are integrated into subsystems which in turn are integrated into the complete system. Then system testing takes place to ensure that all the pieces work together as they should. Conversion programs are also tested during system testing to ensure that data is correctly loaded. Acceptance testing involves user interaction with the system and its data to ensure that it meets their expectations.

Three-way match

The three-way match is an important accounting control within the procurement process. It reconciles (matches) Purchase Order (PO), Goods Receipt, and Invoice data. When the data in these documents align, payment to the vendor can be authorized. Essentially, when organization's Goods Receipt document verifies the receipt of the correct quantities of the goods ordered in the PO when vendor's Invoice specifies the correct quantities of the correct goods and correct prices, payment can be authorized.

ERP Implementation Strategies

The two most widely used ERP implementation strategies are "the Big Bang" ERP implementation strategy and the "phased- roll out" ERP implementation strategy. The Big Bang ERP implementation strategy involves rolling out the ERP system all at once. This strategy requires considerable pre-implementation preparation to ensure implementation success as well as a fall back plan. In the Phased Rollout ERP implementation strategy, the ERP system is rolled out in phases according to a pre-determined plan. Users are adapt to a series of smaller changes made over an extended time period. There can be module by module, business unit by business unit, or geographic location by geographic location. A third, less popular implementation option is the parallel adoption strategy. This involves running the new ERP system alongside the old system(s) that it is replacing for a period of time.

Enterprise Systems Examples

There are many types of enterprise systems. Four of the most widely used types of ES are: -customer relationship management (CRM) systems -supply chain management (SCM) systems -supplier relationship management (SRM) systems -enterprise resources planning (ERP) systems.

Production Process Physical Flows

There are more physical flows in the production process than in the procurement or fulfillment process. These include: -The movement of raw materials and/or components from the raw materials warehouse to work centers in the production area. -The movement of work-in-progress among work centers in the production area. -The movement of finished goods from the production area to the finished goods warehouse.

ERP Vendor Selection Issues

There are numerous questions that should be considered when choosing the ERP vendor. These include: -What is the vendor's reputation and situation? What technologies are included in the vendor's ERP solution? What are the ERP system's functionalities and ease of use? What are the true costs of the vendor's ERP solution What kind of support and training is available? Numerous sub-questions are associated with each of these larger ERP vendor selection questions.

E-Procurement

There are two major forms of electronic procurement (e-procurement): electronic data interchange (EDI) and online marketplaces. Some solutions used by today's organizations are hybrid mixtures of EDI and online marketplaces. Electronic data interchange (EDI) provides buyers and sellers with a pre-defined, standardized way of exchanging business documents including quotations, purchase orders, purchase order receipts/confirmations, and invoices. In EDI, the structure and content of business documents are standardized to enable their contents to be transmitted electronically between the computer systems of buyers and sellers.

Internal Capability Assessment

This involves getting honest answers to several questions including: Do we have the technical skills needed to build the work system? Do we have the project management skills needed to oversee in house development of the work system? Do we have the technical infrastructure needed to run the software packages? Are upgrades needed? Once the organization knows what is available and its internal capabilities, it can decide whether to build or purchase the software and what it will take to make it work.

Purchase and Modify

This involves modifying vendor software to fit the needs of the organization Many software programs have parameters that can be adjusted to conform the software to different ways of operating Adjusting such parameters is configuration If configuration is insufficient to meet organizational needs, the software may be customized. Customization involves changing or writing new program code to provide changed or new software functionality Configuration and customization of ERP systems is common and is often performed under the guidance of consultants

Custom Development

This involves writing software from scratch This approach may be used when there is no vendor software that matches the work systems processes and activities or when it is not feasible or cost effective to modify vendor software to conform to work system requirements. There are three ways to do custom development Completely in house without external help - this is possible when the organization has the programming expertise needed to write the program code on staff In house with external help - some of the software is developed by the organization's programmers and the rest is developed by contract programming firms Outsourced development - all of the software is developed by one or more contract programming firms.

Test cases and Scripts

To ensure that the new system is completely tested, test cases and scripts are constructed. -Test cases describe what is to be tested -Test scripts specify how the test will be performed Load (stress) tests are run to ensure that system provides required response times and can handle expected transaction loads. When test results are different from expectations, "bug reports" are generated. -A bug is a defect in system functioning. -The programming team corrects the bugs and tests (unit, system, acceptance) are rerun.

Full-fledged ERP Systems

Today, to be considered a full-fledged ERP system, a software vendor's ERP product must be able to support: Manufacturing Human resources Accounting and finance Sales Purchasing, and Inventory management processes It must also be able to be able to serve as an integration point for an organization's SCM, CRM, and SRM systems. Because it can interface and interact with other enterprise systems, an ERP system is the heart of an organization's suite of enterprise applications.

ERP Implementation Challenges & Issues

Top management commitment Reengineering business processes Integration of ERP with other BIS applications ERP consultants Selecting employees for the implementation team Employee training

Vendor Managed Inventory (VMI)

Vendor managed inventory (VMI) involves collaboration among suppliers and buyers to streamline inventory management and order fulfillment. The goal of VMI is increased communication among buyers and suppliers that results in better alignment among business objectives and supply chain operations for both. In VMI, buyers typically allow suppliers to monitor the inventory levels of the goods/materials they order from suppliers. When the on-hand inventory level falls to the order point, VMI software automatically sends a purchase order to the supplier and a PO acknowledgement to the buyer. In some arrangements, order points are established to support just-in-time inventory management initiatives.

Chapter 6 summary

Value chain primary and secondary activities links competitive strategy to work systems and IS. Business processes are sequences of linked tasks/activities that produce outputs needed and/or valued by customers. Well-designed business processes are both efficient and effective. There are three main types business processes: management processes, operational processes, and support processes. Cross-functional business processes require interaction and coordination of multiple departments (functions) to work together to complete tasks/activities; these are common in process-centered organizations. Four "flows" may be observed the sequence of process tasks/activities: physical flow, document flow, data flow, and information flow. Three common operational business processes are the procurement, fulfillment, and production processes. Business process flowcharts, data flow diagrams, and BPMN diagrams are commonly used to visualize and document business processes. Business process improvement initiatives include BPM, BPR, Six Sigma, and Lean Six Sigma.

Procurement Process Actors

Warehouse personnel are responsible for monitoring direct materials inventory levels and initiating purchase requisitions. Business unit personnel monitor indirect materials inventory levels and initiate purchase requisitions. Purchasing unit personnel aggregate purchase requisitions into purchase orders (POs). Shipping/receiving personnel receive the materials/goods that are ordered from suppliers. Accounting/finance personnel are responsible for receiving invoices from suppliers and issuing payments.

Web-based SRM

Web-based SRM software provides a real-time interface between the organization and its suppliers. It enables buyers to check PO status and scheduled delivery dates. Because it enables suppliers to monitor buyer stock levels, web-based SRM is often an important part of vendor managed inventory (VMI) partnerships. SRM software supports e-procurement by enabling buyers to aggregate suppliers' Web catalogs, accept electronic invoices, and make electronic payments. SRM software also facilitates the creation, transmission, and confirmation of POs and the execution of inventory-related transactions.

Web-based SRM Software

Web-based SRM software provides a real-time interface between the organization and its suppliers. It enables buyers to check the status of purchase orders or scheduled delivery dates. Web-based SRM enables suppliers to monitor the organization's stock levels to determine when the organization needs to be re-stocked --; this is critical in vendor managed inventory (VMI) partnerships.

VMI Partnerships

When a VMI arrangement is established, the responsibility for managing the buyer's inventory of the goods/materials shifts from the supplier from the buyer to supplier. In some arrangement, the supplier retains ownership of the inventory at the buyer's location until it is sold to buyer customers. The supplier essentially becomes a business partner that is responsible for maintaining adequate inventory levels at the buyer's location(s). So, from the perspective of buyers, an important determinant of VMI success is establishing partnerships with suppliers that dependably monitor and replenish inventory.

Backorders

When a supplier cannot ship the quantity for a good/material specified in a buyer's PO, the difference between the specified and shipped quantity may be backordered. This happens when the vendor's supply of a good/material is less than the quantity specified in the buyer's PO. When the purchasing contract allows backorders, the supplier can sell inventory to the buyer that it does not have at the time that it receives the PO. Because they are exceptions to a supplier's fulfillment process and a buyer's procurement process, backorders create complications for both suppliers and buyers and increase the inventory management challenges of both.

SRM Strategic Partnerships

When an organization enters a strategic partnership with a supplier, high levels interaction and collaboration are often required to make the business processes that connect them efficient and effective. Both organizations are likely to share closely-held information with the other in order to improve the coordination of their interactions and to enable each of them to be more profitable.

Work Centers

When production is authorized and released, a commitment is made to produce a specific quantity of finished goods by a certain date. Numerous resources including raw materials/components and work centers are committed to producing the specified quantity of finished goods in the production order. -A work center is a location where specific work operations needed to produce a finished good are carried out. -During production, the product is routed among work centers until the finished good is complete.

System Acquisition Options

When requirements are finalized, the organization must decide how system will be acquired and/or developed Multiple options exist including: Purchase off the shelf and implement "vanilla", Purchase off the shelf and modify, Custom development: Done completely in house Done in house with help, Outsourcing all work system development work

In House Development

When the decision to made to build the software in house, software design, construction, and testing is performed by staff within the organization. This may be augmented by contract personnel to supplement or provide skills or capabilities that the organization lacks. Two major approaches exist for in house development: The traditional waterfall approach Agile development

How Does a Value Chain Work?

Within the organization, a product/service pass through a chain of activities and each activity adds value to the product/service. According to Porter, the total value added by an organization's value chain activities is greater than the sum of the value added by each value chain activity. Primary and secondary (support) value chain activities are included in Porter's Value Chain Model. These are illustrated in Figure 6-1. Organizations use primary and support activities as building blocks for creating valuable products/services and distinctiveness within the market.

Project Portfolio

a list of prioritized projects

PMI ___________ programs for project ____________ that are globally recognized.

certified managers

During the initiate phase Project Boundaries

defined and articulated in a project charter

Formal Project Management Phases

initiate plan execute monitor and control plan execute complete

Project Management Institute(PMI)

international professional organization for project managers

During the iniate phase, busiiness case for the work system

is prepared

Project success

the project delivers a product or service that provides desired business benefits