ERP as a business concept resounds as a powerful internal information management nirvana: Everyone involved in sourcing, producing, and delivering the company’s product works with the same information, which eliminates redundancies, reduces wasted time, and removes misinformation. Learning outcomes Buffet believes In focused Investing and believes that all Investors should look at five features: 1 . The certainty with which the long-term economic characteristics of the business can be evaluated 2.
The certainty with which management can be evaluated, both as to Its ability to realize the full potential of the business and to wisely employ Its cash flows 3. The certainty with which management can be counted on to channel the reward from the business to the shareholders rather than to Itself 4. The purchase price of the business the degree by which an investor’s purchasing-power return is reduced from his gross return Innovation finding new six best practices of innovation: Find your relevant edge
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Assemble innovation hothouses Reward risk takers Celebrate diversity Look around Mix practitioners and developers Social entrepreneurship “going green” Social Responsibility implies that an organization has a responsibility to society. Corporate Policy reflects the position a company takes on social and political issues. Sustainable or “Green” describes systems that minimize damage to the environment. Energy consumption Breakdown of Power Usage in The Typical Data Centre For convenience and to allow for automatic updates and backup, the majority of computer equipment is never completely shut down.
It draws energy 24 hours a day. Percentage lighting/humidifier power distribution units air conditioners Ups IT equipment Chiller E waste State – Refers to discarded, obsolete or broken electronic devices Sustainable IT disposal – Refers to the safe disposal of MIS assets at the end of their life cycle Electronic Product Stewardship Canada (PEPS) – an industry association that educates and encourages e-waste control Recent International laws restrict the use of hazardous materials.
Moor’s Law has made technological devices smaller, cheaper, and faster, allowing more people from all income levels to purchase computing equipment. This increased demand is causing numerous environmental issues. State refers to drives, printer cartridges, cell phones, pods, external hard drives, TV’s, Vicars, DVD players, microwaves, and so on. Greener IT four ways to save energy in a data center use outdoor air for cooling, cool high density areas, use low power processors, incorporate cooling solutions, use server power management, buy high efficiency power supplies, use overpopulation to consolidate servers.
Organizational social networking three types of social networking an organization can implement: Passive search Boomerangs Marketing networks Passive Search?Finding people for new Jobs who are happy and productive where they through business networking sites. Boomerangs?Former employees returning to old Jobs. Marketing Networks?Using business networks for marketing and events It’s a whole new world Virtual World?An Internet resource which presents a AD virtual community.
Virtual Organizations- interactive web presence for businesses and their customers. Virtual Workforce?working from home… Or anywhere via the Internet. Tools for virtual workforce Mobile commerce (m-commerce)?ability to purchase goods and services through a mobile device. Telemetric?The blending of wired and wireless technologies for efficient electronic communication. Electronic tagging?the use of RIFF (radio frequency identification) and other systems to identify and tracking digital assets. 4. Enterprise resource planning ERP Failures Blaming ERP for the “pickle” that many a company who has implemented ERP find themselves in is like blaming the CAD package for a poorly architect building. Like just about everything else, IT-enabling business processes is about using the right tools for the right reasons and executing. Enterprise resource planning – integrates all departments and functions hat employees can make enterprise-wide decisions by viewing enterprise-wide information on all business operations.
ERP powerful organization tools Solution to incompatible applications. Addresses the need for global information sharing. Avoids the expense of fixing legacy systems. Legacy Systems?are older computer technology still in use. Functional Systems? serve single business departments or units. Legacy systems exist in personal computing as well as business Enterprise resource planning system Core data – employees, orders, customers, sales, inventory 0 ERP- Global sales report,
Global manufacturing report, global shipping report Enterprise resource planning – ERP Integration Data Flow At the heart of all ERP systems is a database; when a user enters or updates information in one module, it is immediately and automatically updated throughout the entire system “Data” (centre) – purchasing, accounting and finance, manual resources, inventory, manufacturing, marketing and sales Why do organizations need integrations, if an ERP system contains one database that connects all applications together?
Most organizations operate functional “silos”, and each department happily has its own systems A company might purchase an ERP and then all of the functional silos would be on one system; however, this doesn’t happen very often in the real world ERP automates business processes such as order fulfillment?taking an order from a customer, shipping the purchase, and then billing for it.
With an ERP system, when a customer service representative takes an order from a customer, he or she has all the data necessary to complete the order. When one department finishes with the order, it is automatically routed via the ERP system to the next department. To find out here the order is at any point, a user needs only to log in to the ERP system and track the order.
ERP systems automate business processes, for example, order fulfillment When a Customer Service Representative (CARS) takes an order from a customer, he or she has all the information necessary to complete the order (the customer’s credit rating and order history, the company’s inventory levels, and the delivery schedule) ERP process flow Data”centre” sales/quote/order warehouse pack/ship receiving returns accounting/billing/payment The organization before ERP Multiple functional systems provide support for the unique needs of each department but cannot be integrated across the enterprise document management, workflow, ERP … Etc The organization after ERP – A central processing needs of each functional unit while having data sharing across the enterprise. Core and extended ERP components The evolution of ERP ERP – material planning, order entry, distribution, general ledger, accounting, shop floor control Extended ERP – scheduling, forecasting, capacity planning, commerce, warehousing, logistics ERP -II – project management, knowledge management, workflow management, customer relationship’, human resource, portal capability
Core ERP components – traditional components included in most ERP systems and they primarily focus on internal operations Extended ERP components – extra components that meet the organizational needs not covered by the core components and primarily focus on external operations Core and extended ERP components Three most common core ERP components 1 . Accounting and finance 2. Production and materials management 3.
Human resource Accounting and finance ERP component – manages accounting data and financial processes within the enterprise with functions such as general ledger, accounts payable, accounts receivable, budgeting, and asset management Dudley Harley-Davidson Canada (DDCD), the exclusive Canadian distributor of Harley- Davidson motorcycles, has improved inventory, turnaround time, margins, and customer satisfaction?all with the implementation of a financial ERP system Production and materials management ERP component – handles the various aspects of production planning and execution such as demand forecasting, production scheduling, Job cost accounting, and quality control Production and materials management ERP components This figure displays the typical ERP production planning process. The process begins with forecasting sales in order to plan operations. A detailed production schedule is developed if the product is produced, and a materials requirement plan is completed in the product is purchased. Sales forecasting 0 operations planning 0 detailed scheduling/production, 0 materials requirement planning, purchasing Human resource ERP component – tracks employee information including payroll, legal requirements of multiple Jurisdictions and tax authorities Extended ERP components include: Business intelligence Customer relationship management Supply chain management
E-business Business intelligence – describes information that people use to support their decision-making efforts Customer relationship management – involves managing all aspects of a customer’s relationships with an organization to increase customer loyalty and retention and an organization’s profitability Supply chain management – involves the management of information flows between and among stages in a supply chain to maximize total supply chain effectiveness and profitability E-business – means conducting business on the Internet, not only buying and selling, but also Irving customers and collaborating with business partners Primary Users and Business Benefits of Enterprise Applications Enterprise application – CRM, SCM, ERP Examples parenting/CSS, customers, accosting finance logistics Integration Middleware – Several different types of software that sit between and provide connectivity for two or more software applications The connected corporation Enterprise application integration middleware – Takes a new approach to middleware by packaging commonly used applications together, reducing the time needed to integrate applications from multiple vendors
Measuring ERP Success with the Balanced Scorecard The Four Primary Perspectives of the Balanced Scorecard Vision and strategy – financial, internal business process, customer, learning and growing Balanced Scorecard is a measurement system whose objective is to clarify the company’s vision and strategy and translate them into actions. It starts with the customer… Customer?”To achieve our vision, how should we appear to our customer. Financial -“To succeed financially, how should we be appearing to our shareholders? ” Internal Business Process?”To satisfy our shareholders and customers, what business processes must we excel at? ” Learning and Growing?”To achieve our vision, how will we sustain our ability to change and improve? ” Successful ERP projects share 3 attributes 1. Overall fit Off the rack Off the rack and tailored to fit Custom made 2.
Proper business analysis Successful companies spend up to 10 percent of the project budget on a business analysis 3. Solid implementation plans A plan is needed to monitor the quality, objectives, and timeliness Overall fit This refers to the degree of gaps that exist between the system and the business process. A well-fitting ERP has no major process gaps and very few minor ones Proper business analysis The best way to determine which fit strategy is right is to conduct a thorough business analysis. Successful companies normally spend up to 10 percent of the project budget on a business analysis. Chapter 5 Operations Management and Supply Chain Management SECTION 5. – OPERATIONS MANAGEMENT “over view” Operations Management Fundamentals MM in Business Information Systems’ Role in MM SECTION 5. 2 – SUPPLY CHAIN FUNDAMENTALS Supply Chain Fundamentals Information Systems’ Role in the Supply Chain Supply Chain Management Success Factors Future Supply Chain Trends Operations management foundations Production management describes all the activities managers do to help companies create goods. Operations management (MM) is the management of systems or processes that convert or transform resources (including human resources) into goods and services. A transformation process is often referred to as the technical core, especially in manufacturing organizations, and is the actual conversion of inputs to outputs.
Operations management fundamentals Operations Involves the Conversion of Inputs into Outputs Example of Inputs, Transformation, and Outputs MM in business Typical MM activities include: Forecasting Capacity planning Scheduling Managing inventory Assuring quality Motivating and training employees Locating facilities Forecasting: Estimating demand for a product/service Capacity Planning: Determining the amount of space, equipment and throughput is needed to achieve the production targets. Scheduling: Determining when the production will occur. Managing inventory: Ensuring raw materials will be available on time and in place and that work in progress and finished goods have storage.
Assuring quality: Ensuring standards are met through sampling inputs, in process work and outputs. Motivating and training employees: Appropriate pay, benefits, scheduling, and direction, supervision and instructions. Locating Facilities: Determining where to put production facilities and the cost effectiveness of near major markets or away from markets and close to transportation routes. Hierarchy of operational planning IS support for operations strategy depends on IS support for operations strategy depends on: Level of available technology. Skill level of workers. Degree of vertical integration, to what degree the suppliers are owned (or partnered) with the company. Extent to which outside suppliers are used.
SUB Strategic Business Unit?is a stand-alone business under a corporate umbrella Strategic Planning?are the collection of decisions focus in doing the right things over a longer period of time MR. Systems?use sales forecast to make sure parts and materials are available Global Inventory Management Systems (SIMS)?locate, track and predict materials and components by installing GAPS in transportation vehicles Operational Planning and Control (POP&C)?deals with day-to-day operations. Competitive MM strategy Five key competitive priorities that can add value for customers: 1 . Cost 2. Quality 3. Delivery 5. Service 1 . Cost?key determinant in a customer purchase decision 2. Quality?product quality should reflect the exact requirements of a customer Process quality ensures a consistent error-free quality level.
Several international quality methodologies exist including Six Sigma Quality, SISSIES, IS014000, TTS, COMIC. An assignment for students is for individual students or groups to research one of these methodologies to see when they started and by whom; what objective is achieved and how; what prominent companies use them today and why; and what the advantages as well as disadvantages there are. 3. Delivery?fast and reliable 4. Flexibility?offering a wide variety of products to customers. Offering a choice of environmentally friendly products and services. 5. Service?New products revert to being commodities quickly. Often the distinguishing factor is the service provided by the supplier. M and the supply chain Supply chain consists of all parties involved, directly or indirectly, in the procurement of a product or raw material Supply chain management (SCM) involves the management of information flows between and among stages in a supply chain to maximize total effectiveness and profitability. The four basic components of Supply chain management (SCM) are: Supply chain strategy Supply chain partners Supply chain operation Supply chain logistics Supply Chain Strategy. A company must have a plan for managing all the resources that go toward meeting customer demand for products or services. Supply Chain Partners – Companies chosen to deliver finished products, raw materials and services.
Supply Chain Operations -Scheduling production activities, including jesting, packaging, and preparing for delivery. Supply Chain Logistics?product delivery process and elements including orders, warehouses, carriers, defective product returns and invoicing. A typical manufacturing supply chain: Supplier, storage, manufacturing, storage (finished goods), distribution, retailer, customer A typical service supply chain: Supplier, storage, service, customer SCM software can enable an organization to generate efficiencies within these steps different supply chain components. Impact of Efficient & Effective Supply Chain Management on Porter’s Five Forces
Effective and efficient SCM systems can enable an organization to Decrease the power of its buyers Increase its own supplier power Increase switching costs to reduce the threat of substitute products or services Create entry barriers thereby reducing the threat of new entrants Increase efficiencies while seeking a competitive advantage through cost leadership “Organizations supply chain” Supplier power + 5. 2 Supply Chain Fundamentals Supply chain fundamentals The supply chain has three main links: 1 . Materials flow from suppliers and their “upstream” suppliers at all levels 2. Transformation of materials into semi-finished and finished products through the organization’s own production process 3.
Distribution of products to customers and their “downstream” customers at all levels Collecting, analyzing, and distributing transactional information to all relevant parties, SCM systems help all the different entities in the supply chain work together more effectively SCM has significantly improved companies’ forecasting abilities over the last few years A Typical Supply Chain for a Manufacturer Supplier/supplies 0 suppliers manufacturer (transformation)ј distributor retailers customer customer’s customer They need to determine all areas and potential threats that make the supply chain vulnerable. For example, An unusually bad season in Australia causes the eucalyptus harvest to fall short of expectation production levels, which causes the price to skyrocket The factory in Lit, Pennsylvania, is destroyed by a fire One of its transportation ships sinks A hurricane causes one of its transportation ships to be delayed The five basic supply chain management components Plan – This is the strategic portion of supply chain management. A company must