SCM CRP ERP Decision Support

Decision Support

Day 2 – Module 5

Text MaterialsChapter 4 – Decision SupportChapter 7 – Enterprise Infrastructure

Decision Support

• Decision Making and Information Systems-Types of decisions, examples- TPS, MIS, DSS- Executive Support Systems

• Supply Chain Management• Customer Relationship Management• Enterprise Resource Planning

Types of Decisions

TPS – Transaction Processing Systems

• Basic business systems that serve the organization’s operational level

• Input: Transactions, events

• Processing: Sorting, listing, merging, updating

• Output: Detailed reports, lists, summaries

• Users: Operations personnel, supervisors

TPSData

MIS – Management Information Systems

TPSData

•Serve management level; provide reports and access to company data

•Input: Summary transaction data, high-volume data, simple models

•Processing: Routine reports, simple models, low-level analysis

•Output: Summary and exception reports

•Users: Middle managers

MIS – Management Information Systems

DSS – Decision Support Systems

TPSData

• Serve management level with data analysis for making decisions

• Input: Low-volume data or massive databases, analytic models, and data analysis tools

• Processing: Interactive, simulations, analysis• Output: Special reports, decision analyses, responses to

queries• Users: Professionals, staff managers

OtherData

OtherData

DSS – Voyage Estimating System

Executive Support Systems

TPSData

OtherData

OtherData

• Provide communications and computing environment that serves the organization’s strategic level

• Input: External and internal aggregate data• Processing: Graphics, simulations, interactive• Output: Projections, responses to queries• Users: Senior Managers

Executive Support Systems

Putting Decision Support All TogetherThe 4 Major Types of Information Systems

Putting Decision Support All TogetherThe 4 Major Types of Information Systems

System Description Organizational Level

Machine control Control the actions of machines and equipment

Production planning

Decide when and how many products should be produced

Facilities location

Decide where to locate new facilities

Supply Chain Management Systems

Supply Chain Management Systems – Nike Example


• Supply Chain Management Systems (SCM): Automate flow of information between firm and suppliers to optimize production and delivery

• Supply Chain Management: Close linkage of activities involved in buying, making, moving a product

• Supply Chain: Network of organizations and business processes for production and distribution of products


Information Systems Can Help Supply Chain Participants:• Decide when and what to produce, store, and move• Rapidly communicate orders• Track status of orders• Check and monitor inventory• Reduce inventory, transportation, warehousing costs• Track shipments• Plan production based on actual customer demand• Rapidly communicate changes in product design

Supply Chain Management

Upstream Downstream

Inboundlogistics

Productionprocesses

Outboundlogistics

Sales andmarketing

Customerservice

Information Technology

Upstream Downstream

Supply Chain Management

Yes No

Federal Express

Supply Chain Management - Logistics

• Most supply chains use inter-modal transportation, multiple transportation channels (railway, truck, etc) to move products from origin destination

• This creates supply chain complexities

Supply Chain Management - Goals

• Fulfillment

• Logistics

• Production

• Revenue and profit

• Cost and price

• Cooperation among SC partners

A Good SCM System will help a firm

• Decide when and what to produce, store, and move

• Rapidly communicate orders

• Track the status of orders

• Check inventory availability and monitor inventory levels

• Reduce inventory, transportation, and warehousing costs

• Track shipments

• Plan production based on actual customer demand

• Rapidly communicate changes in product design

Supply Chain Management – Haworth Case

Identify the problem Haworth was facing.

What alternative solutions were available to management?

How well did the chosen solution work?

What people, organization, and technology issues need to be addressed?

Additional SCM Resources

• i2 Technologies – www.i2.com• Manugistics• Supply Chain Knowledge Base – supplychain.ittoolbox.com• Supply Chain Management Review – www.scmr.com• CIO Magazine – www.cio.com• About Inc. (Logistics/Supply Chain) – logistics.about.com• IBM - http://www-03.ibm.com/solutions/businesssolutions/scm/index.jsp

• Oracle/PeopleSoft Supply Chain – www.oracle.com/applications/scm• Institute for Supply Chain Management – www.ism.ws

http://www.i2.com/

http://www.scmr.com/

http://www.cio.com/

http://www.oracle.com/applications/scm

http://www.ism.ws/

Customer Relationship Management - CRM

Sample CRM System Infrastructure

A Good CRM System will help a firm

• More precise and targeted marketing campaigns.

• Effective management of the sales process.

• Providing superior service and support.

• Better understanding of customer needs.

• Tailoring offerings.

• Integration of pertinent customer information.

Additional CRM Resources

• Siebel Systems – www.oracle.com/siebel• Salesforce.com• cio.com• MyCustomer.com• IBM -http://www-03.ibm.com/solutions/businesssolutions/crm/index.jsp?re=boost

• CRM Today – www.crm2day.com• Business2.0• CRM Knowledge Base – crm.ittoolbox.com• destinationCRM.com

http://www.oracle.com/siebel

http://www.crm2day.com/

Enterprise Resource Planning

• Enterprise Resource Planning Systems is a computer system that integrates application programs in accounting, sales, manufacturing, and other functions in the firm

• This integration is accomplished through a database shared by all the application programs

ERP can be considered an initiative launched to better manage business processes across the organization using a common, integrated database, shared data management applications and reporting tools.

Enterprise Resource Planning - Background

An organization’s critical business processes often cut across many of its functional units.

In most organizations, each process has its own data needs and applications that operate as distinct systems.

The results of this approach:- Function-Centric view in the business units- Operational Inefficiencies

Example: A customer order

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ERP evolved from MRP (Material Requirements Planning) and MRP II.

Material requirements plan

Inventory records Inventory transactions

Bills of materialsRoutings

Time standards

MRPMRPexplosionexplosion

Master production schedule

Manufacturing resource planCost and

financial data

Customer orders Forecasts


“Instead of having one set of numbers for the operating system in manufacturing and one set kept by the financial people – once the manufacturing people have numbers that are valid, the financial people can use these to get their numbers. Of course, whenever there are two systems – the numbers are bound to be different. With MRP II, everybody can be working with the same set of numbers, but that’s only the technical difference. The big difference comes in the way management uses these tools…MRP II becomes a company game plan for manufacturing, marketing, engineering, and finance.”

Oliver Wright, The Executives Guide to Successful MRP II, 1982.

Enterprise Resource Planning – Background Timeline

SAP AG

• A German firm, is a world leader in ERP software.

-Designed to operate in a three-tier client/server configuration-Applications are fully integrated so that data are shared between all applications

R/3 System Functional Components

R/3 SystemFunctional

ComponentsSales & Distribution Human Resources

Manufacturing & Logistics

Financial Accounting

Accounts PayableAccounts ReceivableGeneral LedgerCapital InvestmentsOpen Item ManagementABC (costing approaches)Asset Management

PayrollBenefitsSchedulingPersonnel DevelopmentWorkforce PlanningTravel Expense Accounting

Largest and most complexMaterials ManagementPlant MaintenanceQuality ManagementProduction Planning and ControlProject ManagementBudgeting

Customer ManagementOrder ManagementConfiguration ManagementBillingRebate Processing

London Health Sciences Centre

http://www.lhsc.on.ca/casecost/drilldwn.htm

http://www.lhsc.on.ca/casecost/drilldwn.htm

London Health Sciences Centre

Reasons for implementing ERP

• Desire to standardize and improve processes• To improve the level of systems integration• To improve information quality

• Integrate Financial Information• Integrate Customer Order Information• Standardize and Speed Up Manufacturing Processes• Reduce Inventory• Standardize Human Resources Information

• Global Outreach• Avoid Redundancies

ERP Disadvantages

• Time-consuming

• Expensive

• Fit

• Vendor Dependence

• Too many features, too much complexity

• Process Rigor (Standardized)

The General ERP Process

1. Product Analysis

2. Module Selection

3. Process Analysis

4. Data Analysis

5. Applications Integration

6. Testing and Installation

7. Employee Training

Average Implantation Time24+ Months

Meta Group Study

How Much Does an ERP Implementation Cost?

1. The size and geographic distribution of the company.

2. The size of the ERP package.

3. Hardware

4. Software

5. Consultants and Analysts Fees

6. Time

7. Training

A large company may spend from $ 50 to $ 100 M or more USD for an integrated ERP implementation.

Meta group survey; 63 companies (large and small) in a range of industries.

Average cost $ 15,000,000.

High $300 M, $300,000,000 USD

Low $ 400 K, $400,000 USD

Example: Allied Signal, Inc.

www.honeywell.com

• $14.5 B Manufacturer• World-Wide Operations• 11 countries, 18 sites, 9 languages• Large and complex database

Estimated Costs1. $30 million in software licensing2. $200 million in consulting fees3. Hardware integration4. Software integration5. Training

Time to Implement System: 4 to 6 years

http://www.honeywell.com/

ERP Integration

Successful ERP Implementation Criteria

• Top Management Support• Good Cost Estimation• Realistic Expectations• ERP Implementation• Cultural Impact• Training• Customization and Integration

Two More Examples

Pitney BowesCut overall operations costs by 28%.Sales reps can quote in < 15 minutes versus hours4% increase in sales - $160 M / year

FoxMeyerBankruptSued SAP AG

Hillerich & Bradsby

About Hillerich & Bradsby

Additional ERP Resources

• SSA Global Technologies – www.ssaglobal.com• SAP – www.sap.com• Oracle/PeopleSoft – www.oracle.com• IBM -http://www-03.ibm.com/solutions/businesssolutions/erp• Microsoft (Great Plains) – www.microsoft.com• Also, American Software, i2, Manugistics

http://www.sap.com/

http://www.microsoft.com/

Additional ERP Resources

Managing the Change

Managing the Change - Successfully

1. Economic Feasibility

Tangible Benefits Intangible Benefits

Implementation Costs Operational Costs


2. Address the Organizational Change Involved!


3. User Involvement & Influence


3. User Involvement & Influence Bridge the User / Designer Communications Gap

User Concerns Designer ConcernsWill the system deliver the information I need for my work?

How much disk storage space will the master file consume?

How quickly can I access the data?

How many lines of code will it take to perform this function?

How easily can I retrieve the data?

How can we cut down CPU time when we run this program?

How much clerical support will I need to enter the data into the system?

What is the most efficient way of storing the data?

How will the operation of the system fit into my daily business schedule?

What database management system should we use?


4. Management Support


5. Project Management

SCM CRP ERP Decision Support

Business

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