Session 8 ERP and BPM

8/11/2019 Session 8 ERP and BPM

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Process Management through

ERP, RM, SOA

Sangeeta Shah Bharadwaj


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Are ERPs Process Oriented or

functional?

A business processoriented implementation

approach is required for functionally

developed ERPs

ERPs have configurable modules

All modules necessary to support an entire

business process must be implemented


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RMs vs ERP vs SOA

Best practice process definitions

Automation of best practices

Flexible business Processes


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Sufficie

ntFinishe

d

Goods?

Receive

Customer

Inquiry

Create

& SendQuotati

on

Receive

CustomerPurchase

Order

Creat

eSales

Order

Prepare

Shipment (Pick &

Pack)

Send

Shipme

nt

(Ship)

Create& Send

Invoice

Recei

vePayme

nt

Go

WarehouseSales Accounting

No

A fulfillment Process


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Request

Production

Authorize

Production

Sufficien

t Raw

Materials

?

Go

Issue Raw

Material

CreateProduc

ts

ReceiveFinished

Goods

Warehouse Warehouse WarehouseProduction Production

No

Production Process


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Create

Requisition

Create &

Send

Purchase

Order

Receive

Shipment

Send

Payment

Receive

Invoice

Warehouse Purchasing Warehouse Accounting

Continue

in Parallel

Procurement Process


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Sufficie

nt

Finishe

d

Goods?

Receive

Custom

er

Inquiry

Create

& Send

Quotati

on

Receive

Customer

Purchase

Order

Creat

e

Sales

Order

Prepare

Shipmen

t (Pick &

Pack)

Send

Shipme

nt

(Ship)

Create

& Send

Invoice

Recei

ve

Payme

nt

Request

Production

Go

Authorize

Production

Sufficient

Raw

Materials

?Go

Issue

Raw

Mater

ial

Create

Products

Receive

FinishedGoods

STOP

STOP

Create

Requisition

Create &

Send

Purchase

Order

Receive

Shipment

Send

Payment

Receive

Invoice

Warehouse Purchasing Warehouse Accounting

Warehouse Warehouse WarehouseProduction Production

WarehouseSales Accounting

No

No

Procure Goods

Continue

in

Parallel

Procure Raw

Material

Integrated, end-to-end process


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ERP : The traditional Path to process

Execution

What are good aspects?

Automation to execute a specific process Best practices implementation

Pre defined business processes


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What are the challenges with ERP

processes?

??

Difficult to change the processes

Customization is very costly


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How do you incorporate changes?

Either not able to incorporate changes or

Integration of add on software throughpredefined interfaces

Is this sufficient?

Yes for many scenarios

No if processes are critical to achieve competitiveadvantage


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SOA: New Flexibility in Process

Execution

Enable separation of business process design

and support through appropriate software

application/ component called services.

Enables execution of next practice business

process

SOA a perfect fit for achieving goals of Agility

and innovation.

Promotes reuse of services


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SOA will be discussed in detail later


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Other process best practices and

Implementation

Does any such practice/ standard exist?

Process definition delivered through standards

Reference Models APSQ :American Productivity & Quality Center

Process Classification FrameworkSM


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Reference Models

A process reference model is a powerfulmanagement tool

Process knowledge is formalized and structuredand is a step towards making it a product

a complex management process is captured instandard process reference model form

It is then easy to measure, manage, andcontrolled

It can also be tuned and re-tuned to achieve aspecific purpose or attain a competitiveadvantage


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How to obtain RMs?

Software Companies: SAP documented businessprocesses in the form of event driven processchains

ERP companies are Key drivers in the development ofRM

Consulting companies also structure theirknowledge in the form of RM to increase their

own productivity PMOLink sells RM as product, RM for Project

Management based on PMBOK


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How to obtain RMs?

Industry organization also deliver knowledge

in the form of RM

Supply Chain Council offers Supply Chain

Operations Reference Model (SCOR)

Academic Organization also deliver RM

Scheers Y Model

Beckers Retail H


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SCOR Example

SCOR is a business process reference model

that has all supply chain activities, from

suppliers supplier to customers customer


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The structural framework of the SCOR

model

standard descriptions of the individual elementsthat make up the supply chain processes,

standard definitions of key performancemeasurements,

descriptions of best practices associated witheach of the process elements,

identification of software functionality (features)that enables best practices

identification of information exchanged betweenprocesses.


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Supplier

Plan

CustomerCustomers

Customer

Suppliers

Supplier

Make DeliverSource Make DeliverMakeSourceDeliver SourceDeliver

Internal or External Internal or External

YOUR COMPANY

Source

Supply Chain Operations Reference Model

PlanPlanPlanPlan

Return

SCOR defines supply chain as the integratedprocesses of Plan, Source, Make,Deliver and Return, spanning your suppliers supplier to your customers customer,

aligned with Operational Strategy, Material, Work& InformationFlows.

The SCOR Framework


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Supply Chain Reference Models (SCOR)

All customer interactions, from order entry

through paid invoice.

All product (physical goods, services, etc.)

transactions, including equipment, supplies,

spare parts, bulk product, software, etc.

All market interaction, from the understanding

of the aggregate demand to the fulfillment of

each order.


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SCOR contains three levels of process detail.

The top level (process types) defines the scope

and content. It consists of the five top-levelprocesses:

Plan

Source

Make

Deliver

Return


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The second level of SCOR, the configuration level(process categories), contains more than 30

process categories such as make to stock, make to order,

engineer to order, or production execution.

These process categories can be used toconfigure a companys supply chain

Companies implement their operations strategythrough the configuration they choose for theirsupply chain.


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Plan

P1-Plan supply chain

P2-Plan Source

P3-Plan Make

P4-Plan Deliver

P5-Plan Return


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Source

S1-Source stocked product

S2-Source make-to-order products

S3-Source Engineer-to-order products


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Make

M1-Make-to-stock

M2-Make-to-order

M3-Engineer-to-order


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Deliver

D1-Deliver-stocked product

D2-Deliver Make-to-order

D3-Deliver Engineer-to-order


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Return

DR1-Deliver Return Defective product

DR2-DR MRO Product (maintenance repairoverall product)

DR3-DR Excess Product

SR1-Source Return Defective product SR2-SR MRO Product

SR3-SR Excess Product


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The third SCOR level, the process element level

(decomposed processes), is used to fine tune the

operations of a company. It consists of thefollowing:

Process element definitions

Process element information inputs and outputs Process performance metrics

Best practices

System capabilities necessary to support bestpractices

Systems/ tools to be used


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European

RM Supplier

Key Other

RM Supplier

S2

S1

M2

M1

D2

D1

S2

S1

M1 D1 S1 D1 S1

RM SuppliersALPHA

Alpha Regional

WarehouseCustomer

A SCOR thread diagram of a simple supply chain process


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Supply Chain

Costs

The costs associated with

operating the supply chain.

Cost of Goods Sold

Total Supply Chain

Management Costs

ValueAdded

Productivity

Warranty/ Returns

Processing Costs

Supply ChainAsset

Management

Efficiency

The effectiveness of anorganization in managing assets

to support demand satisfaction.

This includes the management

of all assets: fixed and working

capital.

Cash-to-Cash Cycle Time

Inventory Days of Supply

Asset turns

Inte

rnalFacingAttr

ibutes

SCOR performance attributes and Level 1

metrics


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Companies implement their supply chainsolution on level 4 (or even more detailed

levels)

Level four, or the implementation level(decomposed sub process), defines practicesto achieve competitive advantage and toadapt to changing business conditions

This level is company specific and not in thescope of SCOR


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APSQ :American Productivity &

Quality Center


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APQC : Who are they?

APQC is a member-based, non-profit organization Founded in 1977

Started with donations from 100 corporations

Non-profit, tax-exempt 501(c)(3)

Serves more than 500 organizations around theworld

32-year reputation founded on integrity and thesupport of rapid innovation through

Process improvement andmeasurement

Best practice research andimplementation

Knowledge capture, transfer, andreuse


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PROCESS CLASSIFICATION FRAMEWORK : 12

enterprise level categories

1. Develop Vision and Strategy

2. Design and Manage Products and Services

3. Market and Sell Products and Services

4. Deliver Products and Services

5. Manage Customer Service6. Develop and Manage Human Capital

7. Manage Information Technology

8. Manage Financial Resources

9. Acquire, Construct, and Manage Property

10. Manage Environmental Health and Safety11. Manage External Relationships

12. Manage Knowledge, Improvement, and Change


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Understanding the Numbering

INTERPRETING THE PCF Category: The highest level within the PCF is indicated by whole

numbers (e.g., 8.0 and 9.0)

Process Group: Items with one decimal numbering (e.g., 8.1

and 9.1)are considered a process group.

Process: Items with two decimal numberings (e.g., 8.1.1 and9.1.2)

are considered processes.

Activity: Items with three decimal numbering (e.g. 8.3.1.1 and9.1.1.1)

are considered activities within a process


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One Example

1.0 Develop Vision and Strategy (10002)

1.1 Define the business concept and long-termvision (10014)

1.1.1 Assess the external environment (10017) 1.1.1.1 Analyze and evaluate competition (10021)

1.1.1.2 Identify economic trends (10022)

1.1.1.3 Identify political and regulatory issues (10023)

1.1.1.4 Assess new technology innovations (10024)

1.1.1.5 Analyze demographics (10025)

1.1.1.6 Identify social and cultural changes (10026)

1.1.1.7 Identify ecological concerns (10027)

Session 8 ERP and BPM

Documents

Transcript of Session 8 ERP and BPM