IS560 ERP Session Number: 6

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IS560 ERP - Session Number 6

• Session Date February 10, 2003
• Session Objectives
• Administrative Items
• Session Topics
• ERP Support for Business Processes (continued)
• Geneva Case Study
• ERP Support for eBusiness

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Extended ERP Applications outside the Traditional
Definition
Traditional ERP
Extended ERP/ERP II
Accounting and Controlling
E-commerce
Human Resources management
Supply chain management
Production and Materials management
Business Intelligence (BI)
Project management
Customer Relationship Management (CRM)
Quality management and plant maintenance
Advanced planning and scheduling (APS)
Sales and Distribution
Internet procurement
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Growing Interest in Extended Applications
Sales in Millions of dollars
(e.g. i2)
(e.g. Siebel)
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E-commerce

• Electronic Commerce or E-commerce - the conduct
  of a financial transaction by electronic means
  more recently, the purchase of goods and services
  over the Internets World Wide Web. Includes the
  following types
• Business-to-Consumer (B2C) E-commerce
• electronic commercial interaction between the
  enterprise and the end consumer.
• mimics the type of interaction occurring in a
  traditional retail store.
• Features sales promotions, shopping cart,
  catalog, search engine, online ordering,
  personalization, online help, suggestions and
  up-selling.
• Business-to-Business (B2B) E-commerce
• inter-organizational E-commerce.
• Much higher volume of transactions and dollars
  than B2C.
• Two or more businesses engage in some sort of
  transaction via the Internet (e.g. a
  manufacturer and its suppliers / distributors /
  retailers).
• Tight security and password-protected access.
• Features
• Give suppliers access to inventory information.
• Allow distributors to order more products.
• Enable customers to track the status of orders
  for services and products.
• To provide forum to advertise the availability of
  excess parts and to sell those goods to other
  businesses.

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E-commerce (contd) - Supply Chain Context
B-to-B
B-to-C
Warehouse and Inventory Management
Customer Relationship Management
ProductDevelopment
Supplier Management
Transport
Category Management
Store Management
ProductDevelopmentManagement
E-ProcurementSoftware
Supply ChainManagement
CategoryManagement

• Product design
• Product development
• Vendor capacity
• Quality
• Sample management
• New product introduction

• Invoice processing
• Payment
• RFI/RFP
• Catalog development
• Vendor certification
• Item management
• Product availability
• Production planning
• Technical specifications
• Second- and third-tier suppliers

• Order management
• Product tracking
• Capacity management
• consolidation
• Replenishment
• Reverse logistics

• Goods-in scheduling
• New product introduction
• Planning for seasons and events
• Allocation

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E-commerce (contd)

• Business-to-Employee or B2E E-commerce-
  intra-organizational E-commerce
• A new area of opportunity.
• Commerce Engines
• Separate activity that occurs on a web site from
  the back-end systems.
• Most ERP vendors develop their EC applications to
  operate with third-party commerce engines, e.g.
  Microsoft Site Server / Commerce Edition and IBM
  Net.Commerce.
• Back-Office Integration (e-commerce sites must
  be integrated with ERP software).

Financial data
Customer information
ERP
Inventory system
Order information
E-commerce software
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Supply Chain Management Evolution

• 1960s-1970s
• Detailed market strategies.
• Strong engineering, design and manufacturing
  capabilities.
• 1980s
• Increased flexibility and responsiveness in
  modifying existing products or to develop new
  ones in order to meet ever-changing customer
  demands.
• 1990s
• Realization that material and service inputs from
  suppliers have a major impact on the
  organizations ability to meet customer needs.
• Quality product not enough
• New challenge - cost-effective products to the
  customers when, where, how and in the quantity
  that they want.
• Enterprises must be involved in the management of
  the network of all upstream and downstream
  trading partners.

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Supply Chain Management (contd)

• Different levels of supply chain integration
• Open Market (lack of trust, suppliers at arms
  length).
• Cooperation (some partnership, fewer
  suppliers).
• Single-level Coordination (sole source
  suppliers, sharing of inventory planning data,
  EDI / kanbans).
• Multi-level Coordination (focus on final
  customer, company with suppliers function as one
  entity).
• Full Collaboration (joint planning
  development, info technology sharing).
• Supply chain encompasses all organizations and
  processes related to products and services
  sourced by buying organizations, typically from
  raw materials through consumption.
• Material and information flow both up and down
  the supply chain.
• Supply Chain Management (SCM) is the integration
  of these activities through improved supply chain
  relationships.
• Goal is to achieve a sustainable competitive
  advantage.

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Integrated Supply Chain Model
Customers
Product and material flows
Information and financial flows
Retailers
Distribution Centers
Assembly / Mfg.
1st Tier Suppliers
1st Tier Suppliers
2nd Tier Suppliers
2nd Tier Suppliers
2nd Tier Suppliers
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Supply Chain Example Apparel Industry
Customer
Retailer
Apparel Manufacturer
Information
Product
Textile Producer
Yarn Maker
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Value Chain
A Simple Value Chain
Planning Procurement
Manufacturing Order
Service and
Fulfillment Support

• Value chain is a series of activities a company
  performs to achieve its goal by adding additional
  values as each activity proceeds to the next one.
• Vertically integrated company extends its control
  of the value chain as far back as possible, quite
  literally to own raw materials that are used in
  its products.
• Other companies choose to focus on a core
  competency or set of competencies let others
  manage and run various parts of the value chain.
• Power of the Internet is to further integrate the
  value chain.
• A highly integrated value chain creates greater
  value for the end-customer by delivering products
  and services more efficiently and effectively.

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Value Chain with Extended Enterprise
Value-added suppliers
Third-Party Logistics
Engineering contractors
Installers
Planning and RD
Service and Support
Order Fulfillment
Procurement
Manufacturing
Third-Party Service
Contract Manufacturing
Commodity Suppliers
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Components of e-Supply chain

• Supply chain replenishment
• Integrated production and distribution processes
  with suppliers.
• Facilitates make-to-order and assemble-to-order
  strategies.
• E-Procurement
• Uses web-based technology supportive of
  procurement processes.
• Requisitioning.
• Sourcing.
• Contracting.
• Ordering.
• Payment.
• Employs several web-based functions such as
  on-line catalogs, contracts, purchase orders and
  shipping notices.
• Collaborative Planning
• Requires buyers and sellers to develop a single
  shared forecast of demand and a plan of supply.
• B-to-B workflow across multiple enterprises over
  the Internet, with dynamic data exchange.

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Components of e-Supply chain (contd)

• Collaborative Product Development
• Use of product design and product development
  techniques across multiple companies.
• Used to improve product launch success and reduce
  time to market.
• Includes sharing specs, test results, design
  changes and on-line prototyping to obtain
  customer feedback.
• E-Logistics
• Use of web-based technologies to support the
  warehouse and transportation management
  processes.
• Enables distribution to couple routing
  optimization with inventory tracking and tracing
  information.
• Supply Webs
• Will emerge as alternative configurations
  supplementing traditional supply chains.
• Trade exchanges or portals are appearing.
• Integrating the supply chain systems of various
  buyers and sellers, creating virtual trading
  communities
• Examples are energy and automotive marketplaces
  on the Internet

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Advanced Planning and Scheduling (APS)

• Uses linear programming and other advanced
  mathematics to optimize production schedules.
• Helps in different levels of decision-making
• Strategic (capital investment, infrastructure,
  new products).
• Tactical (demand allocation, resource planning,
  supplier capacities).
• Operational (resource scheduling and execution
  monitoring).
• Helps manufacturers determine and execute
  production plans which are optimized as follows
• Meets customer requirements (quantity, time,
  price).
• Respects all real constraints (capacity,
  materials, workforce, financial).
• Maximizes company objectives (profit, market
  share).

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Evolution of Advanced Planning Scheduling
Systems
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Traditional Linear Enterprise Resource Planning
Enter Customer demand
Create master production schedule
Create first-draft capacity requirements plan
Begin again
Plan feasible
Plan not feasible
Create material requirements plan
Create capacity requirements plan
Plan not feasible
Plan feasible
Final production plan
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APS Generates More Accurate Reports and Analyses
Sales / Customer Service (history, forecast and
orders)
Customer order
ERP
When APS is synchronized with ERP, enterprise
information is shared with APS To generate
accurate order promise dates and capacity and
what-if analyses.
Customer Orders (end- item)
Safety Stock level
Routings
Forecast orders
Planned orders
As soon as possible promise date
APS
Capacity
What-if analyses
Schedules
Capacity reports
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CRM
CRM Software helps companies present one face to
the customer
Customer information
Marketing
One face to the customer
Customer Information pool
Sales
Customer information
Service
Customer information
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Typical CRM functions

• Customer lead generation
• Marketing
• Sales and Product configuration
• Order entry and status tracking
• Invoicing, bill payment and bill status tracking
• Shipping schedule and status tracking
• Contract and warranty management
• In-house service
• Field service management
• Call center management
• Self-service by customers and partners (place
  orders, track status, pay bills)

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CRM connects functional silos in the front office
Prospect identification through generation of
qualified leads Marketing Customer Relationsh
ip Management (CRM)
Sales Opportunity Through Sale closing Sales
CRM
Process
Ongoing Customer Service and Support Service
and Support CRM
Order entry Through Fulfillment Delivery Fulfil
lment Order Processing Component ERP
Function
Application
Business intelligence
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CRM Benefits

• Benefits of CRM
• Enhances the companys front office functions
• Sales,
• Marketing, and
• Customer Service.
• Build strong relationships with customers
  (life-time value)
• Offers unified corporate face to the customer.
• Offers opportunity for personalized, one-to-one
  marketing.
• Key technologies
• E-commerce enablement (browsers/portals,
  middleware, security, XML, etc.).
• Sales Force Automation technology.
• Call centers.
• Data warehousing / mining.

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Portals
Vertical Hub
Legacy applications
Internet
Web portal
ERP
Business Partner applications
Marketplaces
Portals provide web access to collections of
information
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Portals and Business

• Marketplace Portals
• ERP vendor aggregates either directly or
  through partners.
• E.g. Oracle Exchange, mySAP.com Marketplace,
  TradeMatrix.com
• Corporate or Desktop Portals
• Gives employees easy access to typically
  disparate and disconnected business systems
  needed to complete meet or exceed their job
  responsibilities.
• Tailored to the needs of a specific user.
• E.g. Oracle Portal Framework, mySAP.com
  Workplace, Siebel, PeopleSoft.
• Vertical Portals
• Provide services, transactions and content
  tailored to the needs of a specific industry.
• E.g. PaperExchange.com, PlasticsNet.com

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Desktop Portals provide web access to disparate
applications
Trading partner
Manufacturing
Inventory
Finance
Data warehouse
Warehouse management
The Web
Human resources
Marketing
Contracts
Accounts receivable
Desktop portal
User
Customer
Industry news
Vertical hub
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Internet technology opens up the Purchasing
process
Internet-based Procurement
Employee searches Online catalog
The Web
Employee submits Online requisition
Requisition is automatically routed and approved
Goods are sent directly to buyer
Purchase order is Sent automatically
Employee
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The eProcurement Process Online catalogs

• Seller managed
• Generally maintained by one or more vendors that
  control content
• Buyers do not have control over the catalog
  content or who accesses it
• Buyer managed
• Generally gives buyers access to and control over
  content of these online catalogs
• Companies can also create custom views of a
  catalog
• Third-party managed
• Allows buyers and sellers to control certain
  parts of the catalog
• The third-party provider works with suppliers to
  manage content, while buyers can still establish
  business rules to restrict access or create
  custom views

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Shared Service Centers

• Trend Corporate support services (Finance, HR,
  IT, Purchasing) are increasingly centralized in
  Shared Service Centers.
• Consolidating these processes and activities into
  a common organization under its own management
  frees managers within individual business units
  to concentrate on their core competencies.
• ERP is important for effective shared service
  centers.
• E-business may have impact on shared service
  centers.
• Example eProcurement empowers employees to make
  online Maintenance, Repair, Operations (MRO)
  purchases, thus doing away with one of the needs
  for consolidating Purchasing into a shared
  service center.
• Shared Service centers versus Outsourcing.

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Next Session Highlights

• Topics
• ERP Support for e-Business (continued).