Transcript What is an Enterprise Wide Application?

Enterprise Business
Processes and Applications
(IS 6006)
Masters in Business Information Systems
4th Nov 2008
Fergal Carton
Business Information Systems
Last week
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Discussion of Dearden / Vizard
Examples of issues with “OVOTT”
Wastage / discrepancies in inventory
Plan, Buy, Make, Deliver model
Bill of Materials links raw materials to
finished goods
This week
• MRP
• ERP modules (Sales, Finance, Logistics,
Procurement, Manufacturing)
• ERP is single instance
• PCB exercise: assignment practice
• Bill of Materials: matching supply with
demand
• Addditional reading
Material Requirement Planning
• Emerged from BOMP in 60s
• Conversion of production plan for parent items
(finished products) into a production plan of
production or purchasing for component items
• Explosion of the requirements for a top level
item through the BOM to generate component
demand
• Executed at each level of Assembly / subassembly
Principles of MRP
• System to plan and control production and
material flows
• core principle:
demand for material, parts and components
depends upon the demand for finished product
• Chain of causality from finished goods
back to inventories:
– possible to reduce inventory to the minimum
– plan for procurement based on actual needs
– able to cater for “lumpy” (i.e. dependent)
demand
BOM = Recipe or formula
• How to produce our products
• List of components including possible
substitutes
• How much of each
• Special conditions of operation
• Expected yields and labour productivity (i.e.
standards)
• Extrapolate a cost per unit
• Stored in a Bill of Material (BOM)
Example: Bill of Material for
desk
1 – List out the components
2 – describe the steps required for assembly
3 – arrange them in a possible manufacturing
sequence
Solution
Desk
Top (1)
Screw Kit (1)
Adjustable legs (4)
Frame (1)
3 way junctions (4) Painted tubing (4)
Painted metal legs (4)
Leg Tubes (4)
Long Tubes (2) Short Tubes (2)
Paint (1 dl)
Paint (0.6 dl)
How MRP works
• Master production schedule: drives the
system based on customer orders
• Bill of material (dependent demand)
• Inventory status file
• MRP package - contains the logic
See diagram next page
Benefits of MRP
• Understanding the implications of changes in
production schedule (by de-expediting parts)
• Keeping inventory low (25% decreases
reported) while removing risk of stock-outs
• Better planning leading to:
– reduction in lead times
– better use of capacity
– lowered risk of obsolete production (e.g. engineering
firms)
• Early warning system: earliest delivery dates are
known before promises are made
Without MRP
Safety Stock
Demand variations
With MRP
Safety Stock
Demand variations
Keeping tabs on Work-in-Progress
(WIP)
• Inventory consumption
– Something must trigger inventory consumption as
production proceeds (BO, WO, PO, SO, …)
– Visibility of inventory in Work-in-Progress (WIP) is
low
– You can measure output / consumption at
intermediate points but beware of disrupting
process
ERP is often single instance
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Single point of data entry (PO’s, SO’s, …)
Inventory control
Opportunity to re-design processes
Single technical platform (support)
Common language, common pool of data
Sales
Production
Shipping
Collect cash
Customer information (ship-to, bill-to, install-at, …)
Finance
Logistics
Sales
Costing
General
Ledger
Real-Time
Human
Resource
Mgmt
Value
Sales\Order
Entry
Specification/
Configuration
Real-Time Mgmt
Customer
Demand
Mgmt
Accounts
Payable
Decision
Support
Transportation
Mgmt
Asset
Mgmt
Network
Infrastructure
Real-Time
Accounts
Receivable
Sale
Price &
Promotion
Mgmt
Decision
Support
Client
Information
Systems
Warehouse
Mgmt
Fulfillment
Sales
Force
Mgmt
Distribution
Planning
Decision
Support
Trade
Mgmt
Inventory
Mgmt
Vendors
Customers
Real-Time
Customer
Decision
Support
Engineering
Manufacturing
Release
Mgmt
Product
Definition
Real-Time
Quality
Mgmt
Specification
Process
Definition
Decision
Support
Product
Development
Vendor
Performance
Mgmt
Test
Mgmt
Quote/
Contract
Mgmt
Revision
Mgmt
Real-Time
Planning &
Scheduling
Financial
Interfaces
Purchase
Order
Mgmt
Decision
Support
Product
Performance
Mgmt
Receiving
Mgmt
Procurement
Maintenance
Mgmt
Product
Resource
Mgmt
Purchase
Real-Time
Decision
Support
Production
Mgmt
Process
Monitoring
& Control
Manufacturing - Core functionality
Planning & Scheduling
Quality Management.
• Basic APICS standard planning (MS, RCCP,
• Basic quality reporting and issue tracking
MRP, SFC) - requirements netted against onhand inventories, lead times, etc.
Maintenance Management
• Multilevel master scheduling
• Ability to integrate maintenance work orders
• Multiplant MRP and DRP
Quality
and inventory in system
• Basic shop floor control utilizing workorders,
Mgmt
• Robust integration with fixed assets
backflush and repetitive options
Planning & Maintenance • Good tracking of maintenance costs
• Actual orders consume forecast
Scheduling
Mgmt
Product
Process
Resource
Monitoring &
Resource Management
Mgmt
Control
Process Monitoring & Control
• Capacity requirements based on standards;
Production
• Not covered in “core” ERP functionality
machine time, labor time, etc.
Mgmt
• Rough cut capacity planning
Production Management
• Support for variety of production strategies;
kanban, etc. for JIT, production planning
process
• Track WIP inventory
• Record detailed costs
• Integration to quality management
Procurement - Core functionality
Vendor Performance Management
• Good granularity of data and control over
receiving date
• Basic vendor ratings/qualifications mgmt.
• Basic quality and delivery tracking
Financial Interfaces
Quote/Contract Management
Vendor
• Fully integrated w/AP for 2-way or 3-way
• Limited RFQ & quote tracking
Performance
matching
• Blanket orders
Mgmt
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Fully integrated with costing for variance
Quote/
• Basic contract management
Financial
analysis
Contract
Interfaces
• automatic voucher generation
Mgmt
Purchase
Purchase
Product
Order
Performance
Purchase Order Management
Mgmt Receiving Mgmt Product Performance Management
• Orders automatically generated for items
• Good granularity of data
Mgmt
through MRP, Min/Max, or manual
• Basic quality and defect tracking
requisitions
• Integrated receiving inspection and quality
Receiving Management
tracking
• Integrated receiving inspection and quality
tracking
• Items non-nettable until approved
• Receiving routings, matched with PO at
dock
Logistics - Core functionality
Transportation Management.
• Supports basic transportation processing,
shipping documents, and organization of
shipments
Network Infrastructure
• Hierarchical system of branch/plants can
include suppliers and virtual warehouses
Warehouse Management
Transportation
• Basic inventory location tracking
Mgmt
• RF capable
Network
Warehouse • Limited advanced capabilities (pick/put
Infrastructure
away strategies, cross-docking)
Mgmt
Fulfillment
Distribution
Trade
Distribution Planning
Planning
Mgmt Trade Management
Inventory
• Distribution requirements planning with
• Landed costs, multinational taxation and
Mgmt
multiple replenishment strategies and
currency
inventory stocking strategies
Inventory Management
• Visibility across organization
• Serial and lot control
Sales - Core functionality
Sales/Order Entry.
• Order templates, blanket orders and
interbranch orders
• UCC 128 compliance
• Automatic credit check, order validity check
Customer Demand Management
• Forecasts generated from sales history or other
algorithms
Specification / Configuration Management
Sales\Order
• Feature and option-based system with simple
Entry
if/then rule checking
Specification/ • Robust integration with fixed assets
Customer
Configuration • Good tracking of maintenance costs
Demand
Mgmt
Mgmt Sale
Sales
Price &
Force Sales Force Management
Promotion
Client
Price & Promotion Management
Mgmt • Some support for configured quotes and
Mgmt
Information
• Multiple pricing methods (by item, family,
quote tracking
Systems
customer)
• Automatic generation of orders from quotes
• Basic promotions management (effectivity
dates, volume or value discounts)
• Limited complex promotions and pricing
Client Information Systems
management
• Customer hierarchies
• Multiple ship-to, bill-to addresses and
contacts
• Very limited customer information
http://www.sap.com/solutions/businesssuite/crm/featuresfunctions/sales.epx
http://www.sap.com/solutions/manufact
uring/featuresfunctions/index.epx
PCB exercise
– Read narrative
– Draw a process map of the sales order
process
– Show how you would take into account
specific customer requirements.
– What are the strengths / weaknesses of
the process mapping exercise?
– How will you use this process map in the
next stage of the project?
Strengths of process mapping
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Separates physical from virtual flows
Flexible
Intuitive
Fast
Facilitates sharing of ideas
Helps define roles and responsibilities
Highlights potential for automation
– Bottlenecks, delays, errors, redundancy, …
Weaknesses of process mapping
• Biased representation?
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Difficult to meet all people involved
Dependent on accuracy of information given by participants
Holes in understanding -> poor process
Doesn’t take into account new processes
Interpreted differently
Consistency in analysis when using multiple analysts
Only maps repetitive processes?
What about manual work?
• Find right level of abstraction
• Only theoretical?
• Complexity / overcomplication
How will you use the process map?
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Spot problems
Optimise process
Tool to explain / educate
Map alternatives
Draw “how we would like the process to
work”
What is a Bill of Materials?
• Links demand and supply
• Sales require a customer oriented
language to describe functionality
– See example for iPhone
• Manufacturing need a supplier
oriented language to describe Bill of
Materials
Model names (sales)
Model
iPod touch (8 GB or 16 GB)
iPod classic (80 GB or 160 GB)
iPod nano (3rd generation)
iPod shuffle (2nd generation) (1 GB)
iPod (5th generation late 2006) (30 GB or 80 GB)
iPod nano (Second Generation) (2 GB, 4 GB, or 8 GB)
iPod nano (1 GB)
iPod (5th generation)
iPod (5th generation )
iPod nano (4 GB)
iPod nano (2 GB)
iPod with color display (60 GB)
iPod with color display (20 GB)
iPod photo (30 GB)
iPod mini (4 GB Second Generation)
iPod mini (6 GB Second Generation)
iPod shuffle (512 MB)
iPod shuffle (1 GB)
iPod photo (40 GB)
iPod photo (60 GB)
iPod (20 GB Click Wheel)
iPod (40 GB Click Wheel)
iPod mini
Year-Month
2007-09
2007-09
2007-09
2006-09
2006-09
2006-09
2006-02
2005-10
2005-10
2005-09
2005-09
2005-06
2005-06
2005-02
2005-02
2005-02
2005-01
2005-01
2004-10
2004-10
2004-07
2004-07
2004-01
Scrolling device
multi-touch display
Click Wheel
Click Wheel
n/a
Click Wheel
Click Wheel
Click Wheel
Click Wheel
Click Wheel
Click Wheel
Click Wheel
Click Wheel
Click Wheel
Click Wheel
Click Wheel
Click Wheel
n/a
n/a
Click Wheel
Click Wheel
Click Wheel
Click Wheel
Click Wheel
Capacity
8 GB or 16 GB
80 GB or 160 GB
4 GB or 8 GB
1 GB
30 GB or 80 GB
2 GB, 4 GB, or 8 GB
1 GB
60 GB
30 GB
4 GB
2 GB
60 GB
20 GB
30 GB
4 GB
6 GB
512 MB
1 GB
40 GB
60 GB
20 GB
40 GB
4 GB
Ver
1.1.1
1.0.2
1.0.2
1.0.3
1.2.1
1.1.3
1.3.1
1.2.1
1.2.1
1.3.1
1.3.1
1.2.1
1.2.1
1.2.1
1.4.1
1.4.1
1.1.5
1.1.5
1.2.1
1.2.1
3.1.1
3.1.1
1.4.1
Model numbers (manufacturing)
Model
Model #
Model # Model #
10GB
M8709LL/A
M8737LL/A
10GB
M8976LL/A
15GB
M8946LL/A
1GB Black
MA352
1GB White
MA350
1st Generation iPod mini Models
M9160LL/A
M9436LL/A
20GB
M8738LL/A
M8741LL/A
20GB
MA079LL/A
20GB
M9244LL/A
20GB
M9282LL/A
2GB Black
MA099
2GB Silver
MA477
2GB White
MA004
2nd Generation iPod mini Models
M9801LL/A
30GB
M9829LL/A
30GB
M8948LL/A
30GB Black
MA146LL/A
30GB U2 iPod
MA452LL/A
30GB White
MA002LL/A
40GB
M9585LL/A
40GB
M9245LL/A
40GB
M9268LL/A
M8740LL//A
M9460LL/A
M9435LL/A
M9282CH/A
M9282FE/A
M9803LL/A
M9805LL/A
MA002B/A
M9268CH/A
M9268KH/A
Additional reading from library
• The enterprise resource planning decade : lessons learned and
issues for the future (Adam, Frédéric) Hershey, PA : Idea Group
Pub., c2004.
• Second-wave enterprise resource planning systems : implementing
for effectiveness (Graeme Shanks, Peter B. Seddon and Leslie P.
Willcocks.) Cambridge, U.K. ; New York : Cambridge University
Press, 2003.
• Mission critical : realizing the promise of enterprise systems
(Davenport, Thomas H.) Boston, MA : Harvard Business School
Press, 2000.
• Enterprise resource planning : global opportunities and challenges
(Liaquat Hossain, Jon David Patrick, Mohammad A. Rashid.) Imprint
Hershey, PA : Idea Group Pub. ; London : Information Science Pub.,
2002.