SCM CRP ERP Decision Support

Decision Support Day 2 – Module 5 Text Materials Chapter 4 – Decision Support Chapter 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

TPS Data

MIS – Management Information Systems TPS Data

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 TPS Data

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

Other Data Other Data

DSS – Voyage Estimating System

Executive Support Systems TPS Data Other Data Other Data

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 Together The 4 Major Types of Information Systems

Putting Decision Support All Together The 4 Major Types of Information Systems Decide where to locate new facilities Facilities location Decide when and how many products should be produced Production planning Control the actions of machines and equipment Machine control Organizational Level Description System

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 Inbound logistics Production processes Outbound logistics Sales and marketing Customer service 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

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

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 Sales Accounting Purchasing Production Logistics

Enterprise Resource Planning - Background ERP evolved from MRP (Material Requirements Planning) and MRP II. The Idea of MRP Material requirements plan Inventory records Inventory transactions Bills of materials Routings Time standards MRP explosion Master production schedule Manufacturing resource plan Cost and financial data Customer orders Forecasts

Enterprise Resource Planning - Background “ 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. The Idea of MRP II

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

The Idea of ERP

R/3 System Functional Components R/3 System Functional Components Accounts Payable Accounts Receivable General Ledger Capital Investments Open Item Management ABC (costing approaches) Asset Management Payroll Benefits Scheduling Personnel Development Workforce Planning Travel Expense Accounting Largest and most complex Materials Management Plant Maintenance Quality Management Production Planning and Control Project Management Budgeting Customer Management Order Management Configuration Management Billing Rebate Processing Sales & Distribution Human Resources Manufacturing & Logistics Financial Accounting

London Health Sciences Centre 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

Product Analysis

Module Selection

Process Analysis

Data Analysis

Applications Integration

Testing and Installation

Employee Training

Average Implantation Time 24+ Months Meta Group Study

How Much Does an ERP Implementation Cost?

The size and geographic distribution of the company.

The size of the ERP package.

Hardware

Software

Consultants and Analysts Fees

Time

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 Costs

$30 million in software licensing

$200 million in consulting fees

Hardware integration

Software integration

Training

Time to Implement System: 4 to 6 years

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 Bowes Cut overall operations costs by 28%. Sales reps can quote in < 15 minutes versus hours 4% increase in sales - $160 M / year FoxMeyer Bankrupt Sued 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

Additional ERP Resources

Managing the Change

Managing the Change - Successfully 1. Economic Feasibility Tangible Benefits Intangible Benefits Implementation Costs Operational Costs

Managing the Change - Successfully 2. Address the Organizational Change Involved!

Managing the Change - Successfully 3. User Involvement & Influence

Managing the Change - Successfully 3. User Involvement & Influence Bridge the User / Designer Communications Gap What database management system should we use? How will the operation of the system fit into my daily business schedule? What is the most efficient way of storing the data? How much clerical support will I need to enter the data into the system? How can we cut down CPU time when we run this program? How easily can I retrieve the data? How many lines of code will it take to perform this function? How quickly can I access the data? How much disk storage space will the master file consume? Will the system deliver the information I need for my work? Designer Concerns User Concerns

Managing the Change - Successfully 4. Management Support

Managing the Change - Successfully 5. Project Management