SCM CRP ERP Decision Support


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Decision Support
Decision Making and Information Systems
Types of decisions, examples
Executive Support Systems
Supply Chain Management
Customer Relationship Management
Enterprise Resource Planning

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SCM CRP ERP Decision Support

  1. 1. Decision Support Day 2 – Module 5 Text Materials Chapter 4 – Decision Support Chapter 7 – Enterprise Infrastructure
  2. 2. Decision Support <ul><li>Decision Making and Information Systems </li></ul><ul><ul><li>Types of decisions, examples </li></ul></ul><ul><ul><li>TPS, MIS, DSS </li></ul></ul><ul><ul><li>Executive Support Systems </li></ul></ul><ul><li>Supply Chain Management </li></ul><ul><li>Customer Relationship Management </li></ul><ul><li>Enterprise Resource Planning </li></ul>
  3. 3. Types of Decisions
  4. 4. TPS – Transaction Processing Systems <ul><li>Basic business systems that serve the organization’s operational level </li></ul><ul><li>Input: Transactions, events </li></ul><ul><li>Processing : Sorting, listing, merging, updating </li></ul><ul><li>Output: Detailed reports, lists, summaries </li></ul><ul><li>Users: Operations personnel, supervisors </li></ul>TPS Data
  5. 5. MIS – Management Information Systems TPS Data <ul><li>Serve management level; provide reports and access to company data </li></ul><ul><li>Input: Summary transaction data, high-volume data, simple models </li></ul><ul><li>Processing : Routine reports, simple models, low-level analysis </li></ul><ul><li>Output: Summary and exception reports </li></ul><ul><li>Users: Middle managers </li></ul>
  6. 6. MIS – Management Information Systems
  7. 7. DSS – Decision Support Systems TPS Data <ul><li>Serve management level with data analysis for making decisions </li></ul><ul><li>Input: Low-volume data or massive databases, analytic models, and data analysis tools </li></ul><ul><li>Processing : Interactive, simulations, analysis </li></ul><ul><li>Output: Special reports, decision analyses, responses to queries </li></ul><ul><li>Users: Professionals, staff managers </li></ul>Other Data Other Data
  8. 8. DSS – Voyage Estimating System
  9. 9. Executive Support Systems TPS Data Other Data Other Data <ul><li>Provide communications and computing environment that serves the organization’s strategic level </li></ul><ul><li>Input: External and internal aggregate data </li></ul><ul><li>Processing : Graphics, simulations, interactive </li></ul><ul><li>Output: Projections, responses to queries </li></ul><ul><li>Users: Senior Managers </li></ul>
  10. 10. Executive Support Systems
  11. 11. Executive Support Systems
  12. 12. Putting Decision Support All Together The 4 Major Types of Information Systems
  13. 13. 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
  14. 14. Supply Chain Management Systems
  15. 15. Supply Chain Management Systems – Nike Example
  16. 16. Supply Chain Management Systems <ul><li>Supply Chain Management Systems (SCM): Automate flow of information between firm and suppliers to optimize production and delivery </li></ul><ul><li>Supply Chain Management: Close linkage of activities involved in buying, making, moving a product </li></ul><ul><li>Supply Chain: Network of organizations and business processes for production and distribution of products </li></ul>
  17. 17. Supply Chain Management Systems <ul><li>Information Systems Can Help Supply Chain Participants: </li></ul><ul><li>Decide when and what to produce, store, and move </li></ul><ul><li>Rapidly communicate orders </li></ul><ul><li>Track status of orders </li></ul><ul><li>Check and monitor inventory </li></ul><ul><li>Reduce inventory, transportation, warehousing costs </li></ul><ul><li>Track shipments </li></ul><ul><li>Plan production based on actual customer demand </li></ul><ul><li>Rapidly communicate changes in product design </li></ul>
  18. 18. Supply Chain Management Inbound logistics Production processes Outbound logistics Sales and marketing Customer service Information Technology Upstream Downstream
  19. 19. Supply Chain Management Yes No
  20. 20. Federal Express
  21. 21. Supply Chain Management - Logistics <ul><li>Most supply chains use inter-modal transportation , multiple transportation channels (railway, truck, etc) to move products from origin destination </li></ul><ul><li>This creates supply chain complexities </li></ul>
  22. 22. Supply Chain Management - Goals <ul><li>Fulfillment </li></ul><ul><li>Logistics </li></ul><ul><li>Production </li></ul><ul><li>Revenue and profit </li></ul><ul><li>Cost and price </li></ul><ul><li>Cooperation among SC partners </li></ul>
  23. 23. A Good SCM System will help a firm <ul><li>Decide when and what to produce, store, and move </li></ul><ul><li>Rapidly communicate orders </li></ul><ul><li>Track the status of orders </li></ul><ul><li>Check inventory availability and monitor inventory levels </li></ul><ul><li>Reduce inventory, transportation, and warehousing costs </li></ul><ul><li>Track shipments </li></ul><ul><li>Plan production based on actual customer demand </li></ul><ul><li>Rapidly communicate changes in product design </li></ul>
  24. 24. 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?
  25. 25. Additional SCM Resources <ul><li>i2 Technologies – </li></ul><ul><li>Manugistics </li></ul><ul><li>Supply Chain Knowledge Base – </li></ul><ul><li>Supply Chain Management Review – </li></ul><ul><li>CIO Magazine – </li></ul><ul><li>About Inc. (Logistics/Supply Chain) – </li></ul><ul><li>IBM - </li></ul><ul><li>Oracle/PeopleSoft Supply Chain – </li></ul><ul><li>Institute for Supply Chain Management – </li></ul>
  26. 26. Customer Relationship Management - CRM
  27. 27. Sample CRM System Infrastructure
  28. 28. A Good CRM System will help a firm <ul><li>More precise and targeted marketing campaigns. </li></ul><ul><li>Effective management of the sales process. </li></ul><ul><li>Providing superior service and support. </li></ul><ul><li>Better understanding of customer needs. </li></ul><ul><li>Tailoring offerings. </li></ul><ul><li>Integration of pertinent customer information. </li></ul>
  29. 29. Additional CRM Resources <ul><li>Siebel Systems – </li></ul><ul><li> </li></ul><ul><li> </li></ul><ul><li> </li></ul><ul><li>IBM - </li></ul><ul><li>CRM Today – </li></ul><ul><li>Business2.0 </li></ul><ul><li>CRM Knowledge Base – </li></ul><ul><li> </li></ul>
  30. 30. Enterprise Resource Planning <ul><li>Enterprise Resource Planning Systems is a computer system that integrates application programs in accounting, sales, manufacturing, and other functions in the firm </li></ul><ul><li>This integration is accomplished through a database shared by all the application programs </li></ul>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.
  31. 31. 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
  32. 32. 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
  33. 33. 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
  34. 34. Enterprise Resource Planning – Background Timeline
  35. 35. SAP AG <ul><li>A German firm, is a world leader in ERP software. </li></ul><ul><ul><li>-Designed to operate in a three-tier client/server configuration </li></ul></ul><ul><ul><li>-Applications are fully integrated so that data are shared between all applications </li></ul></ul>The Idea of ERP
  36. 36. 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
  37. 37. London Health Sciences Centre
  38. 38. London Health Sciences Centre
  39. 39. London Health Sciences Centre
  40. 40. London Health Sciences Centre
  41. 41. London Health Sciences Centre
  42. 42. Reasons for implementing ERP <ul><li>Desire to standardize and improve processes </li></ul><ul><li>To improve the level of systems integration </li></ul><ul><li>To improve information quality </li></ul><ul><li>Integrate Financial Information </li></ul><ul><li>Integrate Customer Order Information </li></ul><ul><li>Standardize and Speed Up Manufacturing Processes </li></ul><ul><li>Reduce Inventory </li></ul><ul><li>Standardize Human Resources Information </li></ul><ul><li>Global Outreach </li></ul><ul><li>Avoid Redundancies </li></ul>
  43. 43. ERP Disadvantages <ul><li>Time-consuming </li></ul><ul><li>Expensive </li></ul><ul><li>Fit </li></ul><ul><li>Vendor Dependence </li></ul><ul><li>Too many features, too much complexity </li></ul><ul><li>Process Rigor (Standardized) </li></ul>
  44. 44. The General ERP Process <ul><li>Product Analysis </li></ul><ul><li>Module Selection </li></ul><ul><li>Process Analysis </li></ul><ul><li>Data Analysis </li></ul><ul><li>Applications Integration </li></ul><ul><li>Testing and Installation </li></ul><ul><li>Employee Training </li></ul>Average Implantation Time 24+ Months Meta Group Study
  45. 45. How Much Does an ERP Implementation Cost? <ul><li>The size and geographic distribution of the company. </li></ul><ul><li>The size of the ERP package. </li></ul><ul><li>Hardware </li></ul><ul><li>Software </li></ul><ul><li>Consultants and Analysts Fees </li></ul><ul><li>Time </li></ul><ul><li>Training </li></ul><ul><li>A large company may spend from $ 50 to $ 100 M or more USD for an integrated ERP implementation. </li></ul><ul><li>Meta group survey; 63 companies (large and small) in a range of industries. </li></ul><ul><li>Average cost $ 15,000,000. </li></ul><ul><li>High $300 M, $300,000,000 USD </li></ul><ul><li>Low $ 400 K, $400,000 USD </li></ul>
  46. 46. Example: Allied Signal, Inc. <ul><li> </li></ul><ul><li>$14.5 B Manufacturer </li></ul><ul><li>World-Wide Operations </li></ul><ul><li>11 countries, 18 sites, 9 languages </li></ul><ul><li>Large and complex database </li></ul><ul><li>Estimated Costs </li></ul><ul><li>$30 million in software licensing </li></ul><ul><li>$200 million in consulting fees </li></ul><ul><li>Hardware integration </li></ul><ul><li>Software integration </li></ul><ul><li>Training </li></ul><ul><li>Time to Implement System: 4 to 6 years </li></ul>
  47. 47. ERP Integration
  48. 48. Successful ERP Implementation Criteria <ul><li>Top Management Support </li></ul><ul><li>Good Cost Estimation </li></ul><ul><li>Realistic Expectations </li></ul><ul><li>ERP Implementation </li></ul><ul><li>Cultural Impact </li></ul><ul><li>Training </li></ul><ul><li>Customization and Integration </li></ul>
  49. 49. 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
  50. 50. Hillerich & Bradsby About Hillerich & Bradsby
  51. 51. Additional ERP Resources <ul><li>SSA Global Technologies – </li></ul><ul><li>SAP – </li></ul><ul><li>Oracle/PeopleSoft – </li></ul><ul><li>IBM - </li></ul><ul><li>Microsoft (Great Plains) – </li></ul><ul><li>Also, American Software, i2, Manugistics </li></ul>
  52. 52. Additional ERP Resources
  53. 53. Additional ERP Resources
  54. 54. Managing the Change
  55. 55. Managing the Change - Successfully 1. Economic Feasibility Tangible Benefits Intangible Benefits Implementation Costs Operational Costs
  56. 56. Managing the Change - Successfully 2. Address the Organizational Change Involved!
  57. 57. Managing the Change - Successfully 3. User Involvement & Influence
  58. 58. 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
  59. 59. Managing the Change - Successfully 4. Management Support
  60. 60. Managing the Change - Successfully 5. Project Management