Enterprise Systems

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Enterprise Systems

• ERP 1 2

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Important information in Chpt 1?
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Process vs Function

• Business process
• Collection of activities that take one or more
  inputs and creates an output that is of value to
  the customer (internal or external)
• Business function
• Specific activities usually carried out by a
  functional area because it has the expertise to
  do so
• Functional area grouping of similar job types /
  area of knowledge

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History behind functional areas

• Prior to industrial revolution, production done
  in job shop environment on custom basis
• With increasing demand and size of organizations
  that went along with mass production, needed to
  restructure to gain efficiency
• Important concepts
• Max Weber bureaucracy power is ascribed to
  positions
• Fredrick Taylor scientific management one
  best way to accomplish a task
• Henri Fayol chain-of-command authority
  discipline (organizational power) and task
  specialization / job separation

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Why have functional areas?

• Beginning of departments
• Disaggregated work into narrowly defined tasks to
  increase efficiency
• Re-aggregate people performing those tasks into
  departments
• Install managers to administer them
• Operating across functions
• Organized work as a sequence of separate tasks
• Employed complex mechanisms to track progress

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Porters Value Chain
In many ways the most interesting stage of the
collapsed value chain is product delivery, which
requires integrating several different
information systems order entry, purchasing,
materials resources planning, and distribution
management.
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Porters Value Chain
No company has yet accomplished the
large-scale integration of functions and systems
required to fully manage product delivery.
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Process Example

• Develop a process flow chart for the sales order
  process
• Customer places order ? Company posts payment

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Order-to-Cash(plus a little more see above)
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Order-to-cash at Fitter Snacker
Reconcile sales order, pick list shipping notice
Reconcile pick list, pack list physical items
Shipping IS
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Optimizing business function vs process -
purchasing

• Purchasing activity purchase large quantities
• Reduced price per unit
• Reduced ordering costs
• Increased inventory holding costs
• Purchasing as part of inbound logistics to
  support production
• Purchase quantity based on what is needed for
  production and when it is needed

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Information Flows
Customers
Marketing
Accounting/ Finance
HR
Operations
Suppliers
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Important information in Chpt 2?
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Evolution of ERP Systems

• Accounting
• Applications
• General ledger
• Accts receivable

• Manufacturing
• Applications
• Inventory control
• BOM processing

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Potential benefits from ERP

• Integration between functional areas
• Integration between different locations
• Reduced number of systems to maintain and reduced
  number of interfaces
• Real-time information for decision-making
• Improved processes via best practices
• Time for strategic rather than tactical focus