Achieving Operational Excellence and Customer Intimacy:Enterprise Applications

1
Achieving Operational Excellence and Customer
IntimacyEnterprise Applications

• Chapter 9 (10E)

2
Three Systems

• Our focus is on the following enterprise
  applications
• Enterprise resource planning systems (ERP
• Supply chain management systems (SCM)

3
What Are Enterprise Systems?
Enterprise System Architecture
4
ERP

• ERP systems are comprised of independent software
  modules with a common central database that
  support basic internal business processes for
  finance and accounting, human resources,
  manufacturing and production, and sales and
  marketing
• The common database enables data to be used by
  multiple functions and business process for
  precise organizational coordination and control

5
Business Value of ERP

• A more uniform organization
• More efficient operations and customer-driven
  business processes
• Firm wide information for improved decision
  making

6
Supply Chain and Supply Chain Management

• A firms supply chain is a network of
  organizations and business processes for
  procuring raw materials, transforming into
  products, and distributing them to customers.
  Materials, information, and payments flow through
  the supply chain in both directions.
• Supply chain management attempts to Coordinate
  the business processes to speed information,
  product, and fund flows up and down a supply
  chain to reduce time, redundant effort, and
  inventory costs

7
A Supply Chain
8
Parts of the Supply Chain

• Upstream includes the organization's suppliers
  and their suppliers and the process for managing
  relationships with them.
• Internal supply chain includes process for
  transforming the materials, components, and
  services furnished by suppliers into finished
  goods and for managing materials and inventory
• Downstream consists of the organizations and
  process for distributing and delivering products
  to the final customers

9
Five Major SC Processes

• Planning Balancing demand and supply to meet
  sourcing, production, and delivery requirements
• Sourcing Procurement of goods and services
  needed to create a product or service
• Making Processes that transform a product into a
  finished state
• Delivering Processes to manage order
  transportation and distribution
• Returning Processes associated with product
  returns and post delivery customer support

10
Logistics

• Logistics concerns all factors that will have an
  impact on transporting the correct
  product/service to where it is needed on time and
  at the least cost.
• Particularly important in the transportation of
  raw materials in the upstream portion of the
  supply chain and transportation of finished goods
  in the downstream portion of the supply chain.
• Logistics counts for 12-14 of a manufacturers
  costs

11
Key Supply Chain Management Processes
12
SCM Applications (Systems)

• The primary goal of all supply chain management
  systems is to automate flow of information
  between company and supply chain partners.
• Two major types
• Supply chain planning systems Generate
  demand forecasts for a product (demand planning)
  and help develop sourcing and manufacturing plans
  for that product.
• Supply chain execution systems Track the
  physical status of goods, the management of
  materials, warehouse and transportation
  operations, and financial information involving
  all parties.

13
Supply Chain Planning and Execution Systems
(Examples)
14
Supply Chain Performance Measurement

• Metrics for measuring supply chain performance
• Fill rate (the ability to fill orders by the due
  date)
• Average time from order to delivery
• The number of days of supply in inventory
• Forecast accuracy
• The cycle time for sourcing and making a product

15
Intranets and Extranets Play a Major Role in SCM
Ovals represent extranet users.
16
Advantages of Internet SCM Applications

• Provide standard set of tools
• Facilitate global supply chains
• Reduce costs
• Enable efficient customer response
• Allow concurrent supply chains

17
Demand-Driven Supply Chains

• Push-based model Production master schedules
  based on forecasts of demand for products, and
  products are pushed to customers
• Pull-based model Supply chain driven by actual
  customer orders or purchases (Dell)

18
Push- versus Pull-Based SC Models
19
Business Value of SCM Systems

• Improved customer service and responsiveness
  (product availability)
• Cost reduction (supply chain costs represent 75
  of operating expenses for many firms reducing sc
  costs can have major impact)
• Cash utilization (improved cash flows)

20
Challenges of Implementing Enterprise Systems

• High total cost of ownership
• Organizational change requirements
• Realizing organizational goals
• Seventy percent of organizations have not
  obtained the promised benefits of enterprise
  systems

21
Vendors

• Microsoft (http//www.microsoft.com/dynamics/ax/pr
  oduct/supplychain.mspx )
• SAP (SAP United States - Business Management
  Software Enterprise Application Integration)
• Oracle (http//www.oracle.com/applications/procure
  ment/intro.html)
• JDA (http//www.jda.com/solutions/strategic-supply
  -demand-solutions-overview.html )

22
Why Do Enterprise Projects Fail So Often?

• Enterprise systems software requires people to
  adopt new work methods
• People often dont agree that the Enterprise
  systems way of doing things is better than
  existing processes
• Either people resist or force IT to customize
  Enterprise systems
• Customization makes the software unstable and
  harder to maintain
• The mistake companies make is assuming that
  changing people's habits will be easier than
  customizing the software. There is a delicate
  balance between these two choices.
• Extensive collaboration and planning across
  functional areas and between firms.
• Huge education and training needs.