Chapter 12- Integrating the Organization from End to End (Enterprise Resource Planning)

Enterprise Resource Planning (ERP)

· It serves as the organization’s backbone in providing fundamental decision making support.

· It enables people in different business areas to communicate.

· ERP system helps an organization to obtain operational efficiencies, lower costs, improve supplier and customer relations, and increase revenues and market share.

· The heart of an ERP system is a central database that collects information from and feeds information into all the ERP system’s individual application components (called modules), supporting diverse business function such as accounting, manufacturing, marketing, and human resources.

· ERP automates business processes such as order fulfillment- taking an order from a customer, shipping the purchase, and then billing for it.

ERP Integration Data Flow

ERP Process Flow

Bringing the Organization Together

· ERP enables employees across the organization to share information across a single, centralized database.
· With extended portal capabilities, an organization can also involve its suppliers and customers to participate in the workflow process, allowing ERP to penetrate the entire value chain, and help the organization achieve greater operational efficiency.

Organization before ERP

ERP- Bringing the Organization Together


The Evolution of ERP

· Although ERP solutions were developed to deliver automation across multiple units of an organization, to help facilitate the manufacturing process and address issues such as raw materials, inventory, order entry, and distribution, ERP was unable to extend to other functional areas of the company such as sales, marketing, and shipping. It could not tie to any CRM capabilities that would allow organizations to capture customer-specific information, nor did it work with websites or portals used for customer service or order fulfillment.

Integrating SCM, CRM, and ERP

· Integration of SCM, CRM, and ERP is the key to success for many companies. Integration allows the unlocking of information to make it available to any user, anywhere, anytime.

2 main competitors in ERP market:

1. Oracle

2. Sap

Primary Users and Business Benefits of Strategic Initiatives.

Integration Tools

· An integrated enterprise infuses support areas, such as finance and human resources, with a strong customer orientation.

· Integration are achieved using:

Middleware- several different types of software that sit in the middle of and provide connectivity between two or more software applications. It translates information between disparate systems

Enterprise application integration (EAI) middleware- represents a new approach to middleware by packaging together commonly used functionality, such as providing prebuilt links to popular enterprise applications, which reduces the time necessary to develop solutions that integrate applications from multiple vendors.

Integration between SCM, CRM, and ERP Applications.

· Companies run on independent applications, such as SCM, CRM, and ERP. If one application performs poorly, the entire customer value delivery system is affected.

Enterprise Resource Planning’s Explosive Growth:

Reasons of ERP being proven to be such a powerful force:

· ERP is a logical solution to the mess of incompatible applications that had sprung up in most businesses.

· ERP addresses the need for global information sharing and reporting.

· ERP is used to avoid the pain and expense of fixing legacy systems

To qualify as a true ERP solution, the system not only must integrate various organization processes, but also must be:

· Flexible- an ERP system should be flexible in order to respond to the changing needs of an enterprise.

· Modular and open- an ERP system has to have open system architecture, meaning that any module can be interfaced with or detached whenever required without affecting the other modules. The system should support multiple hardware platforms for organizations that have a heterogeneous collection of systems. It must also support third- party add-on components.

· Comprehensive- an ERP system should be able to support a variety of organizational functions and must be suitable for a wide range of business organizations.

· Beyond the company- an ERP system must not be confined to organizational boundaries but rather support online connectivity to business partners or customers.

Everyone involved in sourcing, producing, delivering the company’s product works with the same information, which eliminates redundancies, cuts wasted time, and removes misinformation

Chapter 11- Building a Customer-Centric Organization-customer relationship Management

Customer Relationship Management (CRM)

CRM is a business philosophy based on the premise that those organizations that understand the needs of individual customers are best positioned to achieve sustainable competitive advantage in the future.

- A customer strategy starts with understanding who the company's customers are and how the company can meet strategic goals.

- As the business world increasingly shifts from product focus to customer focus, most organizations recognize the treating existing customers well is the best source of profitable and sustainable revenue growth in the age of e-business, however, an organization is challenged more than ever before to truly satisfy its customers.

 

Recently, Frequency, and Monetary Value

An organization can find its most valuable customers by using a formula that industry insiders call RFM-recency, frequency, and monetary value. In other words, an organization must track:

- How recently a customer purchased items (recently)

- How frequently a customer purchases an item (frequently

- How much a customer spends on each purchase (monetary value)

 

The evolution of CRM

Knowing the customer, especially knowing the profitability of individual customers, is highly lucrative in the financial service industry.

There are three phases in the evolution of CRM:

1. CRM Reporting technology help organizations identify their customers across other applicants

2. CRM analysis technology helps organizations segment their customers into categories such as best and worst customers.

3. CRM predicts technological help organizations make predictions regarding customer behavior such as which customers are at risk of leaving.

The Ugly Side of CRM: Why CRM Matters More Now than Ever Before

Now companies have no choice as the power of the customer grows exponentially as the internet grows. In every case, customers have become an integral part of the action as a member of the aggregated, interactive, self-organizing, auto-entertaining audience on businesses. However, this should no be a surprise, since it was the customers crazy passion and hobbies and obsessions-that build up the web in the first place.

Customer Relationship Management's Explosive Growth

When customers buy on Internet, they see, and they steer, entire value chains.

- Customer web interaction become conversations, interactive dialogs with shared knowledge, not just business transaction. Web- based customer care can actually become the focal point of customer relationship management and provide breakthrough benefits for both the enterprise and its customers, substantially reducing costs while improving service.

- Current users allow allocating 20 percent of their IT budget to CRM solutions.

Using Analytical CRM to Enhance Decisions

The two components of a CRM strategy are:

- Operational CRM supports traditional transactional processing for day-to-day front-office operations or systems that deal directly with the customers.

- Analytical CRM supports back-office operations and strategic analysis and includes all systems that do not deal directly with the customers.

The primary difference between operational CRM and analytical CRM in the direct interaction between the organization and its customers.

-Personalization occurs when a website can know enough about a person's likes and dislikes that it can fashion offers that are more likely to appeal to that person. Many organizations are now utilizing CRM to create customer rules and templates that marketers can use to personalize customer messages.

 

Customer Relationship Management Success Factor

CRM solutions make organizational business processes more intelligent. This is achieved by understanding customer behavior and preferences, then realigning product and service offering and related communications to make sure they are synchronized with customer needs and preferences. If an organization is implementing a CRM system, it should study the industry best practices to help ensure a successful implementation.

Using he analytical capabilities of CRM can help a company Anticipate customer need and proactively serve customers in way that build relationship, create loyalty, and enhance bottom lines.

Chapter 10- Enabling the Organization (Supply Chain Management)

Basics of Supply Chain

- A supply chain consists of all parties involved, directly or indirectly, in the procedurement of a product or raw material.

- Organization must embrace technologies that can effectively manage and oversee their supply chain.

- supply chain management involves the management of information flow between and among stages in a supply chain to maximize total supply chain effectiveness and profitability.

- SCM is becoming increasingly important in creating organizational efficiencies and competitive advantages.

- It improves ways for companies to find the raw components they need to make a product or service, manufacture that product or service, and deliver it to customers.

 

Information Technology's Role in the Supply Chain

- The notion of virtually seamless information links within and between organizations is an essential element of integrated supply chain.

- Information technology's primary role in SCM is creating the integration or tight process and information linkages between functions within a firm.

- Information technology integrates planning, decision -making processes, business operating processes, and information sharing for business performance management.

- Considerable evidence shows that this type of supply chain integration results in superior supply chain capabilities and profits.

 

VISIBILITY

Supply chain visibility is the ability to view all areas up and down the supply chain.

Bullwhip effect occurs when distorted products demand information passes from one entity to the next through the supply chain.

*Information technology allows additional visibility in the supply chain.

CONSUMER BEHAVIOR

Demand planning software generates demand forecasts using statistical tools and forecasting techniques.

Ones an organization understand customer demand and its effect on the supply chain it can begging to estimate the impact that its supply chain will have on its customers and ultimately the organization's performance.

COMPETITION

Supply chain management can be broken down in"

Supply chain planning software: uses advanced mathematical algorithms to improve the flow and efficiency of the supply chain while reducing inventory. SCP depends entirely on information for its accuracy.

Supply chain executive (SCE) software automates the different stems and stages of the supply chain.

SPEED

During the past decade, competition has focused on speed. New forms of severs, telecommunications enabling companies to perform activities that were once never thought possible.

Another aspect of speed is the company's ability to satisfy continually changing customer requirements efficiently, accurately, and quickly.

 

Supply Chain Management Success Factors

To succeed in today's competitive markets, companies must align their supply chains with the demands of the markets key serve.

To achieve success such as reducing operation costs, improving asset productivity, and compressing order cycle time, and organization should follow the seven principles of SCM outlines.

One of the benefits is to know immediately what is being transacted at the customer and of the supply chain instead of waiting days or weeks for the information to flow.

Organizations should study industry best practices to improve their chances of successful implementation of SCM systems. The following are keys to SCM success.

MAKE THE SALE TO SUPPLIERS

The hardest part of any SCM system is its complexity because a large part of the system extends beyond the company's walls.

WEAN EMPLOYEES OF TRADITIONAL BUSINESS PRACTICES

Operations people typically deal with phone calls, faxes, and orders scrawled on paper and will most likely want to keep it that way.

ENSURE THE SCM SYSTEM SUPPORTS THE ORGANIZATIONAL GOALS

It is important to select SCM software that give organizations and advantage in the areas most crucial to their business success.

DEPLOY IN INCREMENTAL PHASES AND MEASURE AND MOMMUNICATE SUCCESS

Design the deployment of the SCM system in incremental phases.

BE FUTURE ORIENTED

The supply chain design must anticipate the future state of the business.

SCM Success Stories

The following picture depicts the top reasons more and more executives are turning to SCM to manage their expended enterprises.

 

This is a list of several companies using supply chain management to drive operations.

Dell: Business grows 17 percent per year with a $40 billion revenue base.

Nokia: Supply chain best practices are turning ideas into profitable businesses

Procter&Gamble: Consumer-driven supply chain is the defining architecture for large consumer companies. Best practice in product innovation and supply chain effectiveness are tops.

IBM: Hardware supply chain product-development processes overhauled to the tune of 70 percent better, faster and cheaper.

Wal-Mart Stores: Every low price defines the customers demand driving Wal-Mart's partner integrated supply chain.

Toyota Motor: Lean is one of the three best practices associated with benchmarked supply chain excellence.

Chapter 9- Enabling the Organization (Decision Making)

There are reason for growth of decision making information system :

• people need to analyze large amount of information
• people must make decision quickly
• people must apply sophisticated analysis technique
• people must protect corporate asset of organizational information

Transaction Processing System
moving up thru organizational pyramid users move from requiring transactional information to analytical information.

Decision Support System
model information to support managers & business professionals during the decision-making process.
DSS used three quantitative models that are :- sensitivity analysis, what-if analysis and goal seeking analysis.

Interaction between DSS and TPS

Executive Information System (EIS) - a specialized DSS that supports senior level executives within the organization.

EIS offering capabilities :
1. consolidation
2. drill down
3. slice-and-dice

Interaction between TPS and EIS

 

Digital dashboard
~integrates info from multiple components and presents it in unified display

 

example of dashboard

Artificial Intelligence (AI)

*ultimate goal is ability to build a system that can mimic human intelligence
*intelligent system - various commercial applications of artificial intelligence
*artificial intelligence - simulates human intelligence such as ability to reason and learn

Chapter 8- Data Warehouse

It is a logical collection of information that gathered from many different operational databases that supports business activities & decision making start.

Data warehouse compiled information from internal or transactional/operational databases & external databases through extraction, transformation, and loading (ETL)Data warehouse sends subsets of the information to data mart. Information is multidimensional : contains layers of columns and rows To present multidimensional information, a cube is used in common term.

Data mining is the process of analyzing data to extract information not offered by raw data alone and to perform it, users need data mining tools such as query tools, reporting tools, statistical tools and intelligent agent. This tools use a variety of techniques to find patterns and relationship in large volume of information.

To increase quality of organizational information and effectiveness, businesses must develop strategy to keep information clean. Information cleansing or scrubbing is process that weed out & fixes or discard inconsistent, incorrect or incomplete information. In addition, business intelligence is information that people use to support their decision making efforts. Principle BI enablers include technology, culture and people.

Chapter 7- Strong Organizational Information Database

relation database information	•Information is everywhere in an organization •Information is stored in databases -Database - maintains information about various types of objects (inventory), events (transactions), people (employees), and places (warehouses)
relational database information	Database models include: Hierarchical database model, Network database model, Relational database model
Hierarchical database model	information is organized into a tree-like structure (using parent/child relationships) in such a way that it cannot have too many relationships
Network database model	flexible way of representing objects and their relationships
Relational database model	stores information in the form of logically related two-dimensional tables
Entity	a person, place, thing, transaction, or event about which information is stored -The rows in each table contain the entities -In Figure 7.1 CUSTOMER includes Dave's Sub Shop and Pizza Palace entities
Attributes (fields, columns)	characteristics or properties of an entity class -The columns in each table contain the attributes -In Figure 7.1 attributes for CUSTOMER include Customer ID, Customer Name, Contact Name
Keys and Relationships	Primary keys and foreign keys identify the various entity classes (tables) in the database
Primary key	a field (or group of fields) that uniquely identifies a given entity in a table
Foreign key	a primary key of one table that appears an attribute in another table and acts to provide a logical relationship among the two tables
Relational database advantage	Database advantages from a business perspective include -Increased flexibility -Increased scalability and performance -Reduced information redundancy -Increased information integrity (quality) -Increased information security
Increased Flexibility	A well-designed database should: -Handle changes quickly and easily -Provide users with different views -Have only one physical view
Physical view	- deals with the physical storage of information on a storage device -Have multiple logical views
Logical view	focuses on how users logically access information
Increased Scalability and Performance	A database must scale to meet increased demand, while maintaining acceptable performance levels
Scalability	refers to how well a system can adapt to increased demands
Performance	measures how quickly a system performs a certain process or transaction
Reduced Information Redundancy	Databases reduce information redundancy
Redundancy	•the duplication of information or storing the same information in multiple places •Inconsistency is one of the primary problems with redundant information
Increase Information Integrity (Quality)	•Information integrity - measures the quality of information •Integrity constraint - rules that help ensure the quality of information -Relational integrity constraint -Business-critical integrity constraint
Increased Information Security	Information is an organizational asset and must be protected
Databases offer several security features including:	-Password - provides authentication of the user -Access level - determines who has access to the different types of information -Access control - determines types of user access, such as read-only access
Database management systems	Database management systems (DBMS) - software through which users and application programs interact with a database
Integrating Information among Multiple Databases	Integration - allows separate systems to communicate directly with each other
Forward integration	takes information entered into a given system and sends it automatically to all downstream systems and processes
Backward integration	takes information entered into a given system and sends it automatically to all upstream systems and processes
Integrating Information among Multiple Databases	Forward integration and backward integration
Integrating Information among Multiple Databases	Building a central repository specifically for integrated information