CII Institute of Logistics Virtual Class Slide 1 21-Aug-15 Session 2 Topics 1.Enterprise Resource...

CII Institute of Logistics Virtual Class Slide 1Apr 19, 2023

Session 2Topics

1. Enterprise Resource Planning (ERP)

2. Inter-Enterprise Integration (XRP)

3. Demand Driven Supply Network (DDSN)

4. Supply Chain Decisions

5. Supply Chain Modeling

6. eSupply Chain Managment

7. eProcurement

8. eDemand Network Management (CRM)

9. Data Warehousing


1. Enterprise Resource Planning (ERP)

Enterprise Resource PlanningEnterprise-wide information system designed to coordinate all the resources, information, and activities needed to complete business processes such as order fulfillment or billing.

Based on Common DatabaseFunctions

Manufacturing, Supply Chain Management, Financials, Projects, Human Resources Customer Relationship Management


1. Enterprise Resource Planning (ERP).

Evolution of ERP1960s Inventory

Management and Control

Combination of information technology and business processes of maintaining the appropriate level of stock in a warehouse. The activities include identifying inventory requirements, setting targets, providing replenishment techniques and options, monitoring item usages, reconciling the inventory balances, nd reporting inventory status.

1970s MRP Utilizes software applications for scheduling production processes. Generates schedule for operations and raw material purchases based on the production requirement of finished goods, the structure of production system, the current inventory, and the lot sizing procedure for each operation


1. Enterprise Resource Planning (ERP).Evolution of ERP

1980s MRP II Utilizes software applications for coordinating manufacturing processes from product planning, parts purchasing, inventory control to production distribution.

1990s ERP Uses multi-module application software for improving the internal business processes. Integrates business activities across fuctional departments from product planning, parts purchasing, inventory control, product distribution, fulfillment, to order tracking. Also includes modules for supporting marketing, finance, accounting and human resource planning.


1. Enterprise Resource Planning (ERP).Components in ERP SystemERP Software –

Module based ERP software is the core of an ERP system. Each software module automates business activities of a functional area within an organization.

Business Processes ERP offers solutions at different levels - strategic planning, management control and operational control.

ERP UsersThe users of ERP systems are employees of the organization at all levels, from workers, supervisors, mid-level managers to executives.

Hardware and Operating SystemsMany large ERP systems are UNIX based. Windows NT and Linux are other popular operating systems to run ERP software. Legacy ERP systems may use other operating systems



Modules in ERP 1. Sales (forecasting, customer prospecting, follow-up, telemarketing support and database management)2. Order Processing (Inquiry, order taking, shipping, invoicing)3. Asset Management4. Cost Accounting, Financial Accounting5. Manufacturing

Engineering, Bills of Material, Scheduling, Capacity, Workflow Management, Quality Control, Cost Management, Manufacturing Process, Manufacturing Projects, Manufacturing Flow 6.

6 Materials Management7. Quality project8. Data Warehouse9. Human Resource Management Payroll, Training, Time & Attendance, Rostering, Benefits 10 Project Management Costing, Billing, Time and Exp Mgmt


1. Enterprise Resource Planning (ERP).ERP Life Cycle

ERP Readiness assessment. This prepares an organisation for ERP. Both physically and mentally ERP feasibility study. How much of ERP does an organisation really require? How much of ERP is good enough? Process modelling and documenting ‘as is’ processes and ‘to be’ processes. BPR comes into the scene here Detailed plan for ERP implementation Preparing to ‘Go Live’ including data migration. This means that once ERP is implemented, users will have to get accustomed to it and feel comfortable in its presence. That is, Going and Living in the ERP jungle. These steps prepare for that process Going Live. After the complete implementation of ERP, organisation will decide a day to shift to newly implemented ERP from existing system. This is called Going live. They fix up a date when they will shift. It is usually the first day of the financial year, like April 1st for India. Performance assessment, documentation, training and future plans



ERP ImplementationBig Bang Approach

Location-wise implementation• To be on the safer side, organisation implements ERP in one of

their offices. For instance, ERP gets implemented in the head office and based on the comfort level, it gets extended, again location wise

Module-wise implementation• It should be easy to guess by now. Organisation installs finance

module of ERP first and based on the comfort level it attains extends the implementation to other modules. Again module by module



ERP Vendor ServicesConsulting

Process Preparation

Configuration

Customization

Data migration

Training

Performance measuring and tuning

Maintenance and Support



ERP – Advantages

ERP can be useful in helping a company find the best design process.

Order Tracking

Planning and Execution – Measure and correct

Accounting, A/R, A/P, unit-wise Profit Analysis

Sales force automation, performance analysis

Improve design and manufacturing process

Helps to improve CRM and SCM



ERP – LimitationsHuge Cost – Recoverable over a period after implementation.Customization of the ERP software is limited Re-engineering of business processes to fit the "industry standard" prescribed by the ERP system may lead to a loss of competitive advantage ERPs are often seen as too rigid and too difficult to adapt to the specific workflow and business process of some companies—this is cited as one of the main causes of their failure Resistance in sharing sensitive internal information between departments can reduce the effectiveness of the software High Training and support cost



Applications in Core ERP framework

C

U

S

T

O

M

E

R

Sales and Distribution

Service Applications

Central

Database

Financial Applications

Manufacturing Applications

Inventory Management

Human Resource Management

Other Functions

S

U

P

P

L

E

R

S


1. Hidden costs in ERP implementation

TrainingIntegration and testingCustomizationData ConversionData AnalysisConsultantsChanging the staffWaiting for ROIPost-ERP depression


2. Inter-Enterprise Integration (XRP)

Better synchronization with trading partnersReduce inventories

Foster strategic pricing

Improve cycle times

Increase customer satisfaction

Complement ERP Intelligent decision support capabilities

Collects data in every step in the supply chain

Planning capability by demand supply chain execution

Depends on tightly coupled decision-making and execution


2. Inter-Enterprise Integration (XRP)XRP Vs. ERP

Real Time EnterpriseERP Applications

XRP Applications

Sales

Logistics

PurchaseHR

Production

Mfg. Res. Plng

FinancialsSales

Integrated Plant Systems

Supply Chain Planning

Collaborative Product Commerce

CRM

Supply Chain Execution

Partner Relationship Mgmt

Integrated Plant Systems

e-Procurement


3. Demand Driven Supply NetworkWhat is Demand Driven Supply Network?

Method of supply chain management which involves building supply chains in response to demand signals supply chain processes are managed to deliver best value according to the demand of the customers Involves pull techniqueMore opportunities to share information and to collaborate with others in the chainModel consists of four levels• Reacting• Anticipating• Collaborating• Orchestrating

Bridge the gap between CRM and SCM


3.1 DDSN – Model

Simple SCM Model

TraditionalIndependent operations by functional unitsIndividual objectives but conflicting

• Cost Vs Inventory, Productivity Vs Quality

SCM is the mechanism for integrating

Vendor

Production

(Transform)

Distribution

Distribution

Customer


3. Demand Driven Supply NetworkDDSN

Demand-driven supply networks are driven from the front by customer demand. Instead products being pushed to market, they are pulled to market by customersDefines that companies in a supply chain will work more closely to shape market demand by sharing and collaborating information

AdvantagesParticipants in the supply chain are all able to take part in shaping demand as apposed to merely accepting it The customer centric approach, as apposed to the factory-centric approach of DDSN accepts that product design and ongoing product innovation are key requirements Modeling enables simulation of "what-if" scenarios so managers can randomly vary their initial conditions


3. Demand Driven Supply Network

DDSN – ImplementationObjectives of aligning planning processes• Agility - The ability to respond quickly to short-term

change in the demand and supply equation and manage external disruptions more effectively.

• Adaptability - The ability to adjust the design of the supply chain to meet structural shifts in markets and modify supply network strategies, products, and technologies.

• Alignment - The ability to create shared incentives that aligns the interests of businesses across the supply chain.


3. Demand Driven Supply Network

DDSN MethodsMonitor economies all over the world to spot new supply bases and markets.

Create flexible product designs.

Use intermediaries to develop fresh suppliers and logistics infrastructure.

Evaluate the needs of ultimate consumers—not just immediate customers.

Determine where companies' products stand in terms of technology and product life cycles


4. Supply Chain DecisionsStrategic Decisions

Product Development• Product Cycle mature or Sales decline• New product or another version of existing product or rationalize the

productCustomer

• Identify key customer segmentManufacturing

• Technology and infrastructure requirement• New manufacturing facility or increase productivity or subcontracting

Suppliers • Volume and value of purchase• Identify suppliers with reliability and max discount• Decision in confirmation with overall company objective for deciding

factorsLogistics

• Decide on design and operation of network• Decide on warehouses and distribution centers or use of third parties



Operational DecisionsLocation

• Geographic location of stocking points, sourcing points

• Commitment of resource to a long term plan

• Significant for accessing customer markets

• Impact on cost, revenue and customer service

• Depend on production cost, distribution cost, taxes and duties, duty drawbacks, production limitation, customer spread, etc.

• Decision on strategic and operational level



Operational DecisionsInventory

• Type of inventory adopted (kanban or just-in-time)

• Level of buffer inventory for material

• Setting goals – strategic decision

• Identify stock points, reorder levels and order

quantities for different material

• Impact on cost, productivity and Customer service

level



Operational DecisionsLogistics

• Closely linked with inventory decisions

• Focus on third party7 logistic companies

• Trade-offs in mode of transports – Air/Ship/Road

• Depends on customer service level and geographic location of customers and suppliers

Production• Operational decision on production scheduling,

increasing the productivity, reducing the down time, workload balancing and quality assurance


5. Supply Chain Modeling

ModelsSpecifications and guidelines that describe the implementation of supply chain decisions.

Network design Method• Minimize cost and time elements

• Lay down manufacturing and distribution strategies far into the future

• Integration of production, location, inventory and transportations

Rough-cut Method• Thrust is on Inventory policies

• Limitations: Production side ignored Distribution assumes receipt from one-distribute to many approach


6. eSupply Chain Management

ERP – Backbone for eBusiness

XRP – Collaboration business with partners

SCOR 7.0 Model for Supply chain

Supplier’s Supplier

Deliver

Return

Supplier

Plan

Source

Deliver

Return

Company

Plan

Source

Deliver

Return

Customer

Plan

Source

Deliver

Return

Customer’s Customer

Deliver

Return


6.1 Processes in eSCMProcesses

PlanSourceMake (produce)DeliverReturn

Processes interdependentDemand Supply network – Collaborative modelERP vendors system architecture to meet requirementExamples: SAP, Oracle


6.2 Categories of eSCM

eSNP – planning functionsDemand forecasting, inventory simulations, manufacturing planning and scheduling

Benefits

eSNE – execution functionsProcurement

Manufacturing

Distribution

Warehouse management


6.3 Modules in eSNP

Enterprise Architecture

eSNP Modules

Order Commitment

Advanced Planning

Demand Planning

Transportation Planning

Distribution Planning


6.4 Functions automated in eSNE

Replenishment Process

Production Process

Distribution Process

Order Planning Process

Order Entry & Planning



Pick & Load

Home/Site Delivery

Customer Service

Schedule Production

Allocate Inventory prioritize Orders

Distribution Scheduling

Forecasting

Aggr. Inv. Planning

Capacity Planning

MPS/Sourcing


6.5 Classic example of eSNE

mySAP – SCMExecution Processes• Order Fulfillment

• Procurement

• Transpiration

• Warehousing

• Manufacturing


7. e-Procurement

ObjectiveReduce paperwork, delay and focus in more planning and controlling

From support function to strategic functionFocus on five Key challenges

Order Processing cost and cycle timeAccess to corporate procurementDesktop requisitioningIntegration of procurement s/w with back-officeElevating to strategic importance


7.1 e-Procurement Trading Models

EDI networksMany manufacturing companies

B2E requisitioning Fords Intranet requisitioning software

Corporate Procurement modelIBM e-Procurement model

First generation trading exchangesCommunity catalog and storefronts

Second generation trading exchangesTransaction-oriented

Third generation trading exchangesCollaborative supply chain


7.2 Traditional Vs. e-Procurement

Tradition purchase – managed by transaction

e-Procurement – managed by execeptionCharacteristics Traditional Purchase e-Procurement Product Selection Search large paper or online

catalog Personal views, templates and shopping lists

Requisition and Authorization

Multiple level of manual approval

Automatic approval online based on business rules

PO transmission Fax, Email or EDI. Supplier retypes the order data

Online dispatch of order through central hub

Payment authorization Dependent on three way match of PO with invoice and receipts (delivery)

Immediate based on receipt notice

Anlysis Adhoc Not linked to supplier Perfomance


8. e-Demand Network Management (CRM)

What is CRM?Customer Relationship Management (CRM) is an information industry term for methodologies, software, and usually Internet capabilities that help an enterprise manage customer relationships in an organized and efficient manner.

In many cases, an enterprise builds a database about its customers. This database describes relationships in sufficient detail so that management, salespeople, and customer service reps can access information; match customer needs with product plans and offerings; remind customers of service requirements; know what other products a customer had purchased; etc.


8.1 Why CRM

Facts to rememberCost of selling to new customer

Effect of negative feedback

Primary reason for customer dissatisfaction

Odds of selling a new product to a new customer

Are the dissatisfied jump to competitors?

Cost for customer service?

Who make-up the “customers” in CRM?

Process-centric to customer-centric approach


8.2 Aspects of CRMFront office operations

Direct interaction with customers, e.g. face to face meetings, phone calls, e-mail, online services etc

Back office operations Operations that ultimately affect the activities of the front office (e.g., billing, maintenance, planning, marketing, advertising, finance, manufacturing, etc.)

Business relationships Interaction with other companies and partners, such as suppliers/vendors and retail outlets/distributors, industry networks (lobbying groups, trade associations). This external network supports front and back office activities

Analysis Key CRM data can be analyzed in order to plan target-marketing campaigns, conceive business strategies, and judge the success of CRM activities (e.g., market share, number and types of customers, revenue, profitability


8.3 Types of CRM

Operational CRM

Sales Fore Automation

Analytical CRM

Sales Intelligence CRM

Campaign Management

Collaborative CRM

Consumer Relationship CRM


8.4 CRM Implementation Issues

Data quality and availability

Multiple sources of data

Proper pre-planning

Human aspect and involvement

Phased Approach

Organization Commitment

Privacy and data security


8.5 Critical Success Factors of CRM

Strategic Planning

Architectural Design

Phased Approach

Data Requirement Analysis

Data Gathering

Organization commitment


8.5 Leading vendors of CRM

Vendor Percentage of implementations

Siebel (Oracle) 41%

SAP 8%

Epiphany (Infor) 3%

Oracle 3%

PeopleSoft (Oracle) 2%

salesforce.com 2%

Amdocs 1%

Chordiant 1%

Microsoft 1%

SAS 1%

Others 15%

None 22%


8.6 Phases of CRM

Acquiring

Enhancing

Retaining

Intimacy and understanding with Customers


8.7 Core competencies of CRM

Prospect or

Customer

Fax

Email Web

Telephone

Manufacturing & Fulfillment

Cust Service & Billing

Loyalty & Retention Prog

Field Sales & Service

SalesCross-sellUp sellTele-Sales

APPLICATION

INTEGRATION

CUSTOMER

PARTNERS

PURCHASE

HISTORY

OPERATIONS

MRKETING

BILLING

WEB

EMAIL

CALLCENTER

SFA

POS

DIRECT MAIL

BILLING

CUSTOMER


9. Data Warehousing

What is data warehouse?Data warehouse is a repository of an organization's electronically stored data. Data warehouses are designed to facilitate reporting and analysis with business intelligence tools, tools to extract, transform and load data into repository, and tools to manage and retrieve metadata.

How does it differ from database?


9.2 Data warehouse Vs Operational Systems

Operational Systems Optimized for data integrity. Uses database normalization and entity-relationship modelSmall amount of data. Fast transactions for update/insert.Older data periodically purged

Data warehouseOptimized for speed of data retrievalDenormalized vis dimension-based modelData stored in granular and summarized formData gathered fro0m operational system and maintained even after purging operational data


9.1 Layers in Data warehouseOperational database layer

The source data for the data warehouse - An organization's Enterprise Resource Planning systems fall into this layer.

Data access layerThe interface between the operational and informational access layer - Tools to extract, transform, load data into the warehouse fall into this layer.

Metadata layerThe data directory - This is usually more detailed than an operational system data directory. There are dictionaries for the entire warehouse and sometimes dictionaries for the data that can be accessed by a particular reporting and analysis tool.

Informational access layerThe data accessed for reporting and analyzing and the tools for reporting and analyzing data - Business intelligence tools fall into this layer. And the Inmon-Kimball differences about design methodology, discussed later in this article, have to do with this layer.


9.3 What is included in Data warehousing

Transactional Applications

Extraction and transformation tools

Scrubbing tools

Movement tools

Repository tools

Access tools

Data Delivery


9.4 Benefits of Data warehousing A data warehouse provides a common data model for all data of interest regardless of the data's source. This makes it easier to report and analyze information than it would be if multiple data models were used to retrieve information such as sales invoices, order receipts, general ledger charges, etc.Prior to loading data into the data warehouse, inconsistencies are identified and resolved. This greatly simplifies reporting and analysis.Information in the data warehouse is under the control of data warehouse users so that, even if the source system data is purged over time, the information in the warehouse can be stored safely for extended periods of time.Because they are separate from operational systems, data warehouses provide retrieval of data without slowing down operational systems.Data warehouses can work in conjunction with and, hence, enhance the value of operational business applications, notably customer relationship management (CRM) systems.Data warehouses facilitate decision support system applications such as trend reports (e.g., the items with the most sales in a particular area within the last two years), exception reports, and reports that show actual performance versus goals


9.5 Disadvantages of data warehouses

Data warehouses are not the optimal environment for unstructured data.Because data must be extracted, transformed and loaded into the warehouse, there is an element of latency in data warehouse data.Over their life, data warehouses can have high costs. The data warehouse is usually not static. Maintenance costs are high.Data warehouses can get outdated relatively quickly. There is a cost of delivering suboptimal information to the organization.There is often a fine line between data warehouses and operational systems. Duplicate, expensive functionality may be developed. Or, functionality may be developed in the data warehouse that, in retrospect, should have been developed in the operational systems and vice versa.


9.6 Future of Data warehousingA 2009 Gartner Group paper predicted these developments in business intelligence/data warehousing market

Because of lack of information, processes, and tools, through 2012, more than 35 per cent of the top 5,000 global companies will regularly fail to make insightful decisions about significant changes in their business and markets. By 2012, business units will control at least 40 per cent of the total budget for business intelligence. By 2010, 20 per cent of organizations will have an industry-specific analytic application delivered via software as a service as a standard component of their business intelligence portfolio. In 2009, collaborative decision making will emerge as a new product category that combines social software with business intelligence platform capabilities. By 2012, one-third of analytic applications applied to business processes will be delivered through coarse-grained application mashups.

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CII Institute of Logistics Virtual Class Slide 1 21-Aug-15 Session 2 Topics 1.Enterprise Resource...

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