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Managmeny Information
Systems used for Kentucky Fried Chicken
Abstract
An Enterprise Resource Planning (ERP) system has an enormous effect on a
business. It is intended to facilitate information sharing, business planning, and
decision making on an enterprise-wide basis therefore, allowing each
department to communicate and share information easier with the rest of thecompany. The ERP system is also responsible for connecting the organization
with its suppliers and customers.
KFC is a major quick serving restaurant (QSR) serving over 12 million
customers on a daily basis through its 21,400 restaurants in 109 countries. This
report investigates the Enterprise Resource Planning (ERP) system being
implemented at Kentucky Fried Chicken, the reasons for its implementation;
the benefits obtained from it my and my personal recommendations to enhance
it. The report also gives an introduction about KFC, its establishment and its
history.
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General Information
KFC Corporation, also known as Kentucky Fried Chicken is the world's most popularchicken restaurant chain. KFC primarily sells chicken pieces, chicken sandwiches, chicken
pot pies, crispy chicken strips, wraps and salads. KFC is part of Yum! Brands, Inc., the
world's largest restaurant company in terms of system restaurants, with more than 36,000
locations around the world.
Type Fast Food Chain
Founded 1930 (North Corbin, Kentucky)
First Franchise 1952 (South Salt Lake, Utah)
Founder Harland Sanders
Headquarter Louisville, Kentucky
Industry Quick Service Restaurant (QSR) industry
Revenues $ 520.3 million (2007)
Employees 24000 (2007)
Parents Yum! Brands
Key People Roger Eaton, President
Harvey R. Brownlea, COO
James O'Reilly, VP for Marketing
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Kentucky Fried Chickens Famous Story
Pete Harman was building a successful burger business in Utah when a white-
haired, goateed acquaintance from Kentucky showed up unexpectedly and offered to cook a
fried chicken dinner.
Colonel Harland Sanders had a business proposition. He was certain that one
helping of his specialty chicken, coated with a blend of 11 herbs and spices, would persuade
Mr. Harman to add chicken to his menu.
Mr. Harman was hooked after a few bites. Soon, his restaurant was promoting the
dish, called Kentucky Fried Chicken.
The chicken became an instant hit in that August of 1952 as customers lined up
outside the Salt Lake City eatery to take home dinners by the bucketful. For $3.50, they got
14 pieces of chicken, mashed potatoes, rolls and gravy.
From humble beginnings, Kentucky Fried Chicken became a fast-food staple and its
originator one of the world's most recognizable faces.
Fifty years later, the chain built on Mr. Sanders' salesmanship and home-style
cooking boasts nearly 12,000 restaurants worldwide generating sales of nearly $10 billion a
year.
For Mr. Sanders, success was a long time coming. He drifted from job to job,
including stints as a railroad fireman, insurance salesman, steamboat ferry operator, tire
salesman and service station operator. He perfected his chicken and the cooking technique
in the late 1930s while serving hungry customers who stopped at his service station now
a historic landmark in Corbin, Ky. The title colonel was an honorific bestowed on Mr.
Sanders by a Kentucky governor.
He decided to take his chicken from a handful of local restaurants to a national stage
at the age of 62, a time when most people are thinking of retiring.
He crisscrossed the country by car, his cookware and herbs and spices in the back, to
whip up batches of chicken for restaurateurs and their employees. The demonstrations
sealed many handshake deals in which restaurant operators agreed to pay Mr. Sanders a
nickel for each chicken sold.
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By 1964, Mr. Sanders had signed up more than 600 franchised outlets when he sold
the company for $2 million to a group headed by Jack Massey and Mr. Brown, who later
became governor of Kentucky.
Kentucky Fried Chicken took flight under Mr. Brown and his partners. By 1971,
when they sold the company for $285 million to Heublein Inc., it had more than 3,500
franchised and company-owned restaurants.
Mr. Brown attributed the company's success to its emphasis on take-home dinners
that resembled the kind mother made, a revolutionary concept in the restaurant industry.
The company also capitalized on Mr. Sanders' popularity. The colonel always
looked the part of the Southern gentleman, wearing his trademark white suit and blackstring tie while pitching chicken or dishing out homespun wisdom on television shows.
Mr. Sanders stayed on as company spokesman, promoting the chicken in folksy
television commercials, until his death in 1980 at the age of 90.
KFC changed hands a few more times. It became a subsidiary of R.J. Reynolds
Industries later RJR Nabisco when Heublein sold it in 1982. PepsiCo acquired KFC
from RJR Nabisco in 1986 for about $840 million.
In 1997, PepsiCo's three fast-food restaurant chains KFC, Taco Bell and PizzaHut spun off to form Tricon Global Restaurants Inc. This year, Louisville-based Tricon
changed its name to Yum! Brands Inc.
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Kentucky Fried Chickens Basis for Success
Is owed much to the vision, energy, and heart of its founder and corporate icon, Colonel
Sanders. Colonel Sanders developed the special cooking process and created the blend of
11 secret herbs and spices known to the world today as Original Recipe Kentucky Fried
Chicken. The Colonels Promise and vision which states the following:
To Serve Our Valued Customers
Hot, Great Tasting Meals
Great Value for Your Money
Quickly and Accurately
In a Clean, Comfortable Environment
In a Friendly, Courteous MannerToday, the company continues to maintain rigorous quality control programs to ensure that
its customers around the world enjoy the highest possible quality restaurant services and
food products. KFC employees are trained to deliver this promise to each and every
customer that is served.
The C.H.A.M.P.S Program
It is a program that backs up the Colonels promise to the customers.
C.H.A.M.P.S stands for the six universal areas of customer expectation common to all
cultures and all restaurants concepts which are:
Cleanliness
Hospitality
Accuracy
Maintenance of Facilities
Product Quality
Speed of Service
C.H.A.M.P.S is the operating platform used to ensure that the customer has the consistent
quality experience in every restaurant, everyday and on every occasion.
\
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Corporate Overview
Facts and Figures
KFC restaurants are located in 109 countries and territories around the world and serves
over 12 million customers every day generating sales of nearly $10 billion a year. KFC
operates more than 5,200 restaurants in the United States and more than 16,200 units around
the world, employing more than 24,000 people worldwide.
Type of Restaurant
Its locations can be found operating as free-standing units and kiosks in high-traffic areas.
Many KFC locations are co-located with one or more ofYum Restaurants including Long John
Silver's, Taco Bell, Pizza Hut, orA&W Restaurants. Many of these locations behave like a
single restaurant, offering a single menu with food items from both restaurants.
Franchise Model
More than 20% of the restaurants are company-operated; the remaining 80% are either
franchised or licensed. Franchisees are required to meet certain operating standards as part
of their franchise agreement.
KFCs Organizational Structure
KFC has adopted a traditional fast food chain restaurant structure.
Chief Executive Officer: The CEO has control over departments and employees.
Regional Manager: Monitors and Controls the Area Manager.
Area Manager: The Area Manager drives excellence in day-to-day operations of all
company owned restaurants in the market; trains, coaches, supports managers; plansand sets goals; focuses on in-store problem solving/process improvement; setsstandards; recognizes and motivates Restaurant Managers, Assistant Managers andRestaurant Teams.
Restaurant General Manager: The Restaurant General Manager is accountable for
creating and running an energetic and valuable work environment, which iscommitted to serving the best chicken at the fastest speed and with a smile. TheRestaurant General Manager reports directly to an Area Manager and is accountablefor successfully implementing and maintaining all company policies and proceduresin relation to operations, customer service, cash handling, marketing, purchasing,human resources, health & safety, administration, training and development.
Assistant Manager: The Assistant Manager is responsible for assisting the
Restaurant General Manager in creating an energetic and valuable workenvironment. Assistant Managers are also responsible for ensuring all company
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policies and procedures are followed in relation to operations, customer service,cash handling, marketing, purchasing, human resources, health & safety,administration, training and development
Trainee Manager: Trainee Manager is responsible for assisting the Restaurant
General Manager and Assistant Manager in creating an energetic and valuable workenvironment.Trainee Managers help with day-to-day running of the restaurant, and need to ensurethat all operations, customer service, cash handling, marketing, purchasing, humanresources, administration and training & development policies are followed.
Customer Service Team Members: Are responsible for working the service areas
and ensuring quality product, service and cleanliness is delivered to all customers attop speed and with a smile!
Food Service Team Members: Are responsible for putting the crunch in the coating
and the zing in the Zingerthe cooks main task is to prepare and cook theirresistible KFC products! The cook must also maintain the cleanliness of thecooking area as well as the quality of product and speed of preparation.
Head Office DepartmentsCompany support functions are listed below:
Business Development
The Development team finds, builds and maintains KFC Restaurants. The Team is set
up in four key areas; network planning, acquisition, store design & construction and
estate management. The team works closely with the Finance team to ensure that the
new restaurant is not only optimizing the customer experience but also driving industry
leading returns for the shareholders. They are also responsible for ensuring KFCs high
standards of convenience, comfort and safety are maintained in all KFC restaurants and
facilities through an extensive annual refurbishment program.
Finance
Meaningful and insightful analysis of their performance is central to ensuring their
continued business success. In the first instance this requires accurate and timely
accounting. Whether it be paying the suppliers, billing the franchisees, managing cashand asset purchases or paying salaries for the employees, each member of the Financial
Control team is dedicated to ensure all business transactions are accurately and
efficiently recorded. This provides a robust platform for the Business Control and
Commercial teams to analyze results and partner with key stakeholders to set and drive
the strategic direction of the business.
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Human Resources
The peoples culture is key to KFCs success and finding the right people who will
thrive in the job they do is paramount. Their HR Practices are second to none and theythrive on giving employees the opportunity to grow and develop within the business.
Their vision is To Build a World Class Organization, which will be achieved through:
Managing Talent, Building People Capability, Creating Engagement and Driving
Organization Effectiveness.
Information Technology
The IT team at KFC select, develop, implement and maintain professional technology
solutions that support, and enable, the strategic goals of the business. The team supports
restaurants throughout the area with a robust and standard framework of applications
and infrastructure. The team has a passion for the provision of world class solutions and
support, from the in-store technology that enables their stores to sell great chicken, to
the timely, relevant and accurate reporting to the management team that enable clear
decisions to be made.
Marketing
The driving force behind the KFC Marketing team is a shared passion to deliver a
constant pipeline of irresistible tasting meals. The process starts with defining consumer
needs and exploring new ways to deliver consumer led innovation. The Marketing team
work cross functionally with Product Excellence and Operations to develop andimplement new ideas and with Finance to measure their contribution to the business.
The Marketing team is also the heart of communication, both within the business and
most importantly to the consumers. The multi million pound Marketing budget is
divided between media buying and advertising production to ensure a year round
calendar of new news to drive consumers back to KFC Restaurants again and again.
Operations
The Operations team is the hub of the company, running KFC stores and delivering to
the customers fantastic quality food and outstanding levels of service. The function
covers the leadership, management and evaluation of all the stores and above store
support staff. Operations works alongside all KFC functions to ensure that their
restaurants look good, their teams are motivated and well trained and all of their
delicious products are hot and fresh giving all their customers a reason to return. They
partner all other functions to ensure that standards are set and maintained. Operations is
a people business. They recruit, train and coach their teams. They take pride in
providing great career development opportunities for their teams, enabling people who
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have joined them for their first job at the age of 16 to progress to become Restaurant
General Managers and Area Managers.
Franchise Operations
The Operational support for the KFC Franchisees is a key focus for their business. They
have a dedicated team working with their Franchise partners on delivering exceptional
excellence.
Enterprise Resource Planning System (ERP)
ERP is a software that consists of multiple applications such as customer relationshipmanagement (CRM) software; inventory control software; accounting applications;sales software; order-tracking tools; invoicing software; project-management andpayroll programs, among others. By consolidating all these tasks into one over-archingsoftware suite, businesses can dramatically cut training and maintenance costs, ensureall data is consistent and up-to-date, and reduce software expenses. It integratesinformation across the company and eliminates complex links between computersystems.
ERP Key Functions: ERP Systems typically handlethe manufacturing, logistics, distribution, inventory, shipping, invoicing,and accounting for a company. ERP software can aid in the control of manybusinessactivities, including sales, marketing, delivery, billing, production, inventorymanagement, quality management, and human resource management.
ERP Software Applications Include:
EDI (Electronic Data Interchange): Is the structured transmission of data between
organizations by electronic means. It is used to transfer electronic documents from
one computer system to another, eg. from one branch in an organization to another.
It is more than mere e-mail; for instance, organizations might replace bills of
lading and even cheques with appropriate EDI messages.
AMS (Attendance Monitoring System): The attendance monitoring system provides
registration and complete processing of the employees attendance. It is intended for
all organization types, ranging from state administration bodies to banks to industrial
companies. Data is stored in an SQL server database, allowing distributed data
processing within a computer network.
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CAD/CAM/CAE (Computer Aided Design/ Computer Aided Manufacturing/
Computer Aided Engineering): This system handles the design, manufacturing and
engineering functions in the organization. This provides drawing and designengineering information to ERP in the execution of manufacturing and purchase
functions.
DMS (Document Management System): Provides storage,
versioning, metadata, security, as well as indexing and retrieval
capabilities of electronic documents and images of
paper documents e.g., records of transactions
handled. The system also provides text edit
facilities, cross checking, confirmation of
authenticity of documentation.
CMS (Communication Management Systems): ERP
uses CMS as a tool for its communication needs.
CMS controls overall communication within the
organization.
SMS (Security Management System): It handles
security aspects of the organization. It tracks the movement of
man, material and vehicle. Access by unauthorized or unidentified
means are monitored and warned. Therefore the entire business operation can be
safeguarded.
Objectives for Implementing an ERP System:
Performance Management & Reporting: Report and manage the performance of
enterprise business solutions.
Purchasing: Automate the steps from procurement to payment.
Materials Management: Manage inventory receipts, shipments, moves and counts
across your warehouses, suppliers and customers.
Manufacturing: Control manufacturing operations with material planning,
production scheduling and shop floor execution capabilities.
Order Management: Create quotes, book orders, manage materials, generate
invoices and collect cash. Sales: Control your valuable customer relationship management solutions.
Service: Manage the entire Service delivery lifecycle.
E-Commerce: Create and run a secure web store front.
Point of Sale: Automate cash sales and inventory management.
Financial Management: One system automates the processes of your business
solution and manages your financial records.
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Projects: Project management, planning and execution. Track costs associated with
multi-phase projects across your business solution.
Advantages of an ERP System:
ERP systems connect the necessary software in order for accurate forecasting to be
done. Integration among different functional areas in an organization to ensure proper
communication, productivity and efficiency. Order tracking, from acceptance through fulfillment.
The revenue cycle, from invoice through cash receipt.
Tracking the three-way match betweenpurchase orders (what was ordered),
inventory receipts (what arrived), and costing (what the vendor invoiced).
Reduce paper documents by providing on-line formats for quickly entering andretrieving information. Improves timeliness of information by permitting, posting daily instead of monthly.
Greater accuracy of information with detailed content, better presentation, fully
satisfactory for the Auditors. Improved Cost Control.
Faster response and follow up on customers.
More efficient cash collection and reduction in delay in payments by customers.
Better monitoring and quicker resolution of queries.
Enables quick response to change in business operations and market conditions.
Helps to achieve competitive advantage by improving its business process.
Improves supply-demand linkage with remote locations and branches in differentcountries.
Provides a unified customer database usable by all applications.
Improves international operations by supporting a variety of tax structures, invoicing
schemes, multiple currencies, multiple period accounting and languages. Improves information access and management throughout the enterprise.
ERP Systems Centralize DataBenefits of this include: Eliminates the problem of synchronizing changes between multiple systems -
consolidation of finance, marketing and sales, human resource, and manufacturing
applications Permits control of business processes.
Provides real time information to management anywhere, anytime to make proper
decisions. Reduces the risk of loss of sensitive data by consolidating multiple permissions and
security models into a single structure. Shorten production lead-time and delivery time.
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Disadvantages of an ERP System:
Customization of the ERP software is limited.
Re-engineering of business processes to fit the "industry standard" prescribed by theERP 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 companiesthis is cited as one of
the main causes of their failure.
Many of the integrated links need high accuracy in other applications to work
effectively.
Resistance in sharing sensitive internal information between departments can reduce
the effectiveness of the software.
Some large organizations may have multiple departments with separate, independent
resources, missions, chains-of-command, etc, and consolidation into a singleenterprise may yield limited benefits.
KFC Before Implementing an ERP System
KFC was using multiple IT solutions to address their business requirements. Because of
this, the integrity of the reports became difficult to validate and management had a hard
time tracking down their stocks. They became burdened by multiple data sources that
didnt integrate. Lots of time and money was lost from duplication of order entries and
business processes throughout the outlets. Numerous hours were being spent each
month manually creating reports, tracking invoices, and handling payroll to provide the
Head Office with their month end financial reports. The reason behind these problems
was evident: the systems could not communicate with one another. The KFC IT Team
updated KFCs enterprise IT structure withJD Edwards EnterpriseOne 8.10 to be able
to solve KFCs growing problem of misinformation and inaccurate reports.
KFCs Implementation of an ERP System
This Enterprise Resource Planning (ERP) system assists with managing finance, assets,
people, projects, suppliers and the fulfillment and manufacturing processes.
JD Edwards EnterpriseOne 8.10 offers both the foundation and operational components,including:
Financial Management
Technical Foundation
Inventory Management
Asset Management (Equipment, vehicles)
Forecasting
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Workforce Management
Time and Expense Management Procurement
JD Edwards EnterpriseOne 8.10 benefits the company with the following: Greater efficiencies - reducing duplicate data entry/maintenance Standardizes business processes Tracks and manages key data Greater level of insight into how the business works Enables to plan ahead Provides business applications for now, and into the future
Conclusion and Recommendation:
The proposed system will not be a different system but, an upgrade to the existing one.After an evaluation of various ERP solutions, I came to conclusion that an upgrade toJD Edwards EnterpriseOne 8.10 to JD Edwards EnterpriseOne 9.0 would be the bestchoice.
JD Edwards EnterpriseOne 9.0 includes enhancements for financial management,supply chain management and human resource management. The latest release alsoincludes industry-specific capabilities for engineering and construction, food andbeverage, commercial real estate, industrial manufacturing and professional services.
The new Web-based system enables quicker generation of inventory, sales and revenue
reports going from 1 hour to 20 minutes. This helps the KFC management to makemore accurate and quicker decisions in response to demand changes.
The system also enables centralized data repository, XML-based integration, andsmooth integration with other applications. Also leverages JD Edwards EnterpriseOneXML Publisher to print and distribute formatted documents, results in savings on third-party software licensing costs.
The system supports the company to automate inter-company invoicing and businessworkflows between the US Head Office and the rest of the company owned outlets,helping to ensure consistency and enhancing operational efficiency. It potentially saves20 to 30 additional headcount to process these routine transactions.
Key features of JD Edwards EnterpriseOne 9.0 include:
Deployment to enjoy enhanced functionalities, user-friendliness, multi-language and
multi-currency support, as well as ease of management. As the new version is unicode-
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compliant and Web-enabled, it helps to save a lot of time and resources for deploymentand training across various countries.
Accounting module provides advanced project accounting integrated to an
enterprise's general ledger to help deliver better data quality for improved complianceand financial management and multiple options for expense allocation on projects. Newfunctionality handles detailed client-required payroll and time card reporting, reportgeneration and invoice printing to specific client formats, and different financial burdenand allocation methods for meeting client needs.
Enhanced financial compliance capabilities through new data relationship
functionality for assigning correct values to entered information. Now, data can beentered correctly using customer-defined rules to help eliminate the possibility thatinconsistencies, abbreviations or incorrect spellings are captured.
Dynamic configuration capabilities enable sales and customer service
representatives to correctly enter sales order combinations comprised of products andservice offerings.
New industry-specific enhancements for food and beverage producers.
JD Edwards EnterpriseOne Tools 8.98 supports JD Edwards EnterpriseOne
applications 8.10, 8.11, 8.11 SP1, 8.12 and 9.0. Key features for reducing total cost ofownership include:
New User Interface that incorporates customer-driven user interface improvements
and adopts a consistent Oracle standard to enhance productivity and improve the visualexperience.
More standards adoption, including support for Web Services for Remote Portlets
(WSRP) and Java Database Connectivity (JDBC), increases IT staff flexibility and
reduces learning curves for effective use. Enhanced Batch Process Management with out-of-the-box functionality to improve
the management and monitoring of JD Edwards EnterpriseOne batch processes andreports.
References
www.kfc.com
www.yum.com
http://www.oracle.com/us/corporate/press/017527_EN
http://www.gtslb.com/solutions/jdedwards.htmhttp://it.toolbox.com/home/search/?r=jd+edwards
http://www.sap.com/index.epx
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