MGT300 Chapter 12: Integrating the Organization from End to End – Enterprise Resource Planning

Enterprise Resources Planning (ERP)

• Serve as the organization's backbone in providing fundamental decision-making support.
• At the heart of all ERP systems is a database, when a user enters or updates information in one module, it is immediately and automatically updated throughout the entire systems

ERP systems automate business processes

Bringing the Organization Together

• ERP enables employees across the organization to share information across a single,centralized database.

ERP – The organization before ERP

ERP – bringing the organization together

The Evolution of ERP
- 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

Integrating SCM, CRM, and ERP

- SCM, CRM, and ERP are the backbone of e-business
- Allows the unlocking of information to make it available to any user, anywhere, anytime
- Integration of these applications is the key to success for many companies

Integration Tools
Many companies purchase modules from an ERP vendor, an SCM vendor, and a CRM vendor and must integrate the different modules together

• Middleware – several different types of software which sit in the middle of and provide connectivity between two or more software applications 
• Enterprise application integration (EAI) middleware – packages together commonly used functionality which reduced the time necessary to develop solutions that integrate applications from multiple vendors

Data points where SCM, CRM, and ERP integrate

Enterprise Resource Planning (ERP)

ERP systems must integrate various organization processes and be:-

• Flexible-must be able to quickly respond to the changing needs of the organization
• Modular and open-must have an open system architecture, meaning that any module can be interface, with or detached whenever required without affecting the other modules. 
• Comprehensive-must be able to support a variety of organizational functions for a wide range of businesses
• Beyond the company-must support external partnerships and collaboration efforts

Enterprise Resource Planning’s Explosive Growth

• SAP boasts 20,000 installations and 10 million users worldwide
• ERP solutions are growing because:-

1. ERP is a logical solution to the mess of incompatible applications that had sprung  up in most businesses
2. ERP addresses the need for global information sharing and reporting
3. ERP is used to avoid the pain and expense of fixing legacy systems

MGT300 Chapter 11 : Building a Customer-centric Organization- Customer Relationship Management.

Customer Relationship Management (CRM)
CRM enables an organization to:-

• Provide better customer service
• Make call centers more efficient
• Cross sell products more effectively
• Help sales staff close deals faster
• Simplify marketing and sales processes
• Discover new customers
• Increase customer revenues

Recency, Frequency, and Monetary Value
Organizations can find their most valuable customers through “RFM” - Recency, Frequency, and Monetary value

• How recently a customer purchased items (Recency)
• How frequently a customer purchased items (Frequency)
• How much a customer spends on each purchase (Monetary Value)

The Evolution of CRM

• CRM reporting technology – help organizations identify their customers across other applications
• CRM analysis technologies – help organization segment their customers into categories such as best and worst customers
• CRM predicting technologies – help organizations make predictions regarding customer behavior such as which customers are at risk of leaving
• Three phases in the evolution of CRM include reporting, analyzing, and predicting.

Using Analytical CRM to Enhance Decisions

• 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
• Operational CRM and analytical CRM

Customer Relationship Management Success Factors

CRM success factors include:

• Clearly communicate the CRM strategy
• Define information needs and flows
• Build an integrated view of the customer
• Implement in iterations
• Scalability for organizational growth

MGT300 Chapter 10 – Extending the Organization – Supply Chain Management

BASICS OF SUPPLY CHAIN

SCM – the management of information flows between and among stages in a supply chain to maximize total supply chain effectiveness and profitability

The supply chain has three main links:-

1. Materials flows from suppliers and their upstream suppliers at all levels
2. Transformation of materials into semi-finished products, or the organization’s own production processes
3. Distribution of products to customers and their downstream customers at all levels

INFORMATION TECHNOLOGY’S ROLE IN THE SUPPLY CHAIN

Information technology’s primary role in SCM is creating the integration or tight process and information linkages between functions within a firm such as marketing, sales, finance, manufacturing, and distribution between firms, which allow the smooth, synchronized flow of both information and product between customers, suppliers and transportation providers across the supply chain

A) VISIBILITY 

• Supply Chain Visibility is the ability to view all areas up and down the supply chain. Changing supply chains requires a comprehensive strategy buoyed by information technology. Organizations can use technology tools that help them integrate upstream and downstream, with both customers and suppliers.
•  The bullwhip effect occurs when distorted product demand information passes from one entity to the next throughout the supply chain.

B) CUSTOMER BEHAVIOR

•   The behavior of customers has changed the way businesses complete. Customers will leave if a company does not continually meet their expectations. They are more demanding because they have information readily available, they know exactly what they want, and they know when and how they want it.
• Demand planning software generates demand forecasts using statistical tools and forecasting techniques. Companies can respond faster and more effectively to consumer demands through supply chain enhancements such as demand planning software.
•  Once an organization understands customer demand and its effect on the supply chain it can begin to estimate the impact that its supply chain will have on its customers and ultimately the organization’s performance.

C) COMPETITION

• Supply chain planning (SCP) 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 execution (SCE) software automates the different steps and stages of the supply chain. This could be as simple as electronically routing orders from a manufacturer to a supplier.

D) SPEED 

• These systems raise the accuracy, frequency and speed of communication between suppliers and customers, as well as between internal users.
• 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 chain with the demands of the markets they serve.
•  Supply chain performance is now a distinct competitive advantage for companies proficient in the SCM area.

• 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. Not only will the people in the organization need to change the way they work, but also the people from each supplier that is added to the network must change. Be sure suppliers are on board with the benefits that the SCM system will provide.

• WEAN EMPLOYEES OFF 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. Unfortunately, an organization cannot disconnect the telephones and fax machines just because it is implementing a supply chain management system. If the organization cannot convince people that using the software will be worth their time, they will easily find ways to work around it, which will quickly decrease the changes of success for the SCM system.

• ENSURE THE SCM SYSTEM SUPPORTS THE ORGANIZATION GOALS

It is important to select SCM software that gives organizations an advantage in the areas most crucial to their business success. If the organizational goals support highly efficient strategies, be sure the supply chain design has the same goals.

• DEPLOY IN INCREMENTAL PHASE AND MEASURE AND COMMUNICATE SUCCESS

Design the development of the SCM system in incremental phases. For instance, instead of installing a complete supply chain management system across the company and all suppliers at once, start by getting it working with a few key suppliers, and then move on to the other suppliers. Along the way, make sure each step is adding value through improvements in the supply chain’s performance. While a big-picture perspective is vital to SCM success, the incremental approach means the SCM system should be implemented in digestible bites and also measured for success one step at a time.

• BE FUTURE ORIENTED 

The supply chain design must anticipate the future state of the business. Because the SCM system likely will last for many more years than originally planned, managers need to explore how flexible the systems will be when (not if) changes are required in the future. The key is to be certain that the software will meet future needs, not only current needs. 

SCM Stories

MGT300 Chapter 9 – Enabling the Organization-Decision Making

Decision Making 

•  Reasons for Growth of Decision Making Information System

-     People need to analyze large amounts of information > Improvements in technology itself, innovations in communication, and globalization have resulted in a dramatic increase in the alternatives and dimensions people need to consider when making a decision or appraising an opportunity

-     People must make decisions quickly > Time is of the essence and people simply do not have time to sift through all the information manually

-    People must apply sophisticated analysis techniques, such as modeling and forecasting, to  make good decisions > Information systems substantially reduce the time required to perform these sophisticated analysis techniques

-      People must protect the corporate asset of organizational information > Information systems offer the security required to ensure organizational information remains safe.

•   Model – A simplified representation or abstraction of reality

•   IT systems in an enterprise

Transaction Processing System

• Moving up through the organizational pyramid users move from requiring transactional information to analytical information

•  Transaction processing system – the basic business system that serves the operational level (analysis) in an organization
•  Online transaction processing (OLTP) – the capturing of transaction and event information using technology to:- (1) process the information according to defined business rules, (2) store the information, (3) update existing information to reflect the new information
•  Online analytical processing (OLAP) – the manipulation of information to create business intelligence in support of strategic decision making

Decision support systems

• Decision support system (DSS) – models information to support managers and business professionals during the decision-making process

1.  Three quantitative models used by DSSs include;      Sensitivity analysis – the study of the impact that changes in one (or more) parts of the model have on other parts of the model
2. What-if analysis – checks the impact of a change in an assumption on the proposed solution
3. Goal-seeking analysis – finds the inputs necessary to achieve a goal such as a desired level of outputs

What-if analysis

Goal-seeking analysis

Executive information system 

• Executive information system (EIS) – A specialized DSS that supports senior level executives within the organization
•  Most EISs offering the following capabilities;

1. Consolidation – involves the aggregation of information and features simple roll-ups to complex groupings of interrelated information
2. Drill-down – enables users to get details, and details of information
3. Slice-and-dice – looks at information from different perspectives

•   Interaction between a TPS and an EIS

•   Interaction between a TPS and a DSS

•  Digital dashboard – integrates information from multiple components and presents it in a united display

Artificial intelligence (AI)

•  The ultimate goal of AI is the ability to build a system that can mimic human intelligence
•  Intelligent system – various commercial applications of artificial intelligence
•  Artificial intelligence (AI) – simulates human intelligence such as the ability to reason and learn
• Four most common categories of AI include;

1. Expert system – computerized advisory programs that imitate the reasoning processes of experts in solving difficult problems
2. Neural network – attempts to emulate the way the human brain works > Fuzzy logic – a mathematical method of handling imprecise or subjective information
3. Genetic algorithm – an artificial intelligent system that mimics the evolutionary, survival-of-the-fittest process to generate increasingly better solutions to a problem
4. Intelligent agent – special-purposed knowledge-based information system that accomplishes specific tasks on behalf of its users

Data Mining

• Data-mining software includes many forms of AI such as neutral networks and expert systems

MGT300 Chapter 8 : Accessing Organizational Information- Data Warehouse

DATA WAREHOUSE FUNDAMENTALS

- A data warehouse is a logical collection of information-gathered from many different operational database-that supports business analysis activities and decision-making tasks.

- The primary purpose of a data warehouse is to aggregate information throughout an organization into a single repository in such a way that employees can make decisions and undertake business analysis activities.

- The data warehouse then send subsets of the information to data mart.

- A data mart contains a subsets of data warehouse information

*Figure above show compiles information from internal database or transactional database and external database through extraction, transformation and loading (ETL) which a process that extracts information from internal and external database, transforms the information using a common set of enterprise definitions, and loads the information into a data warehouse.

MULTIDIMENSIONAL ANALYSIS AND DATA MINING

Relational Database contains information in a series of two-dimensional tables.

- In a data warehouse and data mart, information is multidimensional, it contains layers of columns and rows

       

              Dimension – A particular attribute of information

  Cube – common term for the representation of multidimensional information

- Once a cube of information is created, users can begin to slice and dice the cube to drill down into the information.

- Users can analyze information in a number of different ways and with number of different dimensions.

- Data Mining > the process of analyzing data to extract information not offered by the raw data alone. Also known as “knowledge discovery” – computer-assisted tools and techniques for sifting through and analyzing vast data stores in order to finds trends, patterns and correlations that can guide decision making and increase understanding

- To perform data mining users need data-mining tools

-          Data-mining tool > uses a variety of techniques to finds patterns and relationships in large volumes of information. Eg: retailers and use knowledge of these patterns to improve the placement of items in the layout of a mail-order catalog page or Web page.

INFORMATION CLEANSING OR SCRUBBING

- Information cleansing or scrubbing is a process that weeds out and fixes or discards inconsistent, incorrect or incomplete information.

- It occur during ETL process and second on the information once if is in the data warehouse

Ø  Contract information in an operational system

Ø  Standardizing Customer  name from Operational Systems

Ø  Information cleansing activities

-          Missing Records or Attributes

-          Redundant Records

-          Missing Keys or Other Required Data

-          Erroneous Relationships or References

-          Inaccurate Data

Ø  Accurate and complete information

BUSINESS INTELLIGENCE

- Business Intelligence refers to application and technologies that are use to gather, provide access to, and analyze data and information to support decision-making efforts. 

Enabling Business Intelligence

- Technology

- People

- Culture