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TRY & TRY U WILL BE SUCCESS

ERP SORT QUESTION

SANJAY HIRANISemester: 1st

Branch:MCA

ENTERPRISE RESOURCE MANAGEMENTPage 1


Chapter 2 – ERP Implementation: Life Cycle, Methodologies and Strategy

ERP LIFE CYCLE

There are six phases of ERP life cycle:

1. Pre-implementation PhaseBrief Description of Activities:

1. Having a Team in Place2. Feasibility study/ROI Analysis/Business Case3. Getting Budget4. High Level Requirement Definition, Prioritisation of Requirements5. High Level Scope Definition6. RFP for Selection of Implementation Partner and Evaluation and

Selection of Consulting Partner7. RFP for Evaluation and Selection of ERP Package8. Number of Activities and their Sequence can Change Depending on the

Type of Project

2. Project Preparation PhaseBrief Description of Activities:

1. Project Team Selection (Core Team and Consultants)2. Detailed Project Scoping3. Project Vision/Mission Statement Creation4. Deciding Implementation Strategy, Methodology to Follow5. Finalizing Project Methods, Standards and Governance6. Technical Preparation7. Project Planning, Resource Planning, and Training Planning8. Project Charter Preparation9. Conducting Project Kick off Meeting



10. ERP Overview Training to Senior Management, ERP Process Training to Core Team

3. Business Blueprinting PhaseBrief Description of Activities:

1. High Level Process Modelling of AS IS Process2. Developing Detailed Requirement Definition3. Business Process Reengineering4. Detailed Process Modelling of TO BE Process, Design Process Steps5. Gap Identification and Analysis, and Strategy to Bridge the Gap6. User Authorisation, Roles and Security Planning7. Blueprint Audit by External Team8. Getting Blueprint Signed Off9. ERP Configuration Training to the Core Team

4. Realisation PhaseBrief Description of Activities:

1. Configuration/Customisation2. Unit and Integration Testing3. Developments for Gaps4. End user Training Plan5. Integration Test Sign Off

5. Final Preparation and Go Live PhaseBrief Description of Activities:

1. Stress and Volume Testing2. User Acceptance Testing and User Sign Off3. Conducting End user Training4. Data Migration – Migrating Open Items5. Cut over Planning – Preparing Go Live Checklist6. Help Desk Support Finalisation



7. Closing Open Project Issues8. Pre Go Live Audit by External Team9. Going Live

6. Support Phase

Brief Description of Activities:

1. Knowledge Transfer to Support Team2. Transition of Project Documents and Open Issues3. Regular Supoort, Monitoring Service Level Agreements (SLAs)4. Measuring Performance Improvement5. Upgrading to Next Version of ERP

METHODOLOGY FOR IMPLEMENTATION

One Example of Methodology from ERP Vendor: ASAP from SAP

Objectives of ASAP:

Implement SAP solutions in a quick and cost effective manner. Maximise the utilisation of resources. Incorporate a process-oriented approach to implementation. Involve the user community. Use it as a repeatable “model” with other implementations of SAP.

Phases in ASAP:

1. Project Preparation2. Business Blueprint3. Realisation4. Final Preparation5. Go Live and Support

Tools in ASAP:

1. Implementation Assistant



Roadmaps – Steps to complete project Knowledge corner – Comprehensive library of reference material that

helps implementation2. Q&A Database: This helps in

Setting the project scope Document business requirement in detail Helps in creating the business blueprint

3. Project IMG – Helps in quick customising of the application4. Transports – Helps in moving the configurations from one landscape to another

(Say, development to quality).5. BC sets – Helps in recording configurations so that these can be reused in other

implementation (say, another business division of the company).

One Example of Methodology from Consulting Company: Ascendant from PWC IBM

It focuses on six key areas (domains):

Project management Business Organisation Application Architecture Operations

Phases in Ascendant:

1. Evaluation2. Project Preparation3. Business Blueprint4. Realisation5. Final Preparation6. Go Live7. Sustain

Different types of ERP Projects



1. ERP implementation projects2. ERP upgrade projects3. ERP global rollout projects4. ERP migration projects5. ERP harmonisation/consolidation projects

ERP Implementation Methodology for Small and Medium Business:

The implementation approach that works fine for large companies may not be suitable for small organisations for reasons like:

Small companies may not afford the implementation approach that spans across 24-36 months and costs a few hundred million dollars.

These companies have fairly few senior management officials whom they cannot send as project core team members for a long duration.

In many cases, their business requirements as as complex as large companies. Like large organisations they cannot spend money on a BPR project prior to

implementation.

Keeping in view the above shoetcomings, both ERP package vendors and implementation consultancy companies have come up with the solutions like:

1. Pre-configured Template2. Separate Solutions for SMB Segment3. Fast Forward Implementation Methodologies

Different ERP Implementation Strategies:

1. Big bang (All locations, all modules)2. Rollout (Selected locations, all modules)3. Big bang and Modular (All locations, selected modules)4. Rollout and Modular (Selected locations, selected modules)

Chapter 5 – ERP Package Selection



ERP SELECTION – A TWO-STEP PROCESS

A company can look at a set of criteria for ERP package screening i.e. for selecting 3-5 packages from hundreds of ERP packages available in the market.

Criteria for Initial Package Screening:

1. Product Strategy, Vision and Investment in Innovation2. Financial Viability of the Application Vendor3. Installed Base and Local Presence4. Partnerships

Implementation partnerships with consulting companies Application partnership with other third party applications

5. Technology Maturity 6. Vendor’s Customer Services7. Cost of the Software

Initial Package Shortlisting:

Based on the above criteria, packages are given different weightage (as mentioned in Table below). Packeges (top two or three packages) scoring highest in this method are shortlisted.

Weightage and Criteria for Shortlisting Packages



Key to weightage:

5 – Very good 4 – Good 3 – Average 2 – Bad 1 – Very Bad

Packages 1, 2 and 4 are taken for the next level of evaluation, based on the total weightage given to packages.

Final Package Selection:

Top three packages shortlisted through the earlier exercise are taken up in this round for detailed functionality evaluation against the business requirements of the company.

There can be hundreds of such requirements which can be assesses as follows: FM: The application meets the business requirement directly (fully). PM: The application partially meets the requirement. NM: The application does not meet the business requirement. In the following example, the company has 300 such requirements, out of which

only five are evaluated.

How the business requirements are met, based on that individual vendor is given a point against a particular functionality and the point distribution is as follows:



Now based on this, different package vendors are evaluated:

in this example, both Package 1 and Package 2 come pretty close in terms of functionality. Choices between the two will be mostly driven by cost and service quality.

This is an example of how scientifically packages can be evaluated and selection can be made in favour of one.

Deviations in Package Selection Process:

A company tells its main supplier to implement a particular ERP so that both can be on the same platform and interaction between them would be easier.

A group company wants to implement the same ERP what the mother company has.

For a small company, the ERP decision can be driven a lot by the ERP price. For certain industries one ERP may be very popular as it offers lot of industry-

specific functionalities. Retek for Retail industry, Mincom for Mining industry, AspenTech for Oil and Gas industry are examples of such ERPs.

RFP Process for ERP Package Selection:



A typical RFP document can have different sections detailing with:

Details on the date and time by which the bid needs to be submitted, bid security amount to be deposited, bid validity period, etc.

Overview of company’s business, current operations, locations from where it operates, etc.

Current IT systems the company is using and which of them need interface with ERP systems

High level scope of the project Benefits the company is expecting from the implementation Detailed scope of the work The details of payment schedule

RFP document can specify in detail on what date what is expected out of the ERP package vendor. Table below is an abstract from a government RFP for ERP package selection:

Package Selection Calendar (RFP based)

Finalising the Contract with ERP Package Vendor:

Contract is a legal obligation for both the parties. Generally, for the package vendor there will be standard contract clauses covering the following things:

Payment term



Intellectual property or copyright clauses List of deliverables along with software How training for the software will be handled How the software manitenance will be handled How future upgrades for the software wil be provided and at what cost Software installation help to be provided Prerequisite to install the software – the hardware specification, OS needed,

database needed etc. Any audir or review by the package vendor during package implementation Licence cancellation costs

Chapter 9 – Business Process Reengineering

PROS AND CONS OF BPR:

Pros:

1. Enterprise integration2. Empowered employee3. No handoff4. Simplified process5. Less coordination, reconciliation6. Reduce NVA (No Value Added), eliminata waste7. Case manager as SPOC (Single Point Of Contact)8. Effective use of IT

Cons:

1. High failure rate2. Can take long time3. Can consume lot of organisational resource (cost, executive time)4. Can make existing jobs reduntant5. High resistance to change



BPR/PROCESS REDESIGN - REASONS FOR FAILURE AND KEYS TO SUCCESS

Reasons for Failure:

1. No focus on processes2. Spending a lot of time for analysing the current situation – It does not make

sense as anyway you are going to throw it out3. Proceeding without strong executive leadership4. Going directly from conceptual design to implementation and avoiding

prototyping5. Ignoring the concerns of people6. Poor scoping – 100% improvement to a 1% value-adding process is only 2% value

addition7. Looking for recipes8. Fading top management commitment9. Tweaking the process instead of radically redesigning it10. Assigning less-than-best people to reengineering

Keys to Success:

1. Commited leadership and top management commitment in the project2. Prototyping every process before large-scale implementation3. Showing early success within first three to six months. Even if the success is a

small one, this interests everyone in the organisation in the project4. Communicating effectively. This helps in managing change. If people are not

aware of what the project is all about, this can result in fear or issues related to acceptance of the project.

REENGINEERING PHASES:

1. Have the reengineering team in place2. Selection of process to be redesigned3. Process diagnosis/Understanding the existing processes4. Process redesign



5. Prototyping – Design and build a prototype of the new process6. Full-scale implementation

Reengineering or Redesign principles:

1. Maximise value adding (VA) steps, minimize non-value adding (NVA) steps and eliminate waste

2. Parallelise work3. Try to simplify process4. Multiple versions of the same process5. Enable workers to make decisions6. Reduce audits, checks and controls7. Provide single point of contact for the process8. Combine several jobs into one9. Organise around processes (exit departments, enter process teams)10. Enabling bosses – “coaches”11. Adopt customer perspective12. Automate appropriately13. Organisational structure should support business process

Levers of Process Redesign:

1. Roles and responsibilities2. Measurement and incentives3. Organisational structure4. Information Technology5. Skills

Difference between Process Improvement and Process Redesign Approaches:

Parameter Process Improvement/TQM

Process Redesign/BPR

Level of change Incremental RadicalStarting point Existing process Clean slate



Frequency of change Continuous One-timeTime required Short term Long termParticipation Bottom up Top bottomTypical scope Narrow BroadRisk Moderate HighPrimary enabler Statistical control ITType of change Cultural Cultural/structural

Types of Benchmarking:

1. Process benchmarking2. Financial benchmarking3. Performance benchmarking4. Product benchmarking5. Functional benchmarking

Steps of Benchmarking:

1. Identify problem areas2. Identify targets (leaders in the similar industry or other industries that have

similar processes)3. Identify measures and best practices in the target company4. Implement new and improved business practices

Chapter 13 – Managing ERP Security

TYPES OF ERP SECURITY ISSUES

1. Network security2. System access security – Role and Authorisation3. Data security

SYSTEM ACCESS SECURITY – AUTHORISATIONS

1. Activity-Based Authorisations:Steps for Activity-Based Authorisations:



1. Identify the activities that a particular process may involve2. Prepare a ‘set’ of transaction codes for each identified activity3. Prepare an authorisation role for each set of transactions4. Assign the user the specific authorisation role

2. Role-Based Authorisations:Steps for Role-Based Authorisations:1. Identify the transaction codes that each role in the organisation require2. Prepare an authorisation role for the list of transactions identified3. Assign the user the specific authorisation role

DATA MASKING:

Benefits of data masking:

1. It meets regulatory compliance requirements such as HIPAA.2. It enhances data security for outsourcing application and development.

Data Masking Algorithms:

1. Shuffling/Reorder2. Random value3. Hashing4. Date aging5. Value changes in increments or decrements/Numeric alternation6. Custom 7. Substitution with a random value

Chapter 18 – Success or Failure of ERP Implementation

REASONS FOR FAILURE OF AN ERP IMPLEMENTATION

1. Poor ERP Package Selection



2. Inadequate Requirement Definition and Unrealistic Expectations, Scope3. Investment without ROI Justification4. Not Able to Support Changing Business Needs5. Top Management Support Lacking6. ERP Core Team do not have Right Resource7. User Acceptance Issues8. Employees Resist ERP Implementation9. Training Issues for the Team10. Poor Communication11. Project Viewed as an IT Project12. Customising the Software too Much13. Too Tight Project Schedule, Miscalculation of Time and Effort14. High Turnover Rate of Project Team Members

REASONS FOR SUCCESS OF AN ERP IMPLEMENTATION

1. How You Define A Success – Define Measures2. Managing Project Scope3. Requirements Prioritisation4. Have Early Success and Pilots5. Have Good Relationship with ERP Vendor and Consulting Partner6. Good Project Management7. Having Clean Data in the System8. Quick Decisions9. Test the Solution Thoroughly10. Ensure that Project has Sufficient Budget till the End11. Efficient Risk Management12. Process Owner’s Involvement13. Who Owns Business Benefits

Chapter 20 – Human Capital Management



HUMAN RESOURCE MANAGEMENT MODULES:

1. Recriutment Management Module2. Time, Attendance and Leave Management Module3. Workforce Scheduling Module4. Compensation Management Module5. Benefits and Payroll Module6. Talent Management/Performance Management Module7. Learning Management Module8. Personnel Management Module9. Employee Relationship Management and Employee Self-service10. Human Capital Management Analytics

STEPS IN RECRUITMENT CYCLE OR ACTIVITIES IN RECRUITMENT MANAGEMENT PROCESS:

1. Labour forecasting and workforce planning2. Position management/creating requisitions for new positions3. Candidate sourcing4. Screening and application tracking5. Interviewing6. Selection 7. Job offer8. On boarding/Orientation

CAPABILITIES OF WORKFORCE SCHEDULING MODULE:

1. Generating optimised scheduling and shift planning2. Employee assignment to schedules3. Labour tracking4. Dynamic rescheduling

CAPABILITIES OF COMPENSATION MANAGEMENT MODULE:

1. Compensation planning and analysis



2. Compensation structures3. Compensation workflow and approvals4. Incentive and reward pay5. Commission-based pay6. Pay for performance7. Compliance

CAPABILITIES OF BENEFITS AND PAYROLL MODULE:

1. Payroll administration2. Payroll processing3. Supporting multi-country localisation and taxes

CAPABILITIES OF TALENT/PERFORMANCE MANAGEMENT MODULE:

1. Performance management2. Competency management3. Career development planning4. Succession planning5. Goal alignment of organisation and individual

CAPABILITIES (DIFFERENT AREAS) OF LEARNING MANAGEMENT MODULE:

1. Registration 2. Course catalogue3. Scheduling instructor-led training (ILT) courses4. Supporting training financials5. Tracking 6. Content management7. Learner assessment8. Collaboration 9. Reports

CAPABILITIES OF PERSONNEL MANAGEMENT MODULE:



1. Labour relations2. Non-employee administration3. Maintaining detailed employee records

CAPABILITIES OF EMPLOYEE RELATIONSHIP MANAGEMENT (ERM) AND EMPLOYEE SELF-SERVICE MODULE:

1. Employee portal2. Employee self-service

STRATEGIC/CORE HR PROCESSES:

1. Performance management process design2. Compensation and reward planning3. Planning job roles 4. Recruitment process design5. Workforce planning6. Learning management7. Employee satisfaction measurement, designing employee motivation schemes

OPERATIONAL HR PROCESSES:

1. Employee record management2. Leave and absence management3. Time and labour management4. Tax and compliance services5. Payroll6. Background checking and reference check before recruiting7. Health and welfare benefits administration8. Retirement benefits (Like managing Provident fund, Gratuity, etc.)

EMPLOYEE HEALTH AND SAFETY

SAP has two EHS modules to support employee health and safety concerns:

1. Industrial Hygiene and Safety



2. Occupational Health

Chapter 21 – Financial Management

ERP FINANCIAL APPLICATION

ERP financial applications broadly have offerings as mentioned below:

Accounts Payable Accounts Receivable/Collection Management Accounting Costing and Profitability Reporting different expenses Budgeting Consolidation Financial reporting Internal control and audits Tax planning Treasury and cash management

FINANCIAL MODULES IN DETAIL

Traditional ERP financial applications can be broadly classified in four categories as follows:

1. Financial AccountingThis helps in managing following processes:

General Ledger (GL) Accounts Receivable (AR) Accounts Payable (AP) Assets Accounting Contract Accounting Bank Accounting Cash Journal Accounting Inventory Accounting



Tax Accounting Creation of different Financial Statements

2. Management AccountingManagement Accounting helps in all type of cost and valuation related accounting such as:

Profit Centre Accounting Cost Centre Accounting and Budgeting Project Accounting and Budgeting Product Cost Accounting Transfer Pricing

3. Financial Supply Chain ManagementThis helps in following processes:

Self-service Portals for Customers Collections Management Credit Management Dispute management

4. Treasury ApplicationsTreasury module focuses mainly in the areas of:

Cash and Liquidity Management Financial Risk Management Managing Bank Interactions

EMERGING AREAS IN FINANCIAL MANAGEMENT

1. Budgeting/Planning2. Consolidation3. Business Performance Management4. Activity-based Costing (ABC)



Corporate Performance Management (CPM)/Enterprise Performance Management (EPM):

The four sets of applications (BPM, ABC, Budgeting, Consolidation) together are known as Corporate Performance Management (CPM) or Enterprise Performance Management (EPM). These solutions typically help in the areas of:

Performance Scorecarding Business Modelling Planning, Budgeting and Forecasting Financial Consolidation and Reporting

Leading CPM/EPM vendors and solutions are:

SAP SEM (Strategic Enterprise Management) Oracle budgeting solution Specialised vendors like Brio, Hyperion, SAS (Strategic Vision) etc.

Chapter 22 – Procurement and Inventory Management Through ERP

PROCUREMENT

Procurement Process:

1. Determining what to buy and how much – Procurement planning2. Determination of the source of supply and selecting vendor3. Purchase order creation4. Goods receipt5. Processing vendor payment and invoice verification

How ERPs support Procurement Process:

1. Determining what to buy and how much – Procurement planning2. Determination of the source of supply and selecting vendor3. Purchase order creation



4. Goods receipt Quality inspection and shelf life expiration check Under-delivery and over-delivery

5. Processing vendor payment and invoice verification Invoice entry Three-way matching and invoice variances Invoice Blocking Parking of invoice Credit/Debit memos Reports on aging invoices

Some Important Functionality of the ERP System to Support Procurement Process:

1. Purchase requisition (PR)2. Contracts

Central contract and plany specific contract Quantity contract Value contract

3. Quota arrangement4. Forecast delivery schedule and detailed delivery schedule (Firm schedule)5. Source list6. RFQ (Request For Quotation) and Quotation7. Converting PR to Purchase Order8. Purchase Order

Blanket Purchase Order

Procurement Process Variants for Different Types of Procurement:

Procurement of Materials and Services:

Procurement of materials and services is different from differernt dimensions. Table below explains this.

Material Procurement vs. Service Procurement



Material Procurement Service ProcurementMaterials can be inventotised. Services cannot be inventorised.Specifications are clearly defined during material procurement.

Sometimes it is difficult to define a service specification during procurement.

For a given specification price comparison is simple.

For a given specification service price comparison is difficult – price may differ by time of purchase (early booking vs. late booking in airlines), ambience (same food in a five star hotel and in a normal hotel may be priced very differently).

Typical Challenges for Service Procurement in ERP:

1. Service cannot be inventorised.2. It is difficult to define a service specification.3. Price comparison for service is complex.4. Goods receipt is replaced by service entry and acceptance for service

procurement.

Procurement of Direct and Indirect Items

Commodity Procurement:

Commodities are the items which are not branded and can see wide price variations depending on demand and supply.

These can be items like steel, iron ore, coal, oil, etc. Commodity procurement is a specialised procurement process and ERPs

provide special procurement tools for managing this. Some examples are:

1. E-Procurement/Auctions2. Hedging

Government/Public Sector Procurement:



Public sector procurement is a specialised type of procurement as it needs to follow separate set of guidelines of different government bodies.

For example, any procurement need at least three supporting quotations to release the order. Any tender news item need to be published in popular daily newspaper, etc.

Procurement Maturity Model:



Master Data for ERP Procurement:

1. Material master record2. Vendor master record3. Terms and conditions master4. Service master record and service catalog

INVENTORY MANAGEMENT

Inventory Management Process in ERP:

A. Inventory Transaction Processes1. Goods receipt2. Goods issue3. Reservations4. Stock transfer

B. Inventory Control Processes



1. Quality control Physical inventory Cycle counting Stock overview

2. Value control/Stock valuationC. Inventory Planning Processes

1. Designing better process of inventory replenishment2. Supporting process of managing different inventory exceptions3. Taking scientific decision on when to order and how much to order: To decide

how much to order and when, ERP supports a set of inventory models like: EOQ or Q Model P Model Min-Max Models Two-Bin Models

D. Strategic Inventory Management Processes1. Process of inventory collaboration2. Deciding inventory based on service levels3. Best practice processes of inventory management like Cross docking4. Lean inventory management

Chapter 26 – Sales and Service

SALES AND DISTRIBITION PROCESSES AND HOW ERP SUPPORTS THAT



While most of the leading ERPs support all the steps in the sales order cycle, today’s organisations expect more advanced order management capabilities like:

Order receiving capability through multiple customer touch points like internet, e-mail, phone, SMS, etc.

Capability of handling rush orders

Order communication: Ability to communicate order status to customers on regular basis.

Order promising capability: It includes capabilities like:

◦ Profitable to promise

◦ Available to promise

◦ Capable to promise

How ERP Supports Sales and Distribution Processes



1. Managing Pre-sales Activities

2. Material Availability Date Check

3. Sales Order Processing:

Standard order normally contains:

◦ Customer and material information

◦ Pricing conditions for each item

◦ Delivery dates and quantities

◦ Shipping information

◦ Billing information

4. Inventory Sourcing:

For inventory sourcing, ERP can trigger different set of actions like:

◦ Trigger make-to-order production (Production)

◦ Create purchase requisition from external suppliers (Purchase)

◦ Organise the outbound delivery from another warehouse (Stock transfer)

5. Shipping

This includes all the processes needed to make delivery of items and may involve activities like:

◦ Creating outbound deliveries

◦ Picking in the warehouse

◦ Packing in the warehouse

◦ Planning and monitoring of transport

◦ Posting the goods issue

An ERP transportation order can have variety of information like:



◦ Means of transport

◦ Shipping type

◦ Special processing indicator

When finally goods issues are posted, the system automatically:

◦ Updates the quantities in inventory

◦ Updates the value change in balance sheet accounts for inventory accounting

◦ Generates additional documents for accounting

◦ Generates the billing due list

◦ Updates the status in all relevant ssales documents

6. Billing

Billing supports

◦ Creating invoices for products and services

◦ Creating credit and debit memos

◦ Automatically transferring billing document data to accounting

7. Payment

Payment process supports

◦ Receiving payments from customer

◦ Making entry in the system i.e. Posting payment against invoices

◦ Reviewing differences

Sales and Distribution Documents



SALES AND DISTRIBUTION MASTER DATA

ERP systems need few master data relared to sales and distribution functions and these are:

Customer master data

Material master data

Condition master data

Route master for transportation

Customer Master



Material Master

Material master includes following data: Basic data: Include data fields like Material number, material description, basic

unit of measure, etc. Sales Org 1: Include data fields like delivering plant, material group, tax

classification, etc. Sales Org 2: Include data fields like material pricing group, volume rebate

group, product hierarchy, etc. Sales: General/Plant: Include data fields like availability check, transportation

group, loading group, etc. Foreign trade – Export: Include data fields like export/import group, region of

origin, etc. Sales text: Item text for sales.

Condition Master



There can be different terms and conditions for delivery to different customers. There can be also complex calculations related to prices, surcharges, discounts,

freights, taxes, etc.

Route Master

The route is the transport channel of an outbound delivery from the deliverying plant to the customer.

It has a beginning point and an end point. The route can also be used to define the actual transit time.

THE CONCEPT OF PERFECT ORDER

The concept of perfect order is designed to measure the effectiveness of the order management process.

Each step in the order management process must go smoothly for the order to be considered perfect.

Companies have began to measure the % of order that meet the criteria of perfect order.

And finding to their surprise that less tahn 10% orders are perfect, they are reengineering their OMP.

Figure below explains how perfect order requires coordination of different supply chain functions.

Perfect Order Fulfillment Requires Coordination of All Functions



Perfect order-list of problems:

Order-entry error Missing information Ordered item is unavailable Inability to meet ship date Picking error Late shipment Late arrival Incomplete paperwork Early arrival Damaged shipment Invoice errors Split shipments Follow up required by customer

Table below shows a list of measures that can be used to check the effectiveness of order management process.



MANAGING GLOBAL TRADE (EXPORT AND IMPORT)Challenges of Global Trade: Long lead time leading to high transit inventoty, higher safety stock and slower

cash to cash cycle time Poor visibility into the process as lots of entities (customs, shipping, insurance,

bank, etc.) are involved Generally poor service as supplier can not fulfill rush order or can accommodate

last minute changes in schedule Complexity of global trade – a typical cross border shipment may involve more

than 25 parties, 35 documents, 600 laws and 500 trade agreements to be considered. A single error can result in costly delay.

Disputes take longer time to resolve Risk of global trade, especially after 9/11.

Crtitical Success Factors for Global Trade:

Mitigate financial risk of trading globally, managing currency fluctuations effectively.

Improve reputation with enforcing agencies



Start dealing with government agencies electronically SOX compliance require stringent record keeping and audit trial Reducing risk of business disruptions through a strong mitigation strategy for

non-compliance Abide by trade compliance and documentation standards

How ERP Systems Support Global Trade

A. Custom’s management Product classification Custom duty calculation Management of different customs master data

B. Sanctioned party list screening –screening of suppliersC. Preference processingD. Embargo checkE. Managing import and export licencesF. Managing import/export documentationG. Import and export processingH. Electronic communication with customs authorities/trade systems

How ERP Systems Manages Global Trade Challenges



MANAGING CUSTOMER SERVICE

Assembly of technical objects on site at the customer Despatching of spare parts to the customer Repair of customer devices by field service technicians on site at the customer Repair of customer devicesin the service centre Regular inspection and preventive maintenance of customer devices in the

service centre or at the customer site Managing warranty Helpdesk: This is used for recording, processing and forwarding of incoming

customer requests. Having ready solution database Managing returns Managing service contracts (AMC and maintenance contracts)



Chapter 29 – Quality Management

QUALITY MANAGEMENT BASICS

There are few terms which are frequently used in quality management world which are listed as below:

1. Material Specification2. Inspection Plans and Quality Inspection3. Sampling Procedure4. Statistical Process Controls and Control Charts5. Quality Certificates6. Quality Notification7. Quality Manual and ISO 90008. Batch Management and Traceability9. Quality Audits10. Quality Costs11. Calibration12. Laboratory Information Management Systems (LIMS)13. Electronic Signature

ERP QM PROCESSES FOR PROCUREMENT, PRODUCTION, SALES AND SERVICE

QM During Procurement and Goods Receipt from Vendor

Following quality management processes are relevant while procuring and receiving materials from vendors:

1. Quality inspection at Goods Receipt2. Quality Certificate at Goods Receipt3. Vendor Evaluation4. Blocking of Invoices/Vendors Based on Quality Inspection



5. Appraisal Cost Calculation6. QM Standard Reports

QM in Sales and Service

Following quality management processes are relevant for sales and service:

1. Delivering Material as per Customer’s Quality Specification2. Quality Certificate3. Batch Tracking4. Batch Determination5. Quality Inspection for Delivery6. Returns and Complaint Handling

QM in Sales and Service

Following quality management processes are relevant for production:

1. Inspection During Production2. Statistical Process Control (SPC)3. Test Equipment Calibration

Quality Management Master Data

1. InspectionmMethod2. Material specification3. Master inspection characteristic4. Catalogues5. Sampling procedure and sample scheme

Chapter 33 – Data Warehousing, Data Mining, Business Intelligence and Analytics

DATA WAREHOUSING

Data warehouse sources data from various operational systems, organises and stores it in a form that is standardised, structured, consistent, clean and integrated.



Four Important Characteristics of Data Warehouse

1. Subject-oriented2. Integrated3. Time-variant4. Nonvolatile

Advantages and Disadvantages of Data Warehousing

Advantages:

1. Common data model2. Clean data3. Can store data for longer time and operational system’s performance do not get

hampered4. Facilitate BI, EIS, MIS, DSS and Analytics systems by providing right data

Disadvantages

1. Latency factor2. Storing unstructured data

Data Warehouse Components

Star Schema, Fact and Dimension Tables, Attributes:

The classic star schema, as illustrated in the figure below is the frequently-used multi-dimensional model for relational databases.

This database schema classifies two groups of data: facts (sales or quantity, for example) and dimension attributes (customer, material, time, for example).

Star schema is optimised for OLAP.



Facts:

These are numeric measurements (values) that represent a specific business aspect or activity.

These are stored in a fact table at the centre of the star schema and contain facts that are linked through their dimensions.

Dimension:

These are qualifying characteristics that provide additional perspectives to a given fact.

Dimensions are normally stored in dimension tables. These are joined to fact table by a foreign key.

Attributes:

Attributes provide additional information for a dimension. For example, customer name, city and region can be attribute for the dimension

customer.

Advantages of Star Schema:



Storing data in the form of the classic star schema is optimised for reporting. It allows the user to view facts from a variety of perspectives (dimensions).

DATA MART

This is a subset of a data warehouse that supports the requirements of particular department or business function.

Advantages of Data Mart:

To give users access to the data they need to analyse most often. To provide data in a form that matches need of users in a department or business

function. To improve end-user response time due to the reduction in the volume of data to

be accessed. Normally use less data so tasks such as data cleansing, loading, transformation,

and integration are far easier and hemce implementing and setting up a data mart is simpler than establishing a corporate data warehouse.

The cost of implementing data marts is normally less than that required to establish a data warehouse.

Figure below explains how a data warehouse can source data from different data store and can be a source of data for multiple datamarts:

Operational Data Store (ODS)ENTERPRISE RESOURCE MANAGEMENT

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An operational data store (ODS) consolidates data from multiple source systems and provides a near real time integrated view of current data.

Its purpose is to provide integrated data for operational purpose and it has add, change or delete functionality.

Like data warehouse, its source also include legacy systems, but in contrast to a data warehouse, an ODS may contain 30 to 60 days of information, while a data warehouse typically contains years of data.

Advantages of ODS

Overwrite function – This is the greatest advantage of ODS Save data at a document level Consolidated or overwritten ODS can be used for reporting and drilldown.

Data Warehousing Tool Capabilities

Data storage capabilities Database integration capabilities Supporting different data types Application and middleware integration capabilities Software platform integration capabilities Scalability and performance Security features like authentication, authorisation, access control, permission

management, data encryption, security monitoring, alerting, auditing, etc. High availability and reliability features like redundancy, fault tolerance, data

protection, data backup, recovery, etc. Supporting different industry standards like SQL, SOA (web services, XML), etc. Capabilities like Metadata management, data modelling, hierarchy management,

etc.

Data Warehousing Architecture



Storing Data in Warehouse – Some Related Topics

Data Granularity – At which Level to Store Data in Warehouse:

This is always a trade-off decision, i.e. whether to store data at the most detailed level or to store it at the summarised level. Both have their own advantages and disadvantages.

Data stored at summarised level has advantages like:

Reduced storage costs and reduced CPU usage Increased performance since smaller number of records are processed Better performance in reporting, etc.

But disadvantage is that summarised level data can not answer transaction level questions like whether Mr. A had called Mr. Blast month (for a telecom company).

Advantages of storing data at detailed, i.e. storing each transaction, is obtaining details of every transaction. However, the problem of storing at this level is the huge volume of data.

Data Refreshing – At What Frequency to Refresh Data in Warehouse:



There can be different options of refreshing data in data warehouse like:

Periodically (e.g., every night, every week) After every significant event, say after each month-end financial closing On every update, i.e. as soon as there is a change in data.

There can be different refresh techniques like:

Full refresh from base tables: This reads entire source table. It is expensive and time-consuming and typically done when the data warehousing project goes live for the first time. It is not done on regular basis.

Incremental or Delta refresh: It detect changes on base table and refreshes only the delta records (i.e. changes from last refresh).

Data Partitioning:

This means breaking data into several physical units that can be handled separately.

Typically data can be partitioned by date, line of business, geography, organisational unit or any combination of the above.

Partitioning provides flexibility in managing data and allows:

Easy restructuring Free indexing Easy reorganisation Easy recovery Easy monitoring

DATA EXTRACTION, TRANSFORMATION – CLEANING AND DATA LOADING

Clean Data/Quality Data

Some of the critical attributes of this data are as follows:

Accuracy Completeness



Integrity Timeliness Consistency and standardisation Accuracy of hierarchical relationship Uniqueness Data enrichments by third parties

Data Cleansing Tools

Extraction, Transformation and Loading (ETL) Tools

Extract: Batch extraction of high volumes of data from one or more sources. Transform: After extraction, the data need to be transformed or modified

depending on specific business logic involved so that it can be sent to the target repository.

Load: Loading of data to specified target systems (data warehouse, data mart, ODS, etc.)

Areas of Usage for ETL Tools

Data migrations Masater data management Data warehousing and reporting Compliance

ETL Vendors: ETL vendors come from variety of backgrounds like:

Pure-play ETL vendors like Ascential Software (Ascential Data Stage), Informatica (Informatica PowerCenter), etc.

Database vendors like IBM, Microsoft (Microsoft Pervasive), Oracle (Oracle Warehouse Builder - OWB), etc.

Business intelligence (BI) vendors like Business Objects, Cognos, Hummingbird, SAS, etc.

ONLINE TRANSACTION PROCESSING (OLTP) AND ONLINE ANALYTICAL PROCESSING (OLAP)

Online Transaction Processing (OLTP)



OLTP refers to a class of systems that facilitate and manage transaction-oriented applications, typically for data entry and retrieval transaction processing.

OLTP data is always on-line, and is fast and efficient for querying.

Some of the characteristics of OLTP are:

Operational data that is the ongoing transactional data related to business operations like production data, sales data, etc.

OLTP is the source of the data origin. Every data of the business is stored in the OLTP system.

OLTP database design is highly normalised in nature. Follows entity relationship diagram and uses data modelling. Involves relational database management system (RDBMS). Tables form relations between each other. The data reveals a typical snapshot of the ongoing business activity.

Online Transaction Processing (OLTP)

OLAP enables a user to easily and selectively extract and view data from different points of view.

OLAP is a part of the broader category of business intelligence and data mining tools.

Some of the characteristics of OLAP are:

Data is consolidated for a period of time. OLAP database is formed from various databases which are OLTP in nature. OLAP provides decision-making information, build analysis, problem-solving

activities over the business data. Database design is typically de-normalised with limited tables. Follows star schema with a single fact and multiple dimensional tables. Example:

Sales Fact table with customer dimension, sales dimension, location dimension and time dimension.

The data reveals multi dimensional views of various kinds of business activities.

Types of Analysis Possible in OLAP

There are different type of analysis possible in OLAP. For example:



Aggregation: Total sales, percent-to-total . Comparison: Budget vs. actual, sales for each product line YTD (Year-To-Date)

this year vs. last year, sales of a product line to new vs. existing customers. Ranking: Top 10, Bottom 5, Top 5 product contributors to margin. Find the customers that have had negative sales growth.

OLAP functionalities:

Roll up and roll down (drill up and drill down) Slice and dice Multi-dimensional data cube Pivot Sort

Strengths of an OLAP Tool

It is a powerful visulalisation tool. It provides fast, interactive response times. It is good for analysing time series. It can be useful to find some clusters and outliers.

Three Types of OLAP

ROLAP (Relational Online Analytical Processing): uses an RDBMS to implement an OLAP environment and typically involves a star schema to provide the multi-dimensional capabilities.

MOLAP (Multi-dimension Online Analytical Processing): uses a multidimensional OLAP and multi-dimensional database to store and access data. It provides exceptionally fast response times.

HOLAP (Hybrid Online Analytical Processing): stores detailed data in RDBMS. Stores agrregated data in MDBMS. User access via MOLAP tools.

Difference of OLTP and OLAP

OLTP System OLAP SystemHolds current data. Holds historical data.Stores detailed data. Can store both detailed and highly

summarised data.



Data is dynamic, i.e. changes with every transaction.

Data is largely static.

Transaction driven Analysis drivenSupports day to day transactions/decisions Supports strategic decisionsA large number of operational users uses the system.

Low number of managerial users uses the system.

High number of transactions in the system. Medium to low level of transactions.

DATA MINING

Data mining id the process of extracting patterns from data.

It is told that data warehousing provides the enterprise with a memory and data mining provides the enterprise with intelligence.

The parameters of the patterns identified by data mining are as follows:

1. Valid: The pattern identified based on sample analysis, is valid (i.e. holds true) for the entire data set.

2. Novel: Non-obvious to the system. This pattern was known beforehand.3. Useful: Should be possible to act on the item. We can device actions from the

pattern. If there is a pattern discovered, but nothing can be done with that, then it is not much use.

4. Understandable: The pattern should be interpretable.

Uses and Applications of Data Mining

Uses in Customer Relationship Management

1. Customer analysis: Identify the customers who are likely to leave for a competitor and the ones which are likely to be the most loyal.

2. Targeted marketing: Identify likely responders to promotions.3. Cross-selling: Based on earlier buying trends, the tool can recommend what

other products they may be interested in and trying to sell them.4. Segmenting or grouping customers: Data clustering can also be used to

automatically discover the segments or groups within a customer data set.

Uses in Market Basket Analysis



Market basket analysis uses data mining in retail sales. If a clothing store records the purchases of customers, a data-mining system can identify those customers who favour jeans over cotton.

Market basket analysis tries to answer the questions like: Who makes purchases? What do customers buy together? In what order do customers purchase items?

Other Uses of Data Mining

1. Banking: Predict good customers based on old transactions.2. Credit rating: Given a database of 100,000 names, which persons are the least

likely to default on their credit cards.3. Fraud detection: From an online stream of event, identify fraudulent events.4. Medicine/Disease outcome: Analyse patient disease history.

Data Mining Steps

1. Data Preparation2. Data mining model construction3. Results Validation

Data Mining Cautions

1. Pattern True for Sample may not be True for Whole Dataset2. Privacy Concerns and Ethics

Data Mining Vendors

Major players: Clementine, IBM’s Intelligent Miner, SGI’s MineSet, SAS’s Enterprise Miner

Other Data Mining Products are: DataMind (NeurOagent), Information Discovery (IDIS), SAS Institute (SAS/Neuronets).

ANALYTICS



Analytics comprise all specialised programmings that analyse data about a particular field like marketing, sales, HR, etc.

Presently, there are many analytics available in the market such as CRM analytics, supply chain analytics, sales analytics, customer analytics, product and service analytics, finance analytics, etc.

BI Versus Analytics

Business intelligence is sometimes called analytics though there are distinctions between them.

BI is a full set of technologies and programmes whereas analytics comprise all specialised programmings that analyse data about a particular field like marketing, sales, HR, etc.

Analytics can be divided to two major categories such as: Descriptive analytics that focuses on history (say, historical customer patterns)

and Prescriptive analytics that focuses on trends to predict (say, customer’s future

behaviour).

Different Analytics Segments

The three different segments of analytics applications are:1. Financial and Business Performance Management Analytic Applications2. Customer Relationship Management Analytic3. Operations and Production Analytic Applications.

BUSINESS INTELLIGENCE

Business intelligence tools mainly help in reporting as per the end user requirement.

OLAP, analytics, data mining, etc. is a part of business intelligence suite.

BI tools also provide following functionalities:

Alerts Scorecards



Dashboards Ad hoc query Workflow Data delivery Customisation of reports based on user profile Predictive modelling and data mining using advanced mathematical techniques Slice and dice of data

Leading Business Intelligence Vendors

Business Objects (taken over by SAP recently) Cognos (taken over by IBM recently) SAP Brio Oracle SAS Institute Hyperion.




