Enterprise System - AIS

8/6/2019 Enterprise System - AIS

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Learning ObjectivesDescribe enterprise systemsDescribe enterprise resources planning (ERP)systems

Explain the organization value chainDescribe the relationship of the organization valuechain and an enterprise systemIllustrate the value of systems integrationDescribe how an enterprise system supports major business event processesEnumerate the pros and cons of implementingenterprise systems


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Enterprise System Integrates business processes and

information from entire enterprise Helps coordinate the operation of

business functions ERP systems are software packages

that can be used for the core systemsnecessary to support enterprisesystems


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ERP Systems Vendors


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SAPModules


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Third-Party Modules

C ustomer Relationship Management(C RM)builds and maintains customer

related dataC ustomer Self-Service ( C SS)allowscustomers to complete tasks withoutassistanceSales Force Automation (SFA)automates sales tasks such as order processing and tracking


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Third-Party Modules, Contd.

Supply C hain Management (S C M)plans andexecutes demand planning, inventory acquisition,manufacturing, distributing and sellingProduct Lifecycle Management (PLM)managesproduct data from design through disposal of productSupplier Relationship Management (SRM)

manages the interactions with the organizationsthat supply the goods and services to anenterprise. Includes procurement and contractmanagement.


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Enterprise Systems ValueC hain Enterprise systems facilitate value chain

managementT

he value chain is the system of activities that transform inputs intooutputs valued by the customer T he goal of an organization is to add the

greatest value with the lowest coststhereby increasing competitiveadvantage


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ValueC hain and

System


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T he Value of SystemsIntegration

One of the values provided by an enterprisesystem is the coordination of value activities

in the value chain.T he system performs this coordination bysharing data across business processes.

In the following slides we describe what lifewould be like without integrated systems andthen how enterprise systems solve some of those problems.


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Inefficient Customer Service1 . C heck if the customer exists in thesystem andhas goodcredit.


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Inefficient Customer Service2

. Find out if good can bepromised fromwarehousestock or if ithas to bescheduled for manufacturing.Tell thecustomer whenthey wouldreceivethe item. T hedate is knownas available topromise or AT P.


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Inefficient Customer Service3 . If item is not onthe shelf, when willit be releasedfrommanufacturing?Sally could reviewproduction

schedules and addthe time requiredto pick, pack, andship the item. T hiswould not,however, tell her if

the itemhad already beenallocated toanother customer.


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Inefficient Customer Service5 . How longwill it takevendors tosupply rawmaterials sothat

manufacturingcan takeplace?


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Inefficient Customer Service6 . What pricewill becharged tothis customer for thisorder?

T he price tocharge mustbe obtainedfrommarketing.


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Inefficient Customer Service7 . Needs tocheck ARbalance todetermine if customer hassufficient

credit.Without directaccess to theopen AR data,Sally willhave to callaccounting toapprove thisorder.


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Inefficient Customer Service8 . If credit isinsufficient,must checkwith creditdepartmentfor change in

credit line.


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InefficientC

ustomer Service Do you think that Sally wants to keep

the customer on the phone throughoutthis process?W ould you consider this to be goodcustomer service?


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Solution to Inefficient Customer Service

Enterprise system establishesavailable to promise (A T P) bychecking warehouses and scheduledmanufacturingPrice and creditworthiness

automatically determined fromdatabase


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Enterprise Systems Store Data inT ables


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Processing Orders Requires

MultipleT

ables


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Stored Data Used for Decisions


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Major ERP ModulesSales and Distribution

Records customer ordersShippingBillingC onnections to

Materials management module

Financial accounting moduleC ontrolling module

Based on SAP (best selling ERP)


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Major ERP Modules, Contd.Materials Management

Acquisition and management of goods from vendors

Purchase order preparationReceivingRecording invoice

Interacts withSales and distribution moduleFinancial accounting moduleC ontrolling module


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Major ERP Modules, Contd.Financial Accounting

Plays a central role in an ERP system andincorporates data from other modules intogeneral ledger accounts and financial statementsBusiness events from other modules, such as SDand MM, are incorporated by the FI module intothe general ledger accounts and included in theexternal account statements, the balance sheet,profit and loss statement, and statement of cashflows.T

he FI module also includes accounts receivableand accounts payable functions to record andmanage that data directly and to complete eventsbegun in the SD and MM modules.


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Major ERP Modules, C ontd.

Controlling and Profitability Analysis

Handles internal accounting including: Cost center accounting Profitability analysis for sales Activity-based accounting Budgeting


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Major ERP Modules, Contd.Human Resources

Recruiting, management andadministration of personnelPayroll processingT raining and travelBenefitsReports


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Order-to-Cash

1. Respond tocustomer inquiries andrequests for quotes(RFQs).

Somecompaniesadd onseparate CRMmodules


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Order-to-Cash2. Recordcustomer order including:check customer credit; checkinventorypricing; andcheck whereand wheninventory will beavailable tosend to thecustomer.

Triggers pickingof goods or

purchase of goods fromanother vendor.


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Order-to-Cash

3. Pick goodsfromwarehouseand pack for shipment.


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Order-to-Cash4. Ship goods

to the customer.ERP systemwould choosethe appropriaterouting andcarrier, recordthe cost of goods soldand inventoryreduction in thegeneral ledger.Some ERPsystems trigger the billingprocess when ashipment takesplace.


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Order-to-Cash5. Billing the

customer andrecording thesale in AR.ERP systemensures correctquantities,

prices, terms,addresses, etc.ERP systemcan be used toanalyze salesprofitability by

comparingproduct costs tosellingprice.


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Order-to-Cash6. Receive andrecord payment.Includes:recording cashreceipts andupdating cashand accountsreceivable.ERP data canthen be used tomanagecustomer creditand invest

available cash.


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Purchase-to-Pay1. Determinerequirements,completepurchaserequisition.

ERP system mayautomaticallygenerate thepurchaserequisition basedon quantity on-

hand, quantity-on-order, andexpecteddemand.


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Purchase-to-Pay2. Prepare andrecord purchaseorder.

An ERP systemassists the buyer in identifying

sources of supply for therequested item,preparing RFQsto vendors,analyzing

vendor quotes,comparingvendor prices,terms, and pastperformance


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Purchase-to-Pay3. Receive andrecord goods.Comparequantity orderedto quantityreceived.T he ERP routes

goods to thefunction thatrequested themor directs themthe warehousefor immediate

sale. It alsorecords vendor performancedata.


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Purchase-to-Pay4. Receivevendor invoice,match with POand receivingreport; recordpayable.If the three-waymatch fails, theenterprisesystem notifiesthe proper personnel toensure timelyreconciliation of differences.


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Purchase-to-Pay5. Prepare andrecord cashdisbursementand updateaccounts.

An ERPsystem usesvendor and APdata toschedulepayments in

accordancewith vendor terms and toreceivediscounts.

Documents

Enterprise System - AIS