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Information System Assignment B

Information Systems in Business (University of New South Wales)

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Information System Assignment B

Business Process Management Report

Enterprise Information System Survey for De-Clear Pty

: A Proposal of Enterprise System Architecture

Daniel Chun
Rema Hamdan
Kyungjin Kim

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Contents
Executive Summary 4

Key Business Issues 4–5

Functionalities Needed 6–7

Recommended Enterprise System Architectures 8 – 10

Proposed ERP and SCM Solutions for De-Clear Pty 11 – 14

Conclusion 14

Bibliography 15 - 16

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EXECUTIVE SUMMARY

This report aim to seek an enterprise system architecture for De-Clear Pty. Key
business process issues will be demonstrate based on value chain and supply chain
analysis that are previously completed. With the issues, some required system
functionalities for De-Clear to optimise the business processes are presented. There are
detailed information about enterprise system architectures such as ERP, SCM and CRM.
Finally, this report compare SAP's products with ORACLE 's products based on scored
feature analysis and a high-level cost/benefit analysis.

KEY BUSINESS PROCESS ISSUES AND SYSTEM FUNCTIONALITY NEEDED

The issues from the prior value chain and supply chain analysis shape the required
functionalities by De-Clear which are deconstructed and addressed accordingly. Supply
Chain Management has been broken down into demand forecasting and planning,
supply chain collaboration and supply chain analytics. For Customer Relationship
Management/Enterprise Resource Planning derived order management, master data
management and call centre software. By understanding functionality required by the
senior management team, a thorough investigation of SAP and Oracle Vendors was
undertaken. The following report is informed by De-Clears current situation and future
plans.
Business process issues
Supply chain Value chain
- Inaccurate demand forecast - Ineffective outbound logistics & Ordering
- Miscommunication with suppliers - Disparate information system
- Poor supply chain analytics - Poor customer service activities

1. Key Business Process Issues with the Supply Chain

1.1 De-Clear does not accurately forecast demand for its products. Therefore, when the
level of demand is higher than expected, De-Clear has insufficient inventory in its
warehouses to meet the demand, leading to customers being unsatisfied. Also, when
the demand is smaller than expected, De-Clear’s inventory is too great, leading to
unnecessary warehousing costs. Therefore, De-Clear must forecast demand and then
supply this forecast to its suppliers so that inventory will be at a minimum, but enough
to meet customer demand.

1.2 Furthermore, the method of communication between De-Clear and its suppliers is
problematic. De-Clear and its suppliers communicate via phone leading to
miscommunications which causes supplies arriving late or early. Late supplies have
created delays in production. And early deliveries have creating excess warehousing

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costs unnecessarily. De-Clear must create a better communications system between its
suppliers, one which is less likely to create errors.

1.3 The managers of De-Clear do not evaluate the performance of the entire supply
chain. Therefore, the managers do not understand what aspects of the supply chain
require improvements in order to maximise the firm’s profitability. Hence, De-Clear
needs to address its inability to assess its supply chain.

2. Key Business Process Issues in the Value Chain

2.1 De-Clear has no direct order-to-cash business process. Hence outbound logistics
focusing on distribution of end products to retailers within the order-to-cash process are
essentially inefficient and inconsistent. Ordering and payment procedures vary amongst
domestic and global suppliers/retailers. This is done manually through the Accounting &
Finance departments with the negative consequence of manual input of order
information causing errors. Additionally a standardised order-to-cash process becomes
of prime importance in light of De-Clears global expansion plans.

2.2 De-Clear currently maintains master data manually and on disparate applications,
leading to data inaccuracies and widespread disadvantages to daily operations. This
comprehensively affects the firms performance of key functions and reduces the value-
adding ability of crucial data and information Decision making by management and
users of the information is consequently hindered. Currently there is no enterprise-
wide data accessibility or control, leading to declining business process efficiency and
lack of integration. This poses further implications in a global environment.

2.3 De-Clear cannot effectively solve customer problems, issues or queries. There is no
current way or method for customers to communicate or provide feedback to the
company. The value-added from providing this support function enhances the customer
relationship in the medium to long term. De-Clear is currently failing to maintain
customer satisfaction and missing competitive advantages. Potential information gains
from two-way customer and business dialogue could shape business intelligence and
improve customer retention in domestic and global contexts.

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SYSTEM FUNCTIONALITY NEEDED

System functionality needed in light of these business process issues

The business process issues highlighted in section 1.1 requires system functionality that
can accurately forecast and assess future demand. If forecasts of demand is conducted
then suppliers will be able to ship components in the right amounts at the right time,
such that inventory will be maintained at optimum levels. Because customers will
receive products without extensive waiting periods they are less likely to choose
substitute products. Hence, customer retention will be improved.

The issues addressed in section 1.2 requires a system which enables communication
between De-Clear and its suppliers in a manner which reduces communication errors.
Instead of phone communications, De-Clear should use a program which gives suppliers
access to De-Clear’s inventory levels. By using the program to view inventory levels, the
suppliers will know when to ship components without a directive from De-Clear’s
managers. This kind of collaboration will increase the efficiency of the supply network as
managers from different companies can spend less time communicating to discern
issues of procurement. Furthermore, inventory fallouts due to communication errors
will be rare so that customers will always be able to buy De-Clear products whenever
they want, improving customer satisfaction and retention.

The lack of information that is limiting the ability of managers to evaluate the
performance of the supply chain must be dealt with by providing managers with a tool
that allows access to key performance metrics about the supply chain. By doing so
problems within the supply chain can be quickly analysed and removed. For example, if
executives view key performance metrics on delivery times, they can quickly identify
and replace suppliers, which habitually fail to provide products on time. Obviously,
providing key performance indicators will increase the quality of management reporting
but it will also improve customer retention as bottlenecks within the supply chain can
be quickly removed such that customers can always receive products without waiting
periods.

System functionality needed in light of value chain issues

2.1 From the ordering issue De-clear requires integrated billing and order management
functionality. The application should provide seamless integration of the sub-processes
involved in the order-to-cash process to the supply chain. Each stage of the ordering and
billing steps should be clear and consistent, adding value to the entire process. In doing
so, De-clear will gain efficiency and eliminate manual backlog and delay that is currently
present, creating a effective approach that improves supply chain activities. Retailers

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will become more familiar and confident in the ordering function of the business,
improving customer satisfaction.

2.2 The operational data issue highlights the importance of a centralised repository of
information for De-Clear. The functionality required needs to be easy to use and
accessible by management, employees and suppliers for user-defined objectives.
Synchronisation is pivotal, particularly since the current disparate systems are
ineffective and may lead to loss in important data when shifted to a company-wide
application, causing operational delay and extensive costs. Ideally the disparate systems
should be unified across the enterprise, facilitating the sharing of information for
operations and decision-making.

2.3 The customer service issue identified reveals the need for a mechanism that fosters
business and customer communication. Since De-clear is a manufacturer and supplier, it
ought to consider both its direct consumers ,retailers and the end customers who
purchase the cosmetics from the retailers. Despite De-clear not directly dealing with end
customers, it has a duty to them in ensuring a standard of quality, product information
and assistance. Thus an application needs to be easily accessible to customers and
contribute real-time support services at point of contact, in the form of a contact centre.

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RECOMMENDED ENTERPRISE SYSTEM ARCHITECTURES

System Functionality Modules to be Justification

implemented to
address system
functionality

Accurately Forecast Demand Demand planning and forecasting

and assess future planning and modules should be implemented as it will
demand forecasting enable De-Clear to accurately forecast and
module plan future demand for products. By
doing so, De-Clear can keep inventory
stock at a minimum so as to reduce
warehousing costs, however, the
inventory level will still be sufficient to
meet all customer demands. Demand
planning and forecasting modules can
forecast future demand by using complex
forecasting algorithms which uses sales
history data and sometimes information
on marketing campaigns and product life
cycles to accurately predict future
demand.

Provide real time Supply network De-Clear’s managers are using phone
communication collaboration communications to make orders with
between company and module suppliers and this often leads to order
suppliers about errors. Therefore, supply network
inventory levels and collaboration modules are required. These
other data modules are typically online secure
services that automate electronic
document exchange with suppliers. By
using this module, suppliers will be able
to access real time data on inventory
levels via the internet, and therefore will
be able to send components based on pre-
determined inventory levels. Not only will
this module save managerial time spent on
communicating with suppliers, but it will
also automate all payment transactions
further increasing efficiency within the

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supply network.

Provides managers Supply Chain Supply Chain Analytics modules are

with data about the Analytics required because it enables managers to
performance of the module holistically view the performance of the
supply chain overall supply chain by giving managers key
and the performance of performance metrics. Supply Chain
individual firms within analytics modules present key
the supply chain performance metrics in a form conducive
to very detailed analysis. For example,
most of these modules provide managers
with OLAP tools which allows managers
to view the same data from multiple
perspectives. Dashboards with drill down
capabilities are also commonplace in this
modules. Therefore, these data analysis
tools will provide managers more
information to make better decisions.

An order-to-cash Order De-Clear must implement a billing and

system that has clear Management order application that improves the
billing and processing Module current manual method. This module will
procedures provide capabilities for selecting the right
products, negotiating prices, ensuring
timely fulfillment of orders and payment.
This enhances added value per stage and
optimises the supply chain execution, as
well as keeping financial information up
to date. This module will allow greater
integration, while record keeping
transactions and orders. Additionally
ensuring customer familiarly and
confidence through order updates in the
order life cycle.

A centralised and Master Data This module is a combination of

integrated platform for Management technology that consolidates and
business data, Module augments master data while synchronising
delivering on demand it across an organisation. De-Clear must
information for overcome the obstacles of disparate
decision-making. systems to reduce fragmented information
and reporting. It envisages together
business processes through transactional,

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Call centre software
for: queries, issues and
feedback.
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analytical and operational tools. De-clear
could synchronise structured and
unstructured data, with cross-reference
real time data displays. This shapes
management reporting and organisational
decision-making
Contact and This module is customer-focused and if
Support Service adopted by De-Clear capable of
Module enhancing customer satisfaction and
retention. It enables customer service
through research and diagnosis of issues
via phone calls. De-clear would be able to
responsively cater to customer queries or
concerns as well as gathering crucial
feedback through calls and linked email,
fax and web tools. This module will
deliver a consistent customer experience
across all contact channels. Additionally
providing call centre operations and
trends that inform marketing and sales
intelligence.
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PROPOSED INFORMATION SYSTEM SOLUTIONS FOR DE-CLEAR PTY

Oracle and SAP both being large vendors have similar capabilities in their Demand
Forecasting and Planning modules. However, Oracle is able to better create forecasts
based not only on historical data but also on seasonal models. This is important as De-
Clear being a cosmetic company will have sales fluctuate widely during particular
seasons such as Christmas time. Furthermore, Oracle is better able to adjust its
forecasts to reflect events and promotions and it can create forecasts which match the
product lifecycle from birth and growth to maturity and decline. Therefore, Oracle’s
forecasting demand module is likely to be better.

Oracle’s Supply Chain Analytics module is superior to SAP’s. Although, both Oracle and
SAP’s Supply Chain Analytics modules provide information about the performance of
suppliers by means of KPI’s. Oracle’s module takes it one step further by sending
automatic e-mail alerts to suppliers if their score falls below a specific threshold on a KPI.
This helps suppliers understand how you are measuring their performance and gives
suppliers a chance to readjust their service. Having underperforming suppliers increase
their service quality is always better than finding a new supplier given the difficulties
involved in creating new business relationships. Furthermore, Oracle has an extensive
range of over 80 pre-defined KPI’s which allows very detailed analysis into suppliers.
Obviously, supply chain analytics apply to evaluating individuals within the company.
Oracle has an advantage over SAP in evaluating employees, as non-technical managers
can create a dashboard of KPIs that matter to them to evaluate employees beneath
them by using only a simple three-step procedure. All the KPIs are presented in very
easy to view forms such as graphs and tables.

Both Oracle’s Supplier Network Module and SAP’s Supply Network Collaboration
module are effective. It is difficult to state whether Oracle’s module is better or worse
than SAP’s module. Both modules support key procurement and payment transactions,
including purchase orders, advance ship notices and invoices. Both modules gives
suppliers a clear idea of inventory levels with real time data, such that suppliers know
when to ship components. Both modules allows companies within the supply chain to
communicate by means of one program which avoids the cost of supporting individual
communications between firms. Oracle and SAP’s modules Supplier Network Modules
also tracks the successful deliver of all messages, such that managers can be assured
that crucial messages will be read by suppliers.

For order management Oracle and SAP have captured the important elements of the
order-to-cash process (SAP, n.d.). However it is Oracle’s Order Management Module
that is recommended. De-Clear’s problematic manual errors by the Accounting and
Finance departments can be eliminated by the flexible defaulting capability (ORACLE,

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2003). This automatically populates order data to reduce the likelihood of data entry
error. This validation also supports order modifications, cancellations and returns.
Oracle is architecture to synchronise orders from multiple systems (web stores, third
party systems and call centres).The module can integrate seamlessly with financial and
supply chain operations, being individually implemented or part of Oracles E-Business
Suite.

The SAP Netweaver Master Data Management Module provides a single, user-defined
location for master data (SAP, n.d.). Although it has many advantages, Oracle MDM
Module can be more easily integrated though Oracle’s EBS. It provides an internal
triggering mechanism that creates and deploys change to all connected systems,
increasing adaptability and responsiveness (ORACLE, 2011). Duplication is eliminated
through data quality functionality. Additionally its user interface is supportive of familiar
and casual users, promoting wider management reporting and more informed decision
making.

For contact and support services, SAP CRM call centre software is compared against
Oracle contact centre anywhere module. The SAP module provides required customer
service and call centre analytics while the Oracle module goes further in providing multi
channel solutions enabling routing, queuing, and distribution of phone calls, e-mail, chat,
fax, and web (SAP, n.d.). This is important in light of De-Clear’s customer communication,
particularly in the global context to ensure global customers can deal with the business
in various mediums, overcoming time and distance constraints. Additionally Supervision
tools are integrated by design to include real-time dashboards, historical reporting and
powerful quality management capabilities.

Scoring Analysis
In weighting the Scoring Model, more weight was given to demand forecasting and
communications with the suppliers criteria. The reason being for this is that De-Clear
being a manufacturer requires very good forecasts of demand to know how much
inventory is required in their warehouses otherwise customer demand may not be met.
Communications with suppliers is also highly important given the fact that as a
manufacturer, clear communications with suppliers is required to ensure production can
occur smoothly without delays caused by late shipments of components. The
percentage ratings we gave to SAP and Oracle for each module is based on the analysis
provided immediately above.

Criteria Weight SAP SAP Oracle Oracle

(%) Score (%) Score

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Demand planning and 5 70 350 80 400

forecasting

Communications with 5 73 365 73 365

suppliers

Capacity to evaluate 4 73 292 85 595

performance of supply
chain

Order Management 3 74 222 79 237

(Order-to-cash process)

Master Data Management 3 76 228 78 234

Contact and Support Call 3 76 228 80 240

Centre

Grand Total 1685 2071

Therefore, we can clearly see that from this scoring model, Oracle clearly
seems to be the better choice.

Cost/Benefit Analysis of implementing Oracle

Advantages Disadvantages

 Is hosted locally  Needs intranet

 Does not consume large
amounts of WAN
bandwidth
 Payment requirement
limited to needed modules
 E-Business Suite allows
integration of different
modules in a single
 Expensive. Cost of buying the
modules alone will be $931,238.50 (see
appendix).
 More difficult in implementation
 Any updates to successor are to be paid
for
 Requires the purchase of equipment to
host

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organisation  Requires technical support in its

 Modules can be selected
and employed individually
 Responsiveness and
adaptability
 Real-time changes and
access available
 Customisation to user
operation and maintenance
 Resistance to change within the
organisation. In fact suppliers may not
be willing to monitor inventory levels as
this increases their responsibility
 Adjustments are required even after
implementation has occurred. Constant
monitoring of the system is required for
a few months after implementation to
ensure that operation is smooth.

CONCLUSION

De-Clear should implement the following modules provided by Oracle; Demand

Planning and Forecasting, Supplier Network Collaboration, Supply Chain Analytics, Order
management, Master Data Management and Contact Centre Anywhere. By
implementing these modules Oracle will overcome the key problems within its supply
chain and its value chain and De-Clear will be also be able to achieve its key objectives.
Management reporting will be enhanced by means of the KPI’s provided by the Supply
Chain Analytics module. Efficiency of the supply and distribution network will be
improved by implementing the Supply Chain Management modules. Customer retention
will be improved by the Demand Forecasting modules and the Supplier Network
Collaboration which will prevent inventory stock outs, thereby, reducing the chance of
customer dissatisfaction.

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APPENDIX

Oracle’s Pricing Model

Module License Support Units Total (US$)

Price Price

Demand forecasting $290.00 $638.00 500 $464,000.00

and planning

Supply Chain $580.00 $127.60 60 $42,456.00

Collaboration

Supply Chain Analytics $1400.00 $308.00 150 $256,200

Order Management $4595.00 $1010.90 5 $28,029.50

Master Data $5795.00 $1274.90 10 $70,699

Management

Oracle Contact Centre $1145.00 $251.90 50 $69,845.00

Anywhere

Total $13,805.00 $3611.30 $931,238.50

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BIBLIOGRAPHY

ORACLE, 2003. Oracle® Order Management. [Online]

Available at: http://docs.oracle.com/cd/B11454_01/11.5.9/acrobat/115ontug.pdf
[Accessed 22 5 2012].

ORACLE, 2011. Master Data Management. [Online]

Available at: http://www.oracle.com/us/products/applications/master-data-
management/018876.pdf
[Accessed 22 5 2012].

SAP, n.d. CALL CENTER SOFTWARE. [Online]

Available at: http://www.sap.com/software/call-center-software.epx
[Accessed 22 5 2012].

SAP, n.d. COMPONENTS & TOOLS OF SAP NETWEAVER. [Online]

Available at: http://www.sap.com/platform/netweaver/components/mdm/index.epx
[Accessed 22 5 2012].

SAP, n.d. SAP-Sale Order Management software System. [Online]

Available at: http://www.sap.com/software/sales_order_management.epx
[Accessed 22 5 2012].

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