You are on page 1of 40

ERP

&
BUSINESS PROCESSES

© Krishnan Subramaniam
Business Functions
• Organizational unit
• Also known as department
• Hierarchical structure
CEO

Accounting Office
and IT Manager

Sales Warehouse Purchasing

Sales Reps Back Office Front Office

ERP and Business Processes


© Krishnan Subramaniam
U-turn to Business Processes
• 1990 s - Michael Porters Value Chain 3

• Business process is not a business function


• Trigger, customer demand
• Inputs à outputs

ERP and Business Processes


© Krishnan Subramaniam
What is a Business Process?
• Collection of coherent activities
– starts with a trigger
– ends with the delivery of one or several
products
• The products represent a value for the
Customer of these products.
• Customer
– External
– Internal
• Services are also considered as products.
ERP and Business Processes
© Krishnan Subramaniam
BPR
• Business Process Redesign (Re-
engineering)
• Event-driven Process Chains (EPC s)
– Events drive Logistics, Finance, HR, etc.
– Processes consist of a collection of events
which link one another (activities).
• Cycle-approach
– O2C: Order to Cash
– P2P: Purchase to Pay
– H2R: Hire to Retire
ERP and Business Processes
© Krishnan Subramaniam
Example of a Process Chart
6

ERP and Business Processes


© Krishnan Subramaniam
ERP and Business Management

ERP: Enterprise Resource Planning

Integrated
information system

Central Database

Business
Management

Business Control

ERP and Business Processes


© Krishnan Subramaniam
ERP in Historical Perspective

• MRP
• MRP II
• ERP
• ERP II (or x-ERP)

ERP and Business Processes


© Krishnan Subramaniam
MRP I
• Materials Requirement Planning
• Decide material requirement for a
production process
• BOM and the quantity of finished products
required
• Material requirement leads to purchase
proposals and purchase orders

ERP and Business Processes


© Krishnan Subramaniam
MRP II

• Manufacturing Resource Planning


– Raw materials
– Capacity planning - machines and people
– Other resources
• Aims at manufacturing control

ERP and Business Processes


© Krishnan Subramaniam
ERP
• Enterprise Resource Planning
• Enterprise wide
• One integrated system instead of
separated systems
• One central database
• Process orientation
• EPC s: Event Driven Process Chains

ERP and Business Processes


© Krishnan Subramaniam
ERP
• ERP as a package
– standard software package
– integrated functionality
– covers all business processes in an organization.
• ERP as a phenomenon
– Enterprise-wide integrated planning and steering
• Organizational structure and management
• Products, services and business processes
• IT – Hardware & systems
• People, competences and culture.

ERP and Business Processes


© Krishnan Subramaniam
ERP II

• Extended ERP (x-ERP)


• Collaboration between companies to
reach a better position in the Supply Chain
• Intra-enterprise collaboration = ERP
• Inter-enterprise collaboration = ERP II
• Possibilities of Internet, EDI

ERP and Business Processes


© Krishnan Subramaniam
CRM

• Customer Relationship Management


• Know your customer
o Customer data
o Purchase behavior
o Data from external sources
o Qualitative information
• Analyzing and combining data

ERP and Business Processes


© Krishnan Subramaniam
SCM

© Krishnan Subramaniam
Pros and Cons of ERP

• Integration
• Process orientation
• Simple user interface
• Openness
• One systems vendor • Long
implementation
• State-of-the-art
periods
• International aspects
• Complexity

© Krishnan Subramaniam
The vendors of ERP systems

— SAP Business Suite, All-in-One,


Business One
— Oracle Financials, Peoplesoft, JD
Edwards, Fusion
— Mapics, Baan, SSA Global
— Dynamics NAV, Dynamics AX,
Dynamics CRM

ERP and Business Processes


© Krishnan Subramaniam
© Krishnan Subramaniam
ERP Decisions
http://www.top10erp.org/

Functional Budget and


Company Goals
Software Resources
and Objectives
requirements

Underlying Trusted Partner


Technology

Future Define the


Scalability Process

© Krishnan Subramaniam
ERP Decisions

© Krishnan Subramaniam
Customer

• Master data
• Contact data
• Transaction data
• Customer Card
• Customer posting groups

ERP and Business Processes


© Krishnan Subramaniam
Payment and Delivery Terms

• Creditability
o Creditability as an amount
o Creditability as a period of time
o Payment terms:
• Cash on delivery
• 7 days
• 1 month
• Delivery/shipment terms

ERP and Business Processes


© Krishnan Subramaniam
Customer

• Customer (discount) groups


– Characteristics in common
• Discounts
– Per customer
– Per item
– Per order
• E-commerce
– Web shop
– Electronic payment
– B2B and B2C
ERP and Business Processes
© Krishnan Subramaniam
The Sales Process (O2C)
Contact Issue Sales
the Sales Order
Customer Quotation processing

Delivery
and
Shipping

Collect
Billing
Money

• Blanket orders
• Return orders and credit memos
ERP and Business Processes
© Krishnan Subramaniam
Issuing Sales Quotation
• Request for Quotation (RFQ)
– Not always necessary
– Register Customer data and quotation data
• Fast tabs
• Item lines
• Creating Quotation
• Send to Customer
– Obligation to deliver
– Reaction period
– Management information
ERP and Business Processes
© Krishnan Subramaniam
Sales Order Processing
• Does the customer agree?
– Quotation is converted into a sales order.
• Direct sales order (without quotation)
• Creditability check
• Availability check (AtP, CtP)
• Integration with Office
• Release order for delivery

ERP and Business Processes


© Krishnan Subramaniam
Delivery and Shipping
• Warehouse gets assignments
– sales orders with delivery date
• Picking and packing, Shipping
• Create Shipping documents
• Postings in the ERP system
– Logistic
– Financial

ERP and Business Processes


© Krishnan Subramaniam
Billing

• Sales Order
• Sales Invoice
• Separation of goods and money streams
• Pre-payment

ERP and Business Processes


© Krishnan Subramaniam
Blanket Orders

• Long term relationship with customer


• Special price or discount
• Revenue bonus (afterwards)
• Sell a large quantity, deliver/ship (and bill) in
parts

ERP and Business Processes


© Krishnan Subramaniam
Return Orders

• Damaged on arrival at customer site


• Shipping wrong items
• Customer has ordered too much
• RMA procedure
• Destination of returned items
• Credit memo (sales)

ERP and Business Processes


© Krishnan Subramaniam
Discounts and Credit Memos

• Revenue bonus
• Correction of errors
• Sales dept. authorisation
• Credit memo lowers the debt-claim on the
Customer
• Detailed checks are necessary

ERP and Business Processes


© Krishnan Subramaniam
Marketing
• "Marketing is an organizational function and a set of processes for
creating, communicating and delivering value to customers and for
managing customer relationships in ways that benefit the organization
and its stakeholders."
(source: American Marketing Association (AMA) )

• Macroeconomic functions:
– Information exchange between manufacturers,
wholesalers and consumers;
– Stabilization function/distribution function.
• Product development, strategies
• Segmentation of the market
• Marketing mix
ERP and Business Processes
© Krishnan Subramaniam
CRM
• Customer Relationship Management
• Relation a company maintains with its customers
• Register and analyze customer behavior
• Enlarge profitability and customer satisfaction
• Customer pyramid
• Pros CRM
– Lower costs by operational efficiency
– Higher revenue by better segmented market
– Improved strategy and better measure effects on
actions

ERP and Business Processes


© Krishnan Subramaniam
Analysis
• Dimensions
• Business Warehouse (BW)
• Business Intelligence (BI)
• Standard analysis possibilities
– Sales budgets
– Sales analyses reports
• revenue by region
• revenue by sales rep
– Statistical screens
• Self designed reports
– In ERP
– In (e.g.) Excel

© Krishnan Subramaniam
Implementation
• Configuration
• Collaboration with consultants
• Key-users ; Super-Users; Training
• Implementation plan
• Methodologies
– RIM Toolkit
– SureStep
• Process modeling
• Cost and time frame
ERP and Business Processes
© Krishnan Subramaniam
Master Data Management
• Streamline
• Include entire conglomerate of companies
• No exceptions

ERP and Business Processes


© Krishnan Subramaniam
Change Management

• Principles of Change Management:


– Management has clear vision of the future
– Management has to support the change fully
– Advocates and opponents
– Correct communication to encourage transition
• Cultural and structural side in balance
• Sounding board, support
• Committees and groups

ERP and Business Processes


© Krishnan Subramaniam
Version Management, Upgrades and Updates

• Keeping up to date
• Hot fix, update and upgrade
• Made to measure software and upgrading
• Develop – test – go live
• License costs

ERP and Business Processes


© Krishnan Subramaniam
Logistics Concepts

CUSTOMER TRANSPORTATION
SERVICE

INFORMATION WAREHOUSING
SYSTEMS

MATERIALS INVENTORY
MANAGEMENT

© Krishnan Subramaniam
Questions ?

© Krishnan Subramaniam