ERP & Biz Processes PDF

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

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

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.
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
Example of a Process Chart
6

ERP and Business Management
ERP: Enterprise Resource Planning
Integrated
information system
Central Database
Business
Management
Business Control

ERP in Historical Perspective
• MRP
• MRP II
• ERP
• ERP II (or x-ERP)

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

MRP II
• Manufacturing Resource Planning

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

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
• 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 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

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

SCM
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
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 Decisions
http://www.top10erp.org/
Functional Budget and

Company Goals
Software Resources
and Objectives
requirements
Underlying Trusted Partner

Technology
Future Define the

Scalability Process
ERP Decisions
Customer
• Master data
• Contact data
• Transaction data
• Customer Card
• Customer posting groups

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

Customer
• Customer (discount) groups

– Characteristics in common
• Discounts
– Per customer
– Per item
– Per order
• E-commerce
– Web shop
– Electronic payment
– B2B and B2C
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
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
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

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

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

Blanket Orders
• Long term relationship with customer

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

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)

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

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
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

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

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

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

Logistics Concepts
CUSTOMER TRANSPORTATION
SERVICE
INFORMATION WAREHOUSING
SYSTEMS
MATERIALS INVENTORY
MANAGEMENT
Questions ?

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ERP

Sales Warehouse Purchasing

Sales Reps Back Office Front Office

ERP and Business Processes

• Business process is not a business function

ERP and Business Processes

ERP and Business Processes

ERP: Enterprise Resource Planning

ERP and Business Processes

ERP and Business Processes

ERP and Business Processes

• Manufacturing Resource Planning

ERP and Business Processes

ERP and Business Processes

ERP and Business Processes

• Extended ERP (x-ERP)

ERP and Business Processes

• Customer Relationship Management

ERP and Business Processes

 SAP Business Suite, All-in-One,

ERP and Business Processes

Functional Budget and

Underlying Trusted Partner

Future Define the

ERP and Business Processes

ERP and Business Processes

• Customer (discount) groups

ERP and Business Processes

ERP and Business Processes

ERP and Business Processes

• Long term relationship with customer

ERP and Business Processes

• Damaged on arrival at customer site

ERP and Business Processes

ERP and Business Processes

ERP and Business Processes

ERP and Business Processes

• Principles of Change Management:

ERP and Business Processes

ERP and Business Processes

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SAP Business Suite, All-in-One,