The Supply Chain of ERP Programming Products Pertemuan 11-12

2. The Supply Chain of ERP Programming ProductsPertemuan 11-12 Matakuliah : M0594 / Enterprise System Tahun : 2007

3. The Supply Chain of ERP Programming Products • Value Added Solutions • Implementing the concept of an Open Vendor Policy with CRM • Request for Information and Request for Offers • Costs Matter • Vendor Credit Risk

4. Value Added Solutions • ERP software comes from such vendors as SAP, Oracle, JD Edwards, PeopleSoft, and BAAN • Companies go for ERP programming products because it has been found that they are instrumental in tying factory operations to other corporate functions such as purchasing and inventory management • As with most computer operations, the goal is better coordination of internal functions • Whether or not htis is being achieved, however, it is a different matter

5. Value Added Solutions • The good news first, starting with statement that ERP’s Supply Chain applications have enlarged the concept of off-the-shelf routines to include both internal and external functions. • For example, having parts ordered for just-in-time delivery, which is not necessary part of most ERP routines, bridges the gap between ordering, production scheduling, and inventory control. • The ideal would have been a manufacturing execution system that reaches the vendor’s ERP online, coordinating shop-floor operations between vendor and client, and providing a real-time picture of how the plants are running on both sides of the partnership

6. Value Added Solutions • Another improvement to current packages would be the incorporation of autonomous knowledge artifacts. If a problem arises, agents under a knowledge-enriched planning system would analyzed its impact. • Then they would modify production schedules to make the best use of whatever resources are available at that very moment to meet established plans

7. Implementing the concept of an Open Vendor Policy with CRM • For starters, an open vendor policy implies that the company is not tied up to any vendor. • It deals with all of them on its own term – not the vendor’s terms; and it knows how to coordinate and manage a multi-supplier relationshi[ • It is not easy, but it is doable and practical – provided that the company has developed and uses an open business architecture and that it builds intelligent interfaces between wares. • Developmentt characterizing procurement strategies can be essentially grouped into four epochs: • Single vendor, single machine (1960s) • Single vendor, multiple computers (1970s) • Multiple vendors, multiple computers (1980s) • Open vendor policy for all wares (1990s)

8. Implementing the concept of an Open Vendor Policy with CRM

9. Implementing the concept of an Open Vendor Policy with CRM

10. Implementing the concept of an Open Vendor Policy with CRM • Some of the reasons for diversity originate in the vendor’s own design culture, but the product’s specific orientation weighs on the nature of building blocks. • In CRM’s case, for example, a critical factor is the primary method of communication among devices of choice: WAP phones, other phones, PDAs, Web browsers, fax, email, etc., and also the type of link primarily addressed. For example: • Business-to-consumer • Customer-to-business • Business partner-to-business partner • Sales force reference level

11. Implementing the concept of an Open Vendor Policy with CRM • Any complex off-the-shelf programming product can be divided into a number of modules or subsystems (see exhibit 6.7) • Here is a quick reference to the diversity of CRM vendors: Portal Market-place, MySAP.com, Oracle Portal Framework, IBM Enterprise Information Portal, OpenText, Viador E-portal Suite, Sterling My Eureka, Busines Objects InfoView, 2Bridge 2Share, DataChannel RIO, Intraspect, Plumbtree, and Autonomy.

12. Request for Information and Request for Offers • The selection of a vendor of commodity programming products should be done in a most careful manner. This is a long-term commitment – not an overnight association. The best methodology for supplier selection is the one done step-by-step. • The major steps characterizing the screening and commitment process are the following: • Concept of projected implementation • Request for information (to vendors) • Study of proposals and preselection • Prototype of projected implementation • Request for offers (to selected vendors) • Selection of two vendors for pilot project • Final commitment to one of the vendors

13. Request for Information and Request for Offers

14. Request for Information and Request for Offers • Benchmarking can be done both for software and hardware, but under no condition should hardware selection precede that of the targetted programming product. • Software sells hardware; therefore it should be given preference in the evaluation process and also in investment decisions. • In addition, it is wise to keep in mind other crucial criteria that influence a rational selection process, including: • Conformance to the company’s internal standard • Survivability of vendor to be selected • Diagnostics tools and maintenance tools • Quality of online and on-site support • Costs, which always matter

15. Request for Information and Request for Offers • Both at the level of Request for Information and Request for Offers, there are some sound criteria for evaluating proposals that the reader will be well advised to follow. • First and foremost is the ability to tear to pieces the vendor’s report as soon as it is received: • Carefully look for consistency as well as for discontinuities and unsound statements • Examine the documentation of the statements being made as well as associated commitments • Analyze the statistics supporting the proposal by the vendor, particularly reliability, blocking factor, and other constraints

16. Costs Matter – and so does ROI • There are two ways of looking at cost: absolute and relative. • The absolute cost consists of quoted prices and estimates for implementation expenses. • The relative cost is a function of the time it takes to complete each of the steps discussed in previous page and to implement them. • How long should the selection procedure take? • Less than six months from concept definition to parallel testing. Half that time is selection proper; the other half is implementation.

17. Costs Matter – and so does ROI • The successful implementation of ERP and CRM depends significantly on how well the following were performed: • Prerequisite study of the implementation area • Reengineering of the company’s information technology • Training of system specialists and the users on ERP functionality • The activities identified by these three bullets should be done in parallel with the search procedure discussed in previous topic • At the same time, the existance of these functions documents that the cost of the ERP software will only be a fraction of the total cost of its implementation

18. Costs Matter – and so does ROI • One of the better examples of the cost-effectiveness of technology in the longer term is shown in graphic form in Exhibit 6.9

19. Vendor Credit Risk • Vendor relationships can turn disastrous. Several reasons might lie behind unfavourable developments in vendor-client relationships, including: • The platform or its software may underperform • Joint efforts promised by the vendor are understaffed in skills • Timetables are repeatedly extended, increasing costs and generating friction

20. Vendor Credit Risk • Among the steps in calculating vendor’s risk are a: • Worst-case scenario for each vendor, within the hardware/software capitalization perspective • Decision on the sum to be assured through reinsurance by balancing premium versus risk • Polyvalent reinsurance plan, which is often done by buying options