Comprehensive ERP Solutions for Efficient Business Management

1. Management Information SystemComprehensive and Organized Chapter 11 Enterprise Resource Planning including SCM and CRM

2. Chapter Highlights • Evolution of Enterprise Resource Planning • ERP vendors • ERP solution components • Supply Chain Management • Internal and external SCM • Transaction management foundation • Implementation of SCM • Supply chain and DSS • SAP R/3 architecture • SAP HANA • SAP implementation • Customer Relationship Management

3. Enterprise Resource Planning • Enterprise Resource Planning(ERP) can be termed as a suite of integrated applications using which an enterprise can use to collect, store, manage and interpret data from many business activities, ranging from procurement, inventory management, manufacturing, human resource management, shipping and payment, quality management, marketing and distribution. • In other words, ERP is packaged business software system that lets company automate and integrate the majority of its business processes, share common data without compromising data integrity and practices across the enterprise and produce and access information in a real-time environment Objectives • The objective of ERP system is to integrate all functions or departmental units across a company to a unified single application system capable of serving all those functions’ specific needs.

4. ERP in Retrospective

5. ERP Functional Components • Financial accounting: General Ledger, fixed asset, payables, including vouchering, matching and payment, receivables cash application and collections, cash management financial consolidation • Management accounting: Budgeting, costing, cost management, activity based costing • Human resources: Recruiting, training, roistering, payroll, benefits, diversity management, retirement and separation • Manufacturing: Engineering, bill of materials, work orders, scheduling, capacity, workflow management, quality control, manufacturing process, manufacturing projects, manufacturing flow, product life cycle management • Order processing: order to cash, order entry, credit checking, pricing, available to promise, inventory, shipping, sales analysis and reporting, sales commissioning. • Supply chain management: Supply chain planning, supplier scheduling, product configurator, order to cash, purchasing, inventory, claim processing, warehousing (receiving, putaway, picking and packing). • Project management: Project planning, resource planning, project costing, work breakdown structure, billing, time and expense, performance units, activity management • Customer relationship management: Sales and marketing, commissions, service, customer contact, call centre support – CRM systems are not always considered part of ERP systems but rather Business Support systems (BSS).

6. ERP Market Share 2015 • Global Market of ERP US$ 25.4 Billion

7. ERP Industry Solutions (SAP)

8. ERP Benefits Internal • Integration of a single source of data • Processes become faster due to work group technology and application of workflow automation • Common data definition • A real-time system • Increased productivity • Reduced operating costs • Procedural delay is eliminated • Intelligent ERP download decision making at lower level releasing the burden on the middle management External • Improved customer service and order fulfillment • Short delivery cycle enhances customer satisfaction • Improved communication with suppliers and customers • Enhanced competitive position\ • Business expansion is facilitated due to its scalable architecture • Increased sales and profits

9. ERP Implementation Approach • Big bang – install a single ERP system across the entire organization. • Big bang is risky and it involves exhaustive mobilization of enterprise resources. • Of course, if meticulously planned, the benefits of ERP can be quickly realized by the enterprise. • Slam dunk – ERP dictates the process design in this method, where the focus is on just a few key processes, such as those contained in an ERP system's financial module. • For smaller companies expecting to grow into ERP, the slam dunk approach of implementation is generally adopted. • The goal here is to get ERP up and running quickly and to ditch the fancy reengineering in favor of the ERP system's "canned" processes. 

10. ERP Challenges • Limitations of ERP technical capabilities • Lack of senior management commitment • Inconsistency with existing business processes – failure to redesign business process • Costs - implementation (hardware, software, training, consulting) and maintenance • Impact on organizational structure (front office vs. back office, product lines, etc.) • Misunderstanding of change requirements • Conflicts between user departments • Changes in employee responsibilities • Flexibility of software system upgrades • Implementation timelines – rarely the project timeline has been met in reality. In most cases, there is time and cost overrun. • Availability of internal technical knowledge and resources. Good human resources in IT industry are normally poached by companies offering better compensations and working environment. • Education and training – insufficient training may affect user’s support • Lack of effective project management methodology, proper implementation strategy and execution • Resistance to change

11. ERP Architecture

12. Supply Chain Management (SCM) • SCM provide information to help suppliers, purchasing firms, distributors, and logistics companies share information about orders, production, inventory levels, and delivery of products and services so that they can source, produce, and deliver goods and services efficiently. • SCM helps organizations achieve great efficiencies by automating parts of these processes or by helping organizations rethink and streamline these processes • SCM systems are network of businesses linked together to provide materials and services to an end user. • The major objective of such systems is to coordinate functions and strategies, throughout a company, and across businesses, to improve the performance of all business stakeholders. • Supply chain management systems link several different branches of an organization, each of these systems in these branches are likely to be different.

13. Bullwhip Effect • Bullwhip effect refers to a trend of larger and larger swings in inventory in response to changes in customer demand. • Occurrence of such effect when slight demand variability is magnified as information moves back upstream is known as ‘Bullwhip Effect’. In theory, the bullwhip effect does not occur if all orders exactly meet the demand of each period. • Since the oscillating demand magnification upstream of a supply chain is reminiscent of a cracking whip, it became known as the bullwhip effect

14. Integration • Such challenges are overcome through an integrated process where information is free flowing across procurement, production and distribution

15. SCM – Upstream and Downstream • Supply chain consists of multiple firms, both upstream (i.e., supply) and downstream (i.e., distribution), and the ultimate consumer. • Upstream: It is characterized by the processes occurring before manufacturing of production into a deliverable product or services. • Precisely, it typically involves processes dedicated to getting raw materials from suppliers. • Downstream: It is characterized by the processes which occur after manufacturing or production. • It envisages those processes dedicated to providing goods and services to direct customers and consumers or through wholesalers, retailers.

16. Push Pull Model of SCM • Although having origin in logistics and supply chain management, Push Pull model of supply chain also found wide application in marketing space.  The extensive practice of push vs. pull strategy has been observed in Wal-Mart. • Push Pull system can be described in terms of markets where consumers usually "pull" the goods or information they demand for their needs, whereas the offerers or suppliers "push" their products toward the consumers. • In market both “pull” and “push” strategies are required but definitely there is a time and strategic situation for their execution. • In logistics chains or supply chains the stages are operating normally both in push-manner and pull-manner.  • Thus the basis of “push” production is on forecasting of demand and pull production is based on actual or consumed demand. • The interface between these stages is called the push–pull boundary order coupling point or sometimes known as the push–pull boundary (Harrison et al. 2003). 

17. External and Internal SCM

18. Benefits of SCM • Decide when and what to produce, store, and move • Rapidly communicate orders • Track the status of orders • Check inventory availability and monitor inventory levels • Reduce inventory, transportation, and warehousing costs • Track shipments • Plan production based on actual customer demand • Rapidly communicate changes in product design

19. Transaction Management Foundation • From an enterprise’s perspective, all processes within its supply chain can be categorized into three main areas: processes focused downstream, processes focused internally and processes focused upstream. We use this classification to define three macro supply chain processes as follows: • Customer relationship management (CRM): processes that focus on downstream interaction between the enterprise and its customers • Internal supply chain management (ISCM): processes that focus on internal operations within the enterprise. Note that the software industries commonly call this ‘SCM’ without the word ‘Internal’. • Suppliers Relationship Management (SRM): processes that focus on upstream interactions between the enterprise and its suppliers

20. Transaction Management Foundation • Apart from these, there is a fourth important building block that provides the foundation on which the macro processes rest. This category is called Transaction Management Foundation and this includes basic ERP systems (and its components such as financials and HR), infrastructure software and integration software

21. SCM and eSCM SCM flow and functions • Product flow, • Information flow • Financial flow. • SCM involves counter checks of materials, information and finances as they move in a process from supplier to manufacturer to wholesaler to retailer to consumer. It involves coordinating and integrating these flows both within and among companies. e-SCM flow, functions and benefits • e-SCM chain consists of the following players — manufacturer, logistics companies, distributors, suppliers, retailers and customers. eSCM concentrates on the coordination between the various players in the chain. Coordination is very essential for the success of the organization. e-SCM focuses on reducing the inventory cost. • Extranet, Intranet, Internet are used in e-supply chain. Extranet helps to connect the participating companies. It may be the supplier or the customer. A customer can check the order status. Likewise, a supplier can collect data about inventory to know about the replenishment of the inventory.

22. Supply Chain Operations Reference Model(SCOR) • To evaluate the performance of supply chain, the model commonly accepted in Supply-chain operations reference-model (SCOR). • It is a process reference model used for performance evaluation of supply chain management. • SCOR is based on six distinct management processes: Plan, Source, Make, Deliver, Return, and Enable. • Plan – Processes that balance aggregate demand and supply to develop a course of action which best meets sourcing, production, and delivery requirements. • Source – Processes that procure goods and services to meet planned or actual demand. • Make – Processes that transform product to a finished state to meet planned or actual demand. • Deliver– Processes that provide finished goods and services to meet planned or actual demand, typically including order management, transportation management, and distribution management. • Return – Processes associated with returning or receiving returned products for any reason. These processes extend into post-delivery customer support.

23. SAP R/3 Architectural Diagram

24. SAP Architectural EvolutionSAP R/3 4.6 to SAP ERP 6.0

25. Phases of SAP Implementation • Project Preparation • Define project goals and objectives • Clarify the scope of implementation • Define project schedule, budget plan, and implementation sequence • Establish the project organization and relevant committees and assign resources b) Business Blueprint • In this phase create a blueprint using the question and answer database, which documents the enterprise’s requirements and establishes how your business processes and organizational structure are to be represented in the SAP System. • Also refine the original project goals and objectives and revise the overall project schedule in this phase. • Activities in this phase is almost in line with the activities taken up during ‘as is’ and ‘to-be’ process study in BPR.

26. Phases of SAP Implementation c) Realization • In this phase, configure the requirements contained in the Business Blueprint. Baseline configuration (major scope) is followed by final configuration (remaining scope), which can consist of up to four cycles. Other key focal areas of this phase are conducting integration tests and drawing up end user documentation. d) Final Preparation • In this phase complete the preparations for go live, including testing, end user training, system management, and cutover activities. Also resolve all open issues in this phase. At this stage it is necessary to ensure that all the prerequisites for the system to go live have been fulfilled. e) Go Live & Support • In this phase move from a pre-production environment to the live system. The most important elements include setting up production support, monitoring system transactions, and optimizing overall system performance. After SAP system has gone live, you can chart a separate roadmap with work packages, in order to optimize SAP System continuously. .

27. SAP HANA and SAP FIORI • SAP HANA is an in-memory column-oriented, relational database management system developed and marketed by SAP. It is called ‘in-memory’ because it primarily relies on main memory for computer data storage eliminating the time of retrieving from the external storage. • The architecture of SAP HANA has been designed and developed in such a way as to tackle both high transaction rates and complex query processing on the same platform. • SAP HANA was previously called SAP High-Performance ANalyticAppliance (HANA). • SAP HANA originates from developed or acquired technologies, including TREX search engine - an in-memory column-oriented search engine, P*TIME - an in-memory OLTP database acquired by SAP in 2005 and MaxDB with its in-memory liveCache engine. .

28. SAP HANA and SAP FIORI • SAP Fiori is a SAP Fiori 2.0 is the latest evolution of the user experience for SAP S/4HANA. It is platform that provides the porting of applications on mobile devices in other words SAP Fiori is a series of app suites, being introduced in waves. • The apps in these waves are written by SAP app developers. • SAP Fiori enables applications to be used on desktop computers, tablets and smartphones. SAP Fiori supports HTML5. • The initial release had few applications to start and gradually increased to complete the SAP Business Suite. As of 2014 SAP Fiori is free-to-license for some customers. • SAP Fiori having Apps types namely - Transaction, Analytical and Fact is available for iOS, Android and Windows mobile platforms. • SAP Fiori cloud enhances employee productivity as it provides a simple and personalized user experience consumed in the cloud with connectivity to on premise business processes thereby easing the burden on IT with minimal installation and configuration effort. .

29. Customer Relationship Management • CRM has its roots in relationship marketing. Relationship marketing is a philosophy and orientation towards customer retention and CRM is regarded as the practical implementation of Relationship Marketing (Christopher et al., 1991). • Precisely, it is a result of marriage between Relationship Marketing and Information Technology. • There are conceptual foundations of CRM emerged out of research and analytical studies. One of the most accepted definitions of CRM is: • A comprehensive strategy and process of acquiring, retaining and partnering with selective customers to create superior value for the company and customer (Sheth & Parvatiyar, 1998).

30. Customer Relationship Management - Categories CRM Categories provides technologies for facilitating • Collaborative CRM • Operational CRM • Analytical CRM These activities are the visible limbs of CRM (Goodhue et al., 2002). Apart from these, • Geographical CRM has also found immense importance for viewing these three CRMs from geographical dimensions • Now, we have entered into the era of mobile CRM or mCRM .

31. Customer Relationship Management Operational CRM • Operational CRM - Managing Campaigns , Enterprise Marketing Automation , Sales Force Automation, example: .

32. Customer Relationship Management Analytical CRM Analytical CRM • Analytical CRM analyzes customer data for a variety of purposes (Figure 11.15) and makes heavy use of data mining. Following are the functions of analytical CRM: • Marketing campaigns to optimize marketing effectiveness • Customer campaigns, including customer acquisition, cross-selling, up-selling, retention • Analysis of customer behavior to aid product and service decision making (e.g. pricing, new product development etc.) .

33. Customer Relationship ManagementCollaborative CRM Collaborative CRM • The function of the Customer Interaction System or Collaborative Customer Relationship Management is to coordinate the multi-channel service and support given to the customer by providing the infrastructure for responsive and effective support to customer issues, questions, complaints, etc. • Collaborative CRM aims to get various departments within a business, such as sales, technical support and marketing, to share the useful information that they collect from interactions with customers.

34. Customer Relationship ManagementGeographic CRM Geographic CRM • Geographic CRM (gCRM) is a customer relationship management information system which collaborates geographic information system and traditional CRM. • gCRM combines data collected from route of movement, types of residence, ambient trading areas and other customer and marketing information which are matched with relevant road conditions, building formations, and a floating population. • Such data are conformed with a map and is regionally analyzed with OLAP (On-Line Analytical Processing) for visualization • Heat mapping, from a geographic perspective, is a method of showing the geographic clustering of a phenomenon • Heat mapping is a way of geographically visualizing locations so that patterns of higher than average occurrence of things like crime activity, traffic accidents, or store locations can emerge. From marketing perspective, those can be locations where actual sales exceed the target. Thus, data input in the GIS system generates the heat maps as per the requirements of users.

35. Customer Relationship ManagementGeographic CRM & mCRM Geographic CRM • Example of a Heat Map Mobile CRM (mCRM) • mCRM can be considered: "communication, either one-way or interactive, which is related to sales, marketing and customer service activities conducted through mobile medium for the purpose of building and maintaining customer relationships between a company and its customer(s). • mCRM allows customers to access company services from more and more places, since the Internet access points are increasing everyday.

36. Questions • What is Enterprise resource planning? What are the functional components of ERP? Discuss the benefits of ERP. • What is Bullwhip effect? Discuss with an example •  What is Supply Chain Management? What do you understand by the terms ‘Upstream and Downstream Supply Chain Management’? •  As an IT advisor of an insurance company, what category of technology would you suggest for preparation of the insurance company’s claims analysis with respect to private cars? Discuss briefly the architecture of SAP R/3. What is the importance of ABAP in the architecture? •  List the 6 industry solutions of SAP • What is your understanding about performance measurement of Supply Chain Management? • Discuss the components of Internal Supply Chain Management Process with reference to a specific industry? What are the features of SAP HANA? What are the parameters based on which SAP Fiori is acclaimed as superior to SAP GUI? .

37. Enterprise Resource Planning End of Chapter 11 Thank you