Enterprise Resource Planning
ERPs are the systems and software packages used by
organizations to manage day‐to‐day business activities, such as
accounting, procurement, project management and
manufacturing.
ERP systems tie together and define a plethora of business
processes and enable the flow of data between them.
By collecting an organization’s shared transactional data from
multiple sources, ERP systems eliminate data duplication and
provide data integrity with a “single source of truth.”
Information that was previously fragmented in many different
systems is stored in a single comprehensive data repository
where it can be used by many different parts of the business.
Today, ERP systems are critical for managing thousands of
businesses of all sizes and in all industries. To these
companies, ERP is as indispensable as the electricity that
keeps the lights on.
Enterprise Resource Planning
ERP systems are designed around a common, defined data
structure (schema) that usually has a common database. ERP
systems provide access to enterprise data from multiple
activities using common constructs and definitions and
common user experiences.
A key ERP principle is the central collection of data for wide
distribution.
Instead of several standalone databases with an endless
inventory of disconnected spreadsheets, ERP systems bring
order to the chaos so that all users—from the CEO to accounts
payable clerks—create, store, and use the same data derived
through common processes. With a secure and centralized
data repository, everyone in the organization can be confident
that data is correct, up to date, and complete. Data integrity is
assured for every task performed throughout the organization,
from a quarterly financial statement to a single outstanding
receivables report, without deploying error‐prone
spreadsheets.
Enterprise Resource Planning
The Business Value of ERP
It’s impossible to ignore the impact of ERP in today’s business
world. As enterprise data and processes are corralled into ERP
systems, businesses are able to align separate departments
and improve workflow, resulting in significant bottom‐line
savings. Examples of specific business benefits include:
• Improved business insight From real‐time information generated by
reports
• Lower operational costs Through defined and more streamlined
business processes
• Enhanced collaboration From users sharing data in contracts,
requisitions, and purchase orders
• Improved efficiency Through a common user experience across
many business functions and managed business processes
• Reduced risk Through improved data integrity and financial controls
Enterprise Resource Planning
• Integration.
ERP systems are configured by installing various modules, such
as: Manufacturing, Accounting, Human resources, Sales
• Packages.
ERP systems are usually commercial packages purchased from
software vendors. Unlike many packages, ERP systems usually
require longterm relationships with software vendors because
the complex systems must typically be modified on a
continuing basis to meet the organization’s needs.
Enterprise Resource Planning
• Best practices.
ERP systems reflect industry best practices for generic
business processes. To implement them, businesses often
have to change their processes
• Some assembly required.
The ERP system is software that needs to be integrated with
the organization’s hardware, operating systems, databases,
and network.
• Evolving.
ERP systems were designed first for mainframe systems then
client‐server architectures and now for Web‐enabled or cloud‐
based delivery.
https://www.youtube.com/watch?v=lYCEQqSM08I
https://videos.cdn.sap.com/vod/2017/katerra‐sap‐s4hana‐
sap‐bw4hana.mp4
Systems for linking the enterprise
Customer relationship management (CRM)
Customer relationship management (CRM) is a term that
refers to practices, strategies and technologies that companies
use to manage and analyze customer interactions and data
throughout the customer lifecycle, with the goal of improving
business relationships with customers, assisting in customer
retention and driving sales growth.
CRM systems are designed to compile information on
customers across different channels ‐‐ or points of contact
between the customer and the company ‐‐ which could
include the company's website, telephone, live chat, direct
mail, marketing materials and social media.
CRM systems can also give customer‐facing staff detailed
information on customers' personal information, purchase
history, buying preferences and concerns.
Customer relationship management (CRM)
CRM software consolidates customer information and
documents into a single CRM database so business users can
more easily access and manage it.
The other main functions of this software include recording
various customer interactions (over email, phone calls, social
media or other channels, depending on system capabilities),
automating various workflow processes such as tasks,
calendars and alerts, and giving managers the ability to track
performance and productivity based on information logged
within the system.
Customer relationship management (CRM)
“the customer is always right”
“the customer comes first.”
What kinds of information would you need to build a strong,
long‐lasting relationships with customers?
You’d want to know exactly who your customers are, how to
contact them, whether they are costly to service and sell to,
what kinds of products and services they are interested in, and
how much money they spend on your company. If you could,
you’d want to make sure you knew each of your customers
well, as if you were running a small‐town store. And you’d
want to make your good customers feel special.
Customer relationship management (CRM)
A large business’s processes for sales, service, and marketing
tend to be highly compartmentalized, and these departments
do not share much essential customer information.
Some information on a specific customer might be stored and
organized in terms of that person’s account with the company.
Other pieces of information about the same customer might
be organized by products that were purchased.
There is no way to consolidate all of this information to
provide a unified view of a customer across the company.
This is where customer relationship management systems
help.
https://youtu.be/hnEQq7kNFWo
Systems for linking the enterprise
Customer relationship management (CRM)
Common features of CRM software include:
Marketing automation: CRM tools with marketing automation
capabilities can automate repetitive tasks to enhance
marketing efforts to customers at different points in the
lifecycle.
Sales force automation: Also known as sales force
management, sales force automation is meant to prevent
duplicate efforts between a salesperson and a customer.
Contact center automation: Designed to reduce tedious
aspects of a contact center agent's job, contact center
automation might include pre‐recorded audio that assists in
customer problem‐solving and information dissemination.
Geolocation technology, or location‐based services: Some
CRM systems include technology that can create geographic
marketing campaigns based on customers' physical locations,
sometimes integrating with popular location‐based GPS apps.
Customer relationship management (CRM)
Customer relationship management (CRM)
Customer relationship management (CRM)
Customer relationship management (CRM)
Operational and Analytical CRM
Supply chain management (SCM)
What is supply chain?
The network of external suppliers, internal processes, and
external distributors, and the links connecting them, that
deliver a finished product or service to the customer.
A supply chain is the system of organizations, people,
activities, information and resources involved in moving a
product or service from supplier to customer. Supply chain
activities transform raw materials and components into a
finished product that is delivered to the end customer
Supply chain management (SCM)
Supplier Manufacturer Distributor Retailer Customers
Supply chain management (SCM)
Basic Supply Chain
Supply chain management (SCM)
Supply Chain Management is
the design and management of processes
across organizational boundaries
with the goal of matching supply and demand
in the most cost effective way.
Supply Demand
Mission impossible: Matching Supply and Demand
Supply Chain Management Systems (SCM)
They manage the integrated supply chain.
Business processes are not just internal to a company.
With the help of information technologies, many processes
are linked across companies with a companion process at a
customer or supplier, creating an integrated supply chain.
Technology, especially Web‐based technology, allows the
supply chains of a company’s customers and suppliers to be
linked through a single network that optimizes costs and
opportunities for all companies in the supply chain.
By sharing information across the network, guesswork about
order quantities for raw materials and products can be
reduced, and suppliers can make sure they have enough on
hand if demand for their products unexpectedly rises.
Supply chain management (SCM)
A firm’s supply chain is a network of organizations and
business processes for procuring raw materials, transforming
these materials into intermediate and finished products, and
distributing the finished products to customers. It links
suppliers, manufacturing plants, distribution centers, retail
outlets, and customers to supply goods and services from
source through consumption. Materials, information, and
payments flow through the supply chain in both directions
Supply chain management (SCM)
Example: NIKE supply chain
Nike designs, markets, and sells sneakers, socks, athletic
clothing, and accessories throughout the world.
Its primary suppliers are contract manufacturers with factories
in China, Thailand, Indonesia, Brazil, and other countries.
These companies fashion Nike’s finished products.
Nike’s contract suppliers do not manufacture sneakers from
scratch.
They obtain components for the sneakers—the laces, eyelets,
uppers, and soles— from other suppliers and then assemble
them into finished sneakers.
Supply chain management (SCM)
Supply chain management (SCM)
Information Flow in Supply Chains
Supply chain management (SCM)
Inefficiencies in the supply chain, such as parts shortages,
underutilized plant capacity, excessive finished goods
inventory, or high transportation costs, are caused by
inaccurate or untimely information.
If a manufacturer had perfect information about exactly how
many units of product customers wanted, when they wanted
them, and when they could be produced, it would be possible
to implement a highly efficient just‐in‐time strategy.
Supply chain management (SCM)
In the mid-1990s, the Swedish car manufacturer
Volvo found itself with excessive stocks of green
cars. To move them along, the sales and marketing
departments began offering attractive special deals, so
green cars started to sell. But nobody had told the
manufacturing department about the promotions. It
noted the increase in sales, read it as a sign that
consumers had started to like green, and ramped up
production.
Source: Chain reaction, The Economist, Jan 31, 2002
Supply chain management (SCM)
In a supply chain, however, uncertainties arise because many
events cannot be foreseen—uncertain product demand, late
shipments from suppliers, defective parts or raw materials, or
production process breakdowns.
To satisfy customers, manufacturers often deal with such
uncertainties and unforeseen events by keeping more material
or products in inventory than what they think they may
actually need. The safety stock acts as a buffer for the lack of
flexibility in the supply chain. Although excess inventory is
expensive, low fill rates are also costly because business may
be lost from canceled orders.
Supply chain management (SCM)
One recurring problem in supply chain management is the
bullwhip effect, in which information about the demand for a
product gets distorted as it passes from one entity to the next
across the supply chain. A slight rise in demand for an item
might cause different members in the supply to stockpile
inventory so each has enough “just in case.”
Supply chain management (SCM)
• Supply chain partners can benefit by sharing information on
sales, demand forecasts, inventory levels & marketing
campaigns
• Inaccurate or distorted information leads to the Bullwhip Effect
• If information isn’t shared, everyone has to guess what is going
on downstream.
• Guessing wrong leads to too much or too little inventory:
• If too much, firms hold off buying more until inventories fall
(leading suppliers to think demand has fallen).
• If too little, firms demand a rush order & order more than
usual to avoid being caught short in the future (leading
suppliers to think demand has risen).
Supply chain management (SCM)
Supply chain management (SCM)
Example of the bullwhip effect
the actual demand for a product and its materials start at the customer,
however often the actual demand for a product gets distorted going down the
supply chain.
Let’s say that an actual demand from a customer is 8 units, the retailer may
then order 10 units from the distributor; an extra 2 units are to ensure they don’t
run out of floor stock.
The supplier then orders 20 units from
the manufacturer; allowing them to buy
in bulk so they have enough stock to
guarantee timely shipment of goods to
the retailer. The manufacturer then
receives the order and then orders from
their supplier in bulk; ordering 40 units
to ensure economy of scale in
production to meet demand.
Now 40 units have been produced for a
demand of only 8 units; meaning the
retailer will have to increase demand by
dropping prices or finding more
customers by marketing and
advertising
Supply chain management (SCM)
Supply chain management systems provide the kind of
information that helps members of the supply chain make
better purchasing and scheduling decisions.
Supply chain management (SCM)
Earlier supply chain management systems were driven by a
push‐based model (also known as build‐to‐stock). In a push‐
based model, production master schedules are based on
forecasts or best guesses of demand for products, and
products are “pushed” to customers.
With new flows of information made possible by Web‐based
tools, supply chain management more easily follows a pull‐
based model. In a pull‐based model, also known as a demand
driven model or build‐to‐order, actual customer orders or
purchases trigger events in the supply chain.
Transactions to produce and deliver only what customers have
ordered move up the supply chain from retailers to
distributors to manufacturers and eventually to suppliers.
Supply chain management (SCM)
