graduate program in business information systems bis 581 business process management lectures 9-10...
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Graduate Program in Business Information Systems
BIS 581 Business Process Management
Lectures 9-10
Aslı Sencer
Department of Management Information Systems
Business Process Management – 9-10
Integration with ERP Systems
Outline
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• Types of Enterprises Systems• Types of Data in ES• SAP Overview• Procurement Process• Key Concepts and Assumptions• Conceptual Framework
– Physical Flow– Document and Data Flow– Information Flow– Financial Impact
Enterprise Systems
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• Three stages of evolution– Stage 1: Stand-alone Mainframe Systems– Stage 2: Client-Server Architecture– Stage 3: Service-Oriented Architecture (SOA)
The New Stack – Process Is the Next Platform
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Client
Mainframe Client Server SOA
Application
Data Management
Composites
OS and Database OS
DB
Custom
Application
Punch Card or Terminal
(10’s of users)
Application
OS
PC or Internet
(1000’s of users)
Application
OS
Application
OS
Any Device
(Millions of users)
OSOS
DB
OS
DB
OS
DBOS
DB
OS
DB
OS
DB OSOS
DB
OS
DB
OS
DB
OS
Composites
OSOS
Applications
OS
OSOS
OS
Applications
OS
3-tier Client Architecture
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ApplicationServer
ClientClient
Client
Client
Client
Client
ClientClient
Client
ApplicationServer
ClientClient
Client
Client
Client
Client
ClientClient
Client
ApplicationServer
ClientClient
Client
Client
Client
Client
ClientClient
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Database Server
Types of Enterprise Systems
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• The ES Application Suite– Enterprise Resource Planning (ERP)– Supply Chain Management (SCM)– Supplier Relationship Management (SRM)– Product Lifecycle Management (PLM)
• Other classifications– Best of breed vs. Niche applications– Software as a service (SaaS)
ERP Systems
• Evolved in 1990’s in parallel to advances in BPR and globalization.
• ERP’s are the world’s largest and most complex ES’s.• Focus on internal operations of an organization, integrate
functional and cross functional (intracompany) business processes.
• Typical ERP systems include– Operations (production)– Human resources– Finance and Accounting– Sales and Distribution– Procurement
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Management of intercompany processes: SCM and SRM
• SCM connects the companies that supply the materials it needs to make its products.
• SCM help companies plan for their production demand requirements and optimize complex transportation and logistics for materials.
• SRM systems manage the overal relationships with the material suppliers.
• SRM systems contain functonality to manage the quotation and contracts processes.
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CRM and PLM
• CRM systems connect a company’s ERP system to those of its customers.
• CRM systems provide companies with capabilities to manage marketing, sales and service for its customers.
• PLM systems help companies administer the process of research, design and product management.
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The application suite
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Example: SAP, Oracle
SAP ERP Solution Map
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Sh
are
d S
erv
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eliv
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SA
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etW
eaver
End-User Service Delivery
Analytics Financial Analytics Operations Analytics Workforce Analytics
FinancialsFinancial Supply Chain Management
TreasuryFinancial Accounting
Management Accounting
Corporate Governance
Human Capital Management
Talent ManagementWorkforce Process Management
Workforce Deployment
Procurement and Logistics Execution
ProcurementInventory and Warehouse Management
Inbound and Outbound Logistics
Transportation Management
Product Development and Manufacturing
Production PlanningManufacturing Execution
Product DevelopmentLife-Cycle Data Management
Sales and Service Sales Order Management Aftermarket Sales and Service Professional-Service Delivery
Corporate ServicesReal Estate Management
Enterprise Asset Management
Project and Portfolio Management
Travel Management
Environment, Health, and Safety Compliance Mgmt.
Quality Management
Global Trade Services
Copyright SAP AG 2008
SAP Supply Chain Management
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SA
P N
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Demand & Supply Planning
Demand Planning & Forecasting
Safety Stock Planning
Supply Network Planning
Distribution Planning
Service Parts Planning
Procurement Strategic Sourcing Purchase Order Processing Invoicing
ManufacturingProduction Planning & Detailed Scheduling
Manufacturing Visibility & Execution & Collaboration
MRP based Detailed Scheduling
Warehousing
Inbound Processing & Receipt Confirmation
Outbound Processing
Cross DockingWarehousing & Storage
Physical Inventory
Order Fulfillment Sales Order Processing Billing Service Parts Order Fulfillment
TransportationFreight Management
Planning & Dispatching
Rating & Billing & Settlement
Driver & Asset Management
Network Collaboration
Real World Awareness
Supply Chain Event Management Auto ID / RFID and Sensor Integration
Supply Chain Visibility
Strategic Supply Chain Design
Supply Chain AnalyticsSupply Chain Risk Management
Sales & Operations Planning
Supply Network Collaboration
Supplier Collaboration Customer Collaboration Outsourced Manufacturing
Supply Chain Management with Duet
Demand Planning in MS Excel
Copyright SAP AG 2008
SAP Supplier Relationship Management
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SA
P N
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Purchasing Governance
Global Spend Analysis Category Management Compliance Management
Sourcing Central Sourcing Hub RFx / Auctioning Bid Evaluation & Awarding
Contract Management
Legal Contract Repository
Contract AuthoringContract Negotiation
Contract ExecutionContract Monitoring
Collaborative Procurement
Self-Service Procurement
Services ProcurementDirect / Plan-Driven Procurement
Catalog Content Management
Supplier Collaboration
Web-based Supplier Interaction Direct Document Exchange Supplier Network
Supply Base Management
Supplier Identification & Onboarding
Supplier Development & Performance Management
Supplier Portfolio Management
Copyright SAP AG 2008
SAP Product Lifecycle Management
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SA
P N
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Product Management
Product Strategy and Planning
Product Portfolio Management
Innovation Management
Requirements Management
Market Launch Management
Product Development and Collaboration
Engineering, R&D Collaboration
Supplier Collaboration
Manufacturing Collaboration
Service and Maintenance Collaboration
Product Quality Management
Product Change Management
Product Data Management
Product Master and Structure Management
Specification and Recipe Management
Service and Maintenance Structure Management
Visualization and Publications
Configuration Management
PLM FoundationProduct Compliance
Product Intelligence
Product CostingTool and Workgroup Integration
Project and Resource Management
Document Management
Copyright SAP AG 2008
SAP Customer Relationship Management
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Web
Ch
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Partn
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Trad
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otio
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Man
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Bu
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MarketingMarketing Resource Management
Segmentation & List Management
Campaign Management
Real-Time Offer Management
Lead Management
Sales
Sales Planning & Forecasting
Sales Performance Management
Territory Management
Accounts & Contacts
Opportunity Management
Quotation & Order Management
Pricing & Contracts
Incentive & Commission Management
Time & Travel
Service
Service Order Management
Service Contract Management
Complaints & Returns
In-House Repair
Case Management
Installed Base Management
Warranty Management
Resource Planning
Copyright SAP AG 2008
Other classifications of ERP systems
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Today’s global comanies typically have an ES lanscape that includes custom and packaged applications from several vendors • Best of Breed Applications: Isolated to one process or part of a process that
evolves from departmental applicationsEx: i2 is a popular SCM system. Ariba is a popular procurement system.
• Niche applications: Small and independent software vendors offer highly specialized niche app’s.Ex: Vendova is a small ISV that produces a pricing management tool to assist retailers in maximizing profit for retail sales. It pulls product and price info from several ES’s.
• Other classifications:– Size of enterprise: SAP and Oracle for companies with more than 1000 employees– Method of delivery: Install the hardware and software in the facility (three-tier or
SOA configurations) versus salesforce.com and Netsuite deliver ES entirely from web.
Types of Data in ES
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• Organizational Data• Master Data• Transaction Data
Organizational Data
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• Define the organizational structure of the enterprise• Includes definitions of:
– Companies (subsidiaries, etc.)– Divisions based on, product or geographical hierarchy– Sales organizations– Purchasing organizations– Physical facilities: plants, warehouses, distribution centers– HR organization: Functional areas, reporting relationships
• Data rarely changes
Master Data
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• Define key entities in an organization• Customers
– Basic information: name, address, contact information– Financial information: payment terms, methods– Sales information: delivery terms
• Vendors / suppliers– Similar information as customer
• Products– Basic data: description, weight, color– Purchasing data– Sales data– Manufacturing data
Master Data
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• Employees– Basic data– Personal data: dependents– Payroll data– Tax data
• Data changes occasionally
Transaction Data
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• Data that is the consequence of day-to-day transaction– Who, what, when, where, how, how much
• Sales– Customer, products, quantities, dates and times, location
(shipping, delivery), sales person• Purchase
– Vendor, products, quantities, dates and times, location (delivery), sales person, requester
• Production– Materials, quantities, facilities, resources (machine, people),
dates and times, locations (storage, production)
Super Skateboard Builders, Inc.
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• History• Product Line• Customers• Vendors• Plant Layout• Employees• Information Systems
SSB, Inc. - Product List
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PRODUCT NUMBER PRODUCT DESCRIPTION
STANDARD PRICE(MANUFACTURING OR
PURCHASE COST)WHOLESALE
PRICE MSRP
DXSB1000 DELUXE SKATEBOARD $58.00 $96.00 $160.00
STSB2000 STANDARD SKATEBOARD $40.00 $66.00 $110.00
ENSB3000 ENTRY-LEVEL SKATEBOARD $34.00 $45.00 $75.00
HLMT5000 HELMET $20.00 $27.00 $45.00
SHRT4000 T-SHIRT $7.00 $10.00 $16.00
FAID6000 SKATEBOARD FIRST AID KIT $10.00 $16.00 $27.00
SSB, Inc. - Customer List
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CUSTOMERNUMBER NAME ADDRESS CITY STATE ZIP
1 WORLD WIDE SKATEBOARD DISTRIBUTORS 1229 MAIN STREET ANN ARBOR MI 48109
2 EXTREME SKATEBOARD SPORTS, INC. 5000 RENSELLEAR AVE DETROIT MI 48202
3 "WALDO" AUTRY 3012 HASLETT ROAD LANSING MI 48906
4 SPORTING GOODS, INC. 6903 28TH STREET GRAND RAPIDS MI 49508
5 FLYING ACROBATS, INC. 274 ADAMS STREET HOLLAND MI 49423
6 MI SPORTING COMPANY 3000 ALPINE AVE GRAND RAPIDS MI 49544
7 DAWGS 4005 STATE STREET SE SAGINAW MI 48710
SSB, Inc. - Vendor List
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VENDORNUMBER VENDOR NAME CITY STATE ZIP MATERIALS SUPPLIED
100000 NUTCASE SUPPLIES GRAND RAPIDS MI 49525 NUTS, BOLTS
100001 SKATELUBBERS, INC. GRAND RAPIDS MI 49525 FIRST AID KIT, T-SHIRT, HELMET
100002 GRAND SKATEBOARD SUPPLIES GRAND RAPIDS MI 49525
TRUCKS, RISER PADS, GRIP TAPE, DECKS, ENTRY LEVEL SKATEBOARD, FIRST AID KIT
100003 BLACK WIDOW SKATEBOARDS, INC. HOLLAND MI 49424 ENTRY LEVEL SKATEBOARD,
FIRST AID KIT, T-SHIRT, HELMET
100004 SPOTTED OWL LUMBER CASCADE MI 49546 MAPLE PLY, ENTRY LEVEL SKATEBOARD
100005 VAN GO PAINT SUPPLIES KENTWOOD MI 49508 SEALERS, PAINTS
100006 THE DUTCH MONSTER GRAND RAPIDS MI 49504 BOXES, LABELS, GLUE
100007 WHITEWATER DEVELOPMENT COMPANY JONESBORO AR 72401 BUILDING SPACE
SSB, Inc. - Plant Layout
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SSB, Inc. - Organizational Chart
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John Z. Boeve (President)
Maria Rivera (Office Manager)
Catherine VanderBos (Plant Manager)
Charles Skivers (Shop Floor)
Mark McKendry (Shop Floor)
Patrick Stevens (Sales Manager)
Shana Smith (Accountant)
David Bloomberg (Warehouse Manager)
Tom Jones (Warehouse)
Martha Seward (Purchasing Manager)
SAP Overview
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Copyright SAP AG 2008
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Physical Flow
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• What is the trigger?• What are the steps? • What is the purpose of each step?• Who is involved in each step?• How is communication and coordination
accomplished
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Procurement Process: Physical Flow
Document flow
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• Purchase Requisition• Purchase Order• Packing List• Goods Receipt Document• Vendor Invoice and Payment• Key questions regarding documents
– What is the purpose?– What are the key data?
• General: Who, when, what, where• Process / step specific: varies
– How does data change across the process?– Who is responsible for the data?
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Purchase Requisition
Filled later by the purchasing department, based on the purchase order form.
Purchase Order
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Free-on-board (F.O.B ) point is the point at which ownership of the shipped material legally transfers from one company to the other. F.O.B. Point is either the shipping point or the destination.
Payment Terms define how the company will pay the vendor.Net nn: nn specifies the number of days within which payment for the full amount of the invoice is due.x% mm/Net nn: x% discount is made if the payment is made within mm days; otherwise, full payment should be made within nn days.
Materials may be shipped via ground shipment (trucs, etc.), air, train, sea.
Packing List
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When the vendor sends the shipment, a packing list or delivery document will accompany it, showing the details about the materials in the shipment.It does not include pricing information.
A Goods Receipt Document
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A Vendor Invoice
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Once the shipment is sent, the vendor will send an invoice, or bill for the material shipped to the accounting department for payment. Three-way match: The corresponding purchase order document, goods receipt document and invoice are matched.If the match is OK, the payment is made by check or Electronic funds transfer (EFT)
Note of the Accounting Manager after the payment is made:Paid in fullCheck # 258468/1/08
Information Flow
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• Instance-Level Information– Status of a purchase requisition / order– Has a requisition been acted on? Has a PO been created and sent– Have goods been received for the requisition / order? When? Where are
the goods?– If received, has an invoice been received? Paid?– If not received, when can we expect the goods?Ex: David wants to know the state of the purchase requisition he sent to Martha
• Process-Level Information – How well is the process doing?– How much time does it take on average? Per material? Per vendor?– Which vendors are prompt? Who habitually delivers late?– What do we buy most often? From with vendor(s)?
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Financial Impact
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• Impact on balance sheet and income statement accounts
• Example: Procure $500 in materials.Process step B/S I/S
Purchase requisition
Purchase order
Goods receipt
Vendor Invoice receiptVendor payment
Role of enterprise systems in the procurement process
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• Execute the Process– Create Purchase Requisition– Create Purchase Order– Receive Shipment– Receive Invoice and Send Payment
• Capture and Store Process Data• Monitor the Process
– Instance-Level Information Flow– Process-Level Information Flow
Enterprise systems in Procurement
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Purchase Requisition in SAP
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Purchase Order in SAP
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Goods Receipt in SAP
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Invoice Receipt in SAP
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Vendor Payment in SAP – Initial Screen
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Vendor Payment in SAP – Processing
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Process monitoring (Information flow)
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• Instance level – status information– Status of a purchase requisition / order (PO
history)• Process level – aggregate information
– How is the process doing?
Purchase Requisition History
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Purchase Order History
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Process-Level Information
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Exercise Using Simulated SAP
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• The exercises will require you to complete the steps in the procurement process that have been discussed in this chapter. In particular you will:– Create a purchase requisition for a number of trading
goods– Convert the requisition to a purchase order– Enter a goods receipt into the system– Enter a vendor invoice into the system– Record a payment to the vendor