industry solutions assignment 2

8/6/2019 Industry Solutions Assignment 2

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Texas Southern University

Jesse H. Jones School of Business

Management Information Systems

MIS 678: SAP Applications in SCM

INSTRUCTOR: DR MAYUR DESAI

A REPORT ON THE ANALYSIS OF

SAP SOLUTIONS IN TWO INDUSTRIES

Aerospace/Defense and Public Sector

Prepared By

ABAYOMI ODUTOLA

Fall 2010


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1.0A DESCRIPTION OF THE INDUSTRIESFor this report, these two industries have been chosen to see the impact of the SAP

Enterprise Resource Planning (ERP) system in their respective sectors. There will be similarities

as well as differences in the ERP functions designed for each industry and the major companies

in each industry will be highlighted.

1.1AEROSPACE & DEFENSEIt is also broken down into two sectors described as Aerospace & Defense

Manufacturers (A&D) as well as Maintenance, Repair and Overhaul (MRO) service providers.

The US aerospace products and parts manufacturing industry includes about 1,300 companies

with combined annual revenue of about $170 billion. Major companies include Boeing,

Northrop Grumman, Lockheed Martin, Raytheon, and General Dynamics. The industry is highly

concentrated and the 20 largest companies account for about 90 percent of industry revenue.

Many other companies work primarily as subcontractors to the five largest manufacturers.

The industry is dependent in large part on federal government spending and the

aerospace industry is cyclical by nature and unpredictable, due to uncertainty of the annual

government budgeting. The Demand in the United State is driven by the US military budget and

the overall economic climate, which affects airline traffic and demand for new commercial

aircraft. The profitability of individual companies depends on technical expertise and the ability

to accurately price long-term contracts. Large companies enjoy economies of scale in design,

manufacturing, and purchasing. Small companies can compete effectively by concentrating on

selected components and parts manufacturing for particular prime contractors. Increasingly,

small companies are developing system integration capabilities as large firms outsource more

aspects of contracts.


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US Aerospace & Defense Spending

Source: http://www.aerospacedefenseindustry.com

1.1.1 Primary Demand Drivers

Domestic military budget Domestic economic climate, affecting airline travel and demand for new commercial

traffic

Threat of international warfare Upward mobility in the population, creating demand for air travel

1.1.2 Profitability Drivers

Technical expertise


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Accurately pricing long-term contracts

1.1.3 Major companies in Aerospace & Defense

In the United States, Boeing, the worlds largest aerospace company, is the primary

military aircraft and space shuttle contractor. Boeing is the number two manufacturer of

commercial airplanes, behind Airbus, and second largest collector of defense contracts,

behind Lockheed Martin, in the world. They make two-thirds of their sales in the U.S.

Airbus, which is a division of EADS, the European Aeronautic Defense and Space Company,

is the primary producer of airplanes for countries in the European Union, and also

manufactures products such as satellites or space rockets. In the United Kingdom, BAE

SYSTEMS is the leading defense contractor and is also the largest foreign company in the

U.S. defense market.

Top 7 Companies in Aerospace & Defense Industry 2002)

Company (Ranked by Sales) 2002 Sales (Mil) Estimated of

Employees

#1 The Boeing Company

www.boeing.com

$54,069.00 166000

#2 European Aeronautic Defense

and Space Company EADS N.V.

www.eads-nv.com

$31,339.20 103,967

#3 Lockheed Martin Corporation

www.lockheedmartin.com

$26,578.0 125,000

#4 Airbus S.A.S.

www.airbus.com

$20,333.1 46,000


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#5 Northrop Grumman Corporation

www.northgrum.com

$17,206.0 117,300

#6 Bombardier, Inc.

www.bombardier.com

$15,481.6 70,411

#7 BAE SYSTEMS

www.baesystems.com

$12,953.1 68,100

Source:

http://www.worldtrademag.com/Articles/Feature_Article/f076e14ca8af7010VgnVCM100000

f932a8c0____

1.2Public SectorThe US government services sector consists of about 150,000 federal, state, and local

government entities with combined budgets of nearly $6 trillion that administer and manage a

variety of public (taxpayer supported) programs. The federal government is the largest single

employer in the US, with about 2.8 million employees, including armed services employees. The

largest government agencies by employment are the federal Department of Defense (DOD)

(including all branches of the armed forces), Department of Veterans Affairs (VA), Department

of Homeland Security (DHS), Treasury Department, and Department of Justice (DOJ).

The federal government manages a budget in excess of $3 trillion. State and local government

budgets are much smaller - collectively, expenditures for the over 19,000 US municipalities,

16,500 towns and townships, and 3,000 county governments are approximately $1.5 trillion.The 50 states spend a combined $1.6 trillion.

Other companies considered in the public sector but not included in this report are publicly

owned corporations and companies providing services for the government. My main focus for

this report is Federal, state and local government agencies.


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1.2.1 Demand and Profitability Drivers

With a growing and aging population, critical environmental issues and security threats,

federal and state agencies have to change the way they work. Governments worldwide are

working to become more responsive, efficient, and accountable as they modernize operations

and enhance services. A public agency has to conduct business transparently to gain the trust of

citizens, business partners, employees, and other agencies all while operating in a global

economy.

There is a constant clamor for the reduction in the amount of tax paid to the Government

which will mean less revenue with a growing need to cut cost and be more efficient in their use

of the scarce resources.

1.2.2 Major Agencies in the Public Sector The US Federal Government

1) Department Of Defense2) Department of Homeland Security

FEMA Naval Criminal Investigative Service State Of North Carolina The United Kingdom Department of Works and Pensions. Gobierno De La Republica De Colombia


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2.0 SAP FUNCTIONS IN BOTH INDUSTRIES

Aerospace & Defense

SAP for Aerospace & Defense supports manufacturers in a broad range of critical businessactivities, including:

y Program management With SAP solutions, you can plan, set up, execute, and monitorlarge programs or projects and ensure the fulfillment of contractual obligations such as

agreed-upon costs and schedules.

y Life-cycle data management SAP solutions enables you to manage and maintain theproduct data and master data that designers, work schedulers, and project managers

need for making sound decisions. The solutions provide immediate access to relevant,

up-to-date information for project and program management, document management,

CAD integration, engineering change management, and master data management.

y Contract manufacturing SAP solutions support contract manufacturing that requires acompletely new design for an end product for the customer. You can integrate product

and process design, adhere to extremely rigorous documentation standards, and use

program management methods such as earned value to capture and control costs

accurately.

y Make-to-order manufacturing With SAP solutions, you can manufacture configurableend products driven by customer orders and perform minor engineering during

production of the end product. You can also produce subassemblies and components

based on forecasts of customer demand.

y Operational procurement With SAP solutions, you can automate plan-drivenprocurement of materials used in core business processes by integrating purchasing

with supply chain management. You can also provide self-service functions for

employees to purchase their own materials in compliance with corporate policies. Plus,

you can automate the procurement of services, including consulting and contract labor

[1].


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SAP for Aerospace & Defense supports MRO providers in key business activities, including:

y Asset life-cycle management SAP solutions enable maintenance engineers to managephysical assets and equipment, from the initial investment idea to the end of operation

and replacement of assets. They can manage physical assets, equipment, and

engineering changes over the complete life cycle to optimize equipment performance

and availability.

y Maintenance and service planning With SAP solutions, you can perform midterm tolong-term forecasting and scheduling of major service for aircraft and components, and

you can schedule service areas such as hangar bays. You can also simulate business

alternatives and the resulting effect on service schedules and resources.

y Line maintenance With SAP solutions, you can plan and execute maintenance serviceswhile an aircraft is assigned to the revenue schedule. Our solutions enable you to view

all new, deferred, and cleared work items for an aircraft, which provides a longer time

window for planning and assigning the work items.

y Heavy maintenance SAP solutions enables you to manage maintenance in aircrafthangars, including the majority of scheduled inspections, checking and alignment tasks,

engineering orders, deferred work items, and additional work that arises during the

aircraft's visit. You can plan, package, schedule, and monitor maintenance tasks, and

you can track the real progress of inspection results, production data, and configuration

changes on the shop floor.

y Component maintenance With SAP solutions, you can repair, overhaul, or refurbishcomponents or major assemblies, running component maintenance as a separate line of

business or in support of the airframe maintenance and engine maintenance business

[2].


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Public Sector

The shared services deliver model is the framework for leveraging economies of scale through

standardization and automation of various public administrations.

SAP for Public Sector supports the following business processes:

y Human capital management SAP for Public Sector helps the sector meet the demandsof today's knowledge-based economy by maximizing the potential and productivity of

your employees and integrating employee processes and information with your

organization's overall priorities and strategies.

y Government procurement SAP for Public Sector supports both ad hoc and strategicprocurement, so you can manage purchase order, inventory, and invoice verification

processes. The solutions allow you to automate buying and requisitioning transactions

over the Internet.

y Public sector accounting With SAP for Public Sector, you can receive and handlemoney from constituents and monitor the flow of funds from the source to those

receiving the service.

y Social services and social security SAP solutions enable you to deliver social services,including a wide range of prevention, intervention, and treatment services, to

individuals and families in a highly efficient manner.

y Government programs SAP for Public Sector supports your ability to deliver programsand services to citizens, businesses, and other recipients.

y Tax and revenue management SAP for Public Sector enables efficient public tax andrevenue administration while addressing the customer service requirements of

taxpayers. The solutions support a range of customer service activities, including

registration and account maintenance, return filing and remittance processing,

correspondence and contact management, as well as billing, auditing, and compliance.

y Public security With SAP for Public Sector, you can consolidate data, shareinformation, and ensure that resources are available to support critical activities in

detecting, preventing, responding to, and recovering from attacks. Plus, you can deploy


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advanced technologies in a way that keeps information secure, controls access to

information, and supports diverse missions and functions.

y Organization management and support SAP for Public Sector supports all coreactivities in analytics, financials, human capital management, and corporate services [3].

3.0 COMMON FUNCTIONS OF SAP R/3 IN BOTH INDUSTRIES

Procurement Management Human Capital Management Human Resource Management Quality Management Supply Chain Management Asset Management Finance and Controlling

4.0 UNIQUE FUNCTIONS AND BUSINESS PROCESSES

AEROSPACE & DEFENSE INDUSTRY PUBLIC INDUSTRY

Program Management Enhanced Grants Management

Life-Cycle Data Management Government Procurement

Contract Manufacturing Public Sector Accounting

Operational Procurement Management Social Services and Social Security


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Make to Order Manufacturing Government Programs

Asset life-cycle management Tax and Revenue Management

Maintenance and service planning Public Security

Line maintenance Organization Management and Support

Heavy maintenance

Component maintenance

5.0 UNIQUE CAPABILITIES SAP OFFERS THE INDUSTRY

Faster realization of service revenues Public ROI

Invoice based on consumed resources within

days of maintenance execution, rather than

months.

This initiative will help governments fully

demonstrate the value of government

programs and services across both

quantitative and qualitative dimensions

Reduced waste and faster time to value Protected IT Investments

Take an enterprise approach to implementing

best manufacturing practices such as lean

manufacturing.

This allows governments to incorporate

specialized systems and leverage past IT

investments while providing a framework for

adding solutions in the future.


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Improved maintenance management Improved Collaboration

Integrate maintenance requirements with

supply chain management to reduce parts

shortages, speed maintenance execution, and

increase asset availability.

This reduces agency stovepipes by

consolidating basic systems such as payroll

and procurement across divisions and

agencies.

6.0 MISSING CAPABILITIES IN BOTH INDUSTRIES

Most of the essential capabilities are available in both industries except SAP Mobile

applications, platforms, and services designed for both core mobile users in the field and

business users who want anytime access, mobile applications extend your business processes

to any device for anytime, anywhere access.

7.0 SAP INDUSTRY SOLUTIONS BENEFIT

Increased Sustainability - A performance based logistics solution from SAP serves as an

integrated IT system and the foundation for a future-oriented business model, supporting all

aspects of system sustainability.

Increased Compliance - SAP BusinessObjects GRC solutions, helps to address risk management,

access management, continuous controls testing and data monitoring issues, and compliance

management and reporting.

Improved maintenance management - It improves the ability to track and manage

maintenance requirements and eliminate redundant maintenance tasks.


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Reduced costs - Streamline processes and simplify complex system landscapes.

Improved Customer Satisfaction - The CRM function enables better interaction with the

internal and external Customers.

8.0 SOLUTIONS FROM OTHER ERP PROVIDERS

Oracle offers a unique set of solutions for the Aerospace Industry. Oracles industry solutions

leverage its best-in-class portfolio of products to address complex business processes relevant

to your industry. These solutions enable you to speed time to market, reduce costs, and gain a

competitive edge.

Microsoft Dynamics does not offer any unique solutions for the industry at this time.

Microsoft Dynamics ERP and CRM solutions help you manage finances, human resources,

citizen relationships, funds and grants, and service delivery, all with a low total cost of

ownership

9.0 OTHER PUBLIC SECTOR ERP FUNCTIONS BY OTHER ERP PROVIDERS

Oracle Microsoft Dynamics

Content Management Business Intelligence

Business Process Management Case Management

Financial Management Contact Center 311

Human Capital Management Constituent Management

Procurement Management Field Inspection


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Contracts Management Funds Management

Governance, Risk & Compliance Grants Management

Case Management and CRM Solutions Personnel Management

Enterprise Performance Management Task Management

Business Intelligence Correspondence Management

10.0 CONCLUSION

Each ERP solution provider tries to provide unique solutions for integrating systems in both

Industries discussed. It has been shown that Sap ERP has an important role in the

Aerospace/Defense and the Public Sector (Government). It has been a pioneer and in the

forefront of the solutions industry. The company believes that generic solutions can't address

industry specific challenges. It has combined its popular packages with unique functions to form

solutions for every industry.

Despite its higher cost of implementation, it is still one of the best options for industries looking

for integration packages to enhance productivity. All functionality is in one place and over time

the benefits outweighs the cost. Oracle solutions for industries are its closest competitor in the

market and it offers a strong suite of functions that are designed for each industry. As the

worlds largest business software company, it is able to market its industry solutions with

database solutions and it is very popular in several countries.

Oracle as a company has grown so large by its acquisition of smaller software companies which

enables it to offer several products. This initial benefit might on the long run cause problems

with issues of integrating all the different platforms for smoother operations.


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It can be debated which ERP brings better value to both industries. Both industries have a wide

range of solutions to choose from and their services will be improved for the 21st Century.

References

1. http://www.sap.com/industries/aero-defense/businessprocesses/manufacturers/index.epx

2. http://www.sap.com/industries/aero-defense/businessprocesses/mro/index.epx3. http://www.sap.com/industries/publicsector/public/businessprocesses/index.epx4. http://www.oracle.com/us/industries/aerospace/018740.htm5. http://www.oracle.com/us/industries/public-sector/index.html6. http://www.microsoft.com/en-us/dynamics/industries/government.aspx7. http://globaledge.msu.edu/industries/aerospace-and-defense/background/

industry solutions assignment 2

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