07._functional_modeling_using_standard_idef0_process_improvement_in_procurement_snežana_mijalilovic

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    FUNCTIONAL MODELING USING STANDARD IDEF0 PROCESS

    IMPROVEMENT IN PROCUREMENT

    Sneana MijailoviPhD1

    Mc. Duan Trajkovi2

    Aleksandar MariPhD3

    Abstract: Functional modeling is a solution that improves the management and control of complex processes and the

    procurement . The goal of modeling the procurement process is the quality of treated through all aspects of product and

    direction to the demands of its users. Model Procurement covers the area daily operations and long-term planning and

    razvoja.U paper presents the application of standard IDEF0 for functional modeling as an element of re-engineeringthe procurement process in the company. Methodology for the implementation of the function , and the appropriate

    CASE (Computer Aidid System Engineering ) tools , in this case Bpwin (Business Process for Windows ) allows

    modeling of functional decomposition of business functions and planning the necessary resources, which enables

    modeling of the process with the use of all claims arising from international SRPS ISO 9000:2008 .

    Keywords: functional modeling , CASE tools , IDEF0.standard , procurement process , re-engineering process

    1. INTRODUCTION

    What is the quality of the product? The answer is the new Japanese manufacturing philosophy that definedthe early 70 's. Japan 's understanding of the quality certainly is now the world standard . However , hisunderstanding and acceptance is not easy and requires an understanding of the basic principles of Japanese

    manufacturing philosophy. The complexity of the concept of quality stems from an intensive trend ofchanges in the ratio of customers to quality . The survey results in 1979. year about 75 % of customersbelieve that it is important that the product quality is high, while in 1986. year the number was 80-90 % ofcustomers [4]. The essence of this approach is that as stakeholders to produce , in addition to the companiesin which it operates , and appear users or buyers of the products as well as suppliers of equipment andmaterials to produce. The choice of suppliers to ensure that the best meet the technical , commercial,financial and other needs of the organization .

    Caveat emptor Latin proverb suggests skill in the procurement process , which refers to knowledge ofproduct choice in terms of quality and quantity of procurement . The procurement process is oriented to theanalysis of market research to achieve the most favorable amount at the best price . The aim of procurementin terms of manufacturer 's acquisition of further processing and sale of the finished product on the market.

    The goal of management is to supply the right product at the right place at the right time , in the rightconditions and the right price [2]. Supply is recognized as an important transport function but are oftendowngraded to a subordinate position and is considered a sale of the opposite sign. Fifties , in theory and inpractice, changed the perception that buying service not only " downside " to sell , but to perform an activefunction. Results according to analysts estimates that 1 % savings in procurement as a result of efficientpurchasing process , affects about 15% of the nominal profit growth of the organization [5].

    Process-oriented organization , insistence on quality as a deciding factor in the competition to meet thedemands of customers.

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    1.1.The process approach to organizational functions in business

    ISO 9000:2008 series of standards has been particularly emphasized the importance of a process approach tothe business. Process model of organization structure is realized , which is user friendly . The structure of theapplication of information and communication technologies at the level of each process and their interaction

    has a great ability to adapt increasingly frequent changes in business conditions . Defining theresponsibilities of each level of the process , there is an efficiency monitoring process , which helps toimprove the quality of care and resource management processes, as well as interest in the fulfillment of thepre-defined objectives. Identifying the main processes and sub-processes , process owner , accountability andresponsibility in the process of assessment with the possibility of continuous improvement, management andmonitoring of the effectiveness of the whole organization is a process approach [11]. Each segment of thenetwork process before it user requirements that must be translated to their satisfaction. The aim of theprocess approach, achieved through an organizational structure linking process is the organizationalfunctions of the system , which are fully user -oriented. Optimal use of available resources requires theapplication of optimization methods , insisting on a series of ISO 9000:2008.

    2.

    RESEARCH METHODS IN PROCESS MODELINGOptimal use of available resources is achievable with proper planning , management and promotion ofeffective business decisions. Real processes in the supply chain may involve a very large number ofinterrelated variables. Their modeling requires experience with mathematical methods to find optimalsolutions using optimization methods in the modern supply chain management and related software toolsavailable in this area [8]. The development of Internet and information technology (IT) has redefined theconcept of supply chain management. Management concept based on the idea of sharing and exchange ofinformation between the participants in the chain. IT that have an impact on the development of the conceptof the ERP systems (Enterprise Resource Planning) and APS (Advanced Planning and Scheduling ). ERPsystems including finance, forecasting, order tracking, sales analysis, local and global distribution andquality control [3]. These systems have tools for monitoring and reporting , but their implementation requiresa well-defined data. ERP systems ensure that data in different places can be coordinated. APS systemscompensate for shortcomings of ERP systems as a tool for planning and taking into account the availableresources and capacity to generate new plans on the basis of the objectives (minimum stock, maximumthroughput, delivery, etc.). Detailed form optimal allocation of tasks . ERP and APS systems implemented inhalf of all large companies in the U.S. and Europe. Approximately $ 10 billion a year is spent on ERPsoftware licenses in the United States , not including the amount of implementation and consulting services,as well as the increasing demand for additional APS software [1].

    Provider ASP provides for commercial use Application Services to use the software to solve the optimizationproblem through the Web with a price. The market pristuni software packages: DRA Systems, ILOG , Inc. .ILOG provides software components for mathematical programming , programming constraints , businessrules , and visualization [7], Meta Software Corporation provides Web Metasoft for publication WorkFlowModeler business process models on the Web or Intranet, SAS Institute offers Web- enabled applications for

    data analysis, econometrics, forecasting, operations Research (OR) - decision analysis, discrete eventsimulation, optimization and project management, and statistics, Vanguard Software Corporation offersDecisionPro 3.0, Web and e- mail capability OR package for modeling that supports timber -making,forecasting, diagrams effects, linear and non-linear programming and Monte Carlo simulation. They also

    -CSystems Inc. . with e - forecasting ( TimeTrends e- Forecasting ) , ExpertCommerce , Inc. . offers ExpertChoice , analytic hierarchy process implemented as a web -enabled program for evaluating procurementbetween businesses . Software packages for solving optimization problems in the market is Web -enabledand is still a competitive advantage but a few years will become necessary properties [9]. Users will beforced to stay in touch with current and compatible software implementation architectures in terms ofuncertainty in the market, which requires customization of software solutions rapidly [9]. Correctness of thisapproach is specifically linking the latest version of CASE (Computer Aidid System Engineering ) toolsBPwin (Business Process for windows ) for process modeling (IDEF0 standard), Paradigm Plus for objectmodeling (UML standard) and ERwin ( Entity Relationships for windows ) for data Modeling ( IDEF1Xstandard or IE). Of implementation of improved business processes, based on the application of previous

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    tools, supported by simulation methods in solving problems of managers in decision making. This isdemonstrated by experience of the Corporation , IBM (International Business Machines) , a computerhardware and software, the quantitative assessment of the effects of redesigned processes on the systemperformance [12]. IDEF modeling techniques adopted as the basis for conducting the re-engineering ofbusiness processes.

    2.1.Application of IDEF techniques in process modeling

    The goal of modeling is to develop technologies that will enable the integration of logical and physicalnetwork hardware and software configuration is very different. IDEF1X information modeling is a simplifiedrepresentation of the real system through a set of objects ( entities), the relationship between objects andattributes - properties . Information modeling is a term that is defined in the IDEF1X methodology anddefine an appropriate data model. IDEF0 technique consists of a hierarchical series of diagrams thatgradually display more details about the process and their interconnection (interface ) to other parts of thesystem. IDEF0 modeling allows to analyze properties of a business process for their improvement.IDEF0 functional model consists of a hierarchical series of diagrams that gradually display more detailsabout the features and their interconnection (interface ) to other parts of the system . These descriptivemodels indicate a high level of activity of the process. The basic model of IDEF 0 method is based on the

    record to determine ICOM activities and arrows represent " data " related to ICOM [6]. Based on the EnglishICAM diagram notation is short (Figure 2.1) :

    I - Input, something that is used in the operation; C - Control , control conditions or performance activities ; O - output, outcome performance activities ; M - Mechanism , something that is used in the activity but does not change.

    Control

    Input Output

    Mechanism

    Figur e 2.1 IDEF meta model . [6 ]

    Input (Input) represents material or information that is used or transformed to the corresponding outputs(Output) . Control (Control) governs how, when and whether the activity is carried out , and what will be theoutputs (Output). Controls are often in the form of rules, policies, procedures, or standards. They affect the

    activity, but it can not be transformed or used . If the objective of the action to change the rules, policies,procedures or standards, it is expected that the arrow containing the information, in fact, be an input . Themechanism of the sources that perform actions, and yet they themselves do not "consume" . The mechanismmay be people, machines and/or equipment , ie. objects that provide the energy needed to carry out theactivities .

    IDEF0 modeling allows to analyze properties of a business process in order to improve it. After gathering thenecessary information to access the definition of the process (activities that take place) and the class of data(documents) to be used. The decomposition process is carried out through three subordinate activities [13]:

    - Definition of the system boundary ,- Defining Decomposition diagrams,

    - Define the tree actions

    FUNCTION OR

    ACTIVITY

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    Activity "Define boundaries " of the system is related to the determination of the objects that are describedby the rectangle hierarchy and associated activities in the tree. Graphic describes the IDEF0 method offunctional decomposition over the set of diagrams , each of which is a limited amount of detail defined in theappropriate syntax and semantics. Diagrams consisting of rectangles representing the function or activity ofthe process in the organization. They are connected to each other directional lines that are called arrowsrepresent connections between the parts. There are three types of IDEF0 display: graphic, text and dictionary( glossary ). Graphic defines the functions and relationships of the process over rectangles and arrows and

    the corresponding syntax and semantics. Text and a glossary provide additional information and supportinggraphical diagrams.

    The syntax of the graphic language IDEF0 make rectangles ( boxes ), arrow ( arrows ) and the rules (rules).Rectangles represent the function or activity, the process of transformation and the concept of activity calledwork. Jobs that are hierarchically divided into: business functions, business processes, activities andprocesses. The hierarchical nature of IDEF0 allows the system to be presented in detail at all levels. Besidesthe undeniable quality, IDEF methods have weaknesses. IDEF models can be so concise that only theappropriate domain experts can understand. IDEF models are sometimes misinterpreted as graphicalpresentation of a series of activities . Activities appear rectangular . Rectangle contains the name of thefunction or activity and number. The number is used to describe the activities associated text ( Figure 2.2) .

    Figur e 2.2 Syntax rectangles ( Box) [13]

    Activity must have a name format type " verb ", " subject". Name of activity definitions which should not belong, but must fully explain each activity. Activity has a temporal dimension of time that must elapsebetween the beginning and end of the activity, and the corresponding output (the result of the activitiesperformed). The following syntax element is a graphic language IDEF0 arrows. Arrows consists of one ormore lines with arrowhead at one end. Arrows can be straight or bent at an angle of 90 and can then split ormerged. Each arrow is defined as (noun) and represent the transfer of data or objects related to the observed

    activity, and not only mean flow or sequence. The context diagram is represented by a rectangle thatrepresents the border of the model under study and keys through which information flows. The contextdiagram is the highest level of abstraction that decomposition diagrams translates into lower levels ofabstraction. Boundaries of the model are defined to be, above all, know where you stand with modeling. Thisproblem can be seen in terms of:

    - Defining the elements that are observed and- Defining the level of detail .

    Defining the elements of the model is related to the definition of the context diagram (in IDEF0 notationmeans to A0) and the first level of decomposition is labeled A1. Within konteksnog diagrams must be takenthat is necessary to define sets of inputs, controls and mechanisms that produce a set of outputs, ie. need atthis stage to generalize the observed problems with less detail. Defining the level of detail of the model isdefined levels of decomposition in the context diagram. Decomposition is going to allow for the definition ofsoftware modules that can be described by the data flow diagram DFD. ( Data Flow Diagram ). A0 activity,which occurs in the context diagram describes the model and must be determined by an active verb phrase.The context diagram should begin by defining output arrow, then the arrow defined inputs, which aretransformed to create a corresponding output, popomugnut appropriate mechanisms and control. It startsfrom the fact that every action has a corresponding output that can be identified. When defining the outputshould take into account the negative outputs, which can cause feedback (feedback) arrows. Defined contextdiagram check whether:

    - Include activities that are modeled;- Consistent with the purpose, viewing angle and borders;

    - Arrows a proper level of detail- Model acceptable by all team members.

    NAME OF THEACTIVITY

    1

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    2.1.1. Contextual diagram of the procurement process

    The context diagram for the procurement level A0, considering the previous state checks and rules ofdatabase design model is formed that includes data entities, attributes, domains and links [10]. Based on theelements of the data matrix formed in the process of \ class data, process \ process, that \ management andlogical subsystems (Figure 2.3).

    Figure 2.3 Context diagram for the procurement pr ocess - 0 - these levels

    Identify the basic procurement process , their activities and the signals between them requires adecomposition of the subprocesses " Defining child process tree " where it is necessary to establish thevertical ( hierarchical ) links between activities (Figure 2.3).

    The decomposition process of procurement activities carried out by the method of solving the problem fromthe top down ( top-down ), when complex actions dismantle the more subordinate activities and approachesto solving the subordinate activities (Figure 2.4).

    PROCUREMENT MANAGEMENT

    Figure 2.4 Decomposit ion of the activit ies of the procur ement process

    1.1MarketResearchProcurement1.2PreliminaryAssessmentsfrom the

    supplier

    2.1Processingrequests forprocurement

    2.2Procurementplandevelopment

    A3.1 Production RFPA3.2 Admission and registration

    offersA3.3 The bid suppliersA3.4 Issuing the purchase order

    to the supplierA3.5 Receiving and processing

    contractA3.6 InvoicingA3.7 Processing and approval of

    invoicesA3.8 Liquidation of the invoice

    A4.1 Treatmentrecords ofcomplaint

    4.2 Submittingyour complaint

    4.3Processingresponse onresolvingcomplaints

    A5.1 Analysis of thequestionnaire

    5.2 The analyzes ofnon-compliance

    5.3 Resolvingcomplaints

    5.4 The calculation ofextra costs

    5.5 Methods forevaluating supplier

    5.6 Identify and reviewthe status of the supplier

    0 din 1

    Market research

    0 din A2

    Procurement

    planning

    0 din A3

    CONTRACTING

    PROCUREMENT

    0din 4

    PROCUREMENT

    IMPLEMENTATI

    .

    0din A5

    STATUS SUPPLIER

    1

    SUPPLIER

    Information about thecontractor

    E5

    DATABASE SUPPLIER,

    (Web databases)

    0 din 0

    SUPPLY

    3

    COMMERCIAL

    OPERATIONS

    4OTHER

    SUBSYSTEMS

    Implementation report

    Implementation report

    Requisition materials

    The requirement to obtain

    Implementation report

    The completed questionnaire

    Offer (invoice), contract

    Purchase Order

    Packing lists, invoices

    Request for complaint by

    Information provider

    The requirement to obtain

    Questionnaire for evaluatingthe bids of the supplier

    Report on delivery deadlines

    Record of receipt

    Report on the evaluation of bids

    Procurement Plan

    2

    PRODUCTION

    The answer to the complaint The plan for materials, inventory

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    Structure formation Decomposition diagram represents the horizontal links between activities in the IS,where appropriate connection information is defined in the tree tasks (Figure 2.4). Respecting the IDEF0standard, the corresponding arrows represent sets of documents that define such information. Anyinformation on the next level is divided up to the level of activity where the arrows are defined as a specificdocument.

    Manage the procurement process involves basic processes : procurement planning , market research,

    procurement , procurement contracting , bid evaluation , ranking and selection of suppliers , the procurementof , monitoring of the final product in the production of the Report on the complaint and determine the statusof new and existing suppliers based on criteria. Each of these process is documented and appropriateprocedures of the quality system and records (plans, requirements, forms, records, reports). Model of theprocurement process was presented IDEF1X technique (Figure 2.5).

    Supply contracting function includes activities since the formation of the procurement plan, drafting RFP,public advertising, bidding, bid evaluation, ranking and selection of suppliers for the procurement of goodsfor further manufacture by issuing the purchase order (Figure 2.6).

    Offer (invoice), contract

    Figure 2.5 Decomposit ion di agram of the procur ement process

    2 The preliminary qestionnaire

    1

    SUPPLIER

    E2

    PRODUCTION

    E4

    OTHERSUBSYSTEMS

    0 din A2

    PROCUREMENT

    PLANNING

    0 din 3

    CONTRACTING

    PROCUREMENT

    3COMMERCIAL

    FINANCIAL

    TRANSACTIONS

    0 din A4

    RECLAMATION

    E1

    SUPPLIER

    0 5DETERMINING

    THE STATUS OF

    THE SUPPLIER

    13 The application ofnon-compliance

    15 The answer tothe reclamation 14 Record of the

    reclamation

    18 Report on thestatus

    11 Deliverytime

    12 The SupplyAgreement

    10 Purchaseorder

    9 Offer(invoice)

    16 Invoices

    17 Packinglists

    7 Operational plan

    19 Questionnaireontheevaluation

    6 Therequirementto obtain

    5 The plan for materials,inventory

    1 Information provider.

    3 Cardboardsuppliers4 Questionnaire on evaluation

    The application ofnon-compliance

    Packing lists, invoices

    Purchase order

    u repor

    Implementationreport

    The answer to

    the reclamation

    The preliminary questionnaire to assess

    Error! Not a valid link.

    The completed questionnaire

    Request for Quote

    Report on delivery deadlines

    Implementation report

    Implementation report

    The requirement toobtain

    The plan for materials,inventory.

    Procurement

    plan

    The requirementto obtain

    0 din 1

    MARKET

    RESEARCH

    Questionnaire for evaluating the bids Error! Not a valid link.

    8 The requirementto obtain

    5DATABASE

    SUPPLIER

    ec ama on

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    Implementation of product acquisition is implemented by receiving invoices and delivery notes and supplierregistration in the records of receipt of products delivered in the incoming quality control to their dispatch inthe production process from requisition. Upload process is documented requisition, from which follows thesupplied product in the production of an operational function to process claims (Figure 2.7). Report on thecomplaint is a document which assesses the quality of suppliers and calculating surcharges quality ofdelivered product.

    Figur e 2.7 Di agram of operational f unctions to process complaints

    0 din A4.1

    TREATMENT OF BOOKSRECEIVING COMPLAINTS

    E3

    COMMERCIAL

    SERVICES

    E1

    SUPPLIER

    0 din A4.3

    CLAIMS PROCESSING MADE

    0 din A4.2

    RECEIVING RECLAMATION

    E2

    PRODUCTION

    13 Record of thereclamation

    17 Despatch

    supplier

    16 Invoice

    14 The application ofnon-com liance

    15 The answer tothe reclamation

    The answer to the reclamation

    The application of

    non-compliance

    The application of

    non-complianceRecord of the

    reclamation

    Implementation report

    Figur e 2.6 Diagram of functions for the process of procurement

    The ProcurementPlan

    7

    3 Cardboard suppliers

    4 Questionnaire toassess supplier

    9 Offer (invoice), contract

    10 Purchase order

    11 Deliverytime

    18 Implementationreport

    12 Procurementcontract

    RFAsupplier

    8

    0 din 3.1MAKING CLAIMS AND PUBLIC

    ADVERTISING OFFERS

    0 3.2ADMISSION AND

    REGISTRATION OFFER

    0 din 3. 3

    SELECTING THE BEST OFFER

    0 din A3.4

    PLACEMENT PURCHASE ORDER

    0 din 3.5

    RECEIPT AND PROCESSING OF

    PROCUREMENT CONTRACTS

    E4

    OTHER SUBSYSTEMS

    E3

    COMMERCIAL

    SERVICES

    E1

    SUPPLIER

    E2

    PRODUCTION

    Offer (invoice), contract

    Purchase order

    Procurement contract

    Implementation report

    RFA supplier

    Report on delivery deadlines

    Implementation

    report

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    By analysis of the supply of delivered goods is determined by the status of the suppliers for the futureoperations (Figure 2.8). Report on the status of suppliers is a document on which to check the adequacy ofthe decision on the selection of a reliable supplier, and an explanation of suppliers to improve the quality oftheir products.

    Procurement process modeling technique is designed IDEF1X data model, where data are presented throughentities and their relationships forming a relational database suppliers. The entities in the data model mustcorrespond to the relations between entities in realacionim databases of suppliers used in the decision-making model for the selection of reliable suppliers .

    3. DISCUSSION AND CONCLUSION

    The goal is to create and establish a new and modern procurement process , which serves to integrate allorganizational activities in a complete network and make the flow of accurate information and timelyfunctioning well.

    Displayed activity of the integrated procurement processes are complex and through them is to grasp allaspects of acting actors of the communication process .

    Displayed activity procurement process cally described and represented graphically IDEF0 method willenable management structures and decision-makers in the organization of continuous monitoring of key

    business parametirima.

    Functional integration process , the application of uniform standards of services and work to improve thequality of work can be achieved through :

    - The introduction of the QMS of the company- Development of an integrated enterprise information system- Decision making prmenom OLAP and data mining , ie . The discovery of knowledge in the data

    stored in the databases of companies intergisanog- Integration of economic and legal affairs- The marketing activities that should inform and facilitate recognition of the public enterprises- Integration of educational, entrepreneurial and administrative subsystem functional entity in the

    company- Automation of operational functions for the process of determining the status of the supplier- Integration of the organizational units ( production, procurement , sales , market research )- Efficient use of human resources, planning and follow-up training of new staff.

    Figure 2.8 Diagram of operational functions for the process of determi ning the status of the supplier

    E1

    SUPPLIER

    E2

    0 din 5.1

    DATA PROCESSING

    SUPPLIER EVALUATION

    0 din 5.2

    TREATMENT

    RESPONSE ON COMPLAINTS

    0 din 5.3

    CALCULATION OF EXTRAORDINARY

    COSTS OF QUALITY DELIVERED

    0 din 5.4

    DATA PROCESSING STATUS

    24 Statusreport

    24 The calculationof extra costs

    22 The answer tothe complaint

    Evaluation Report

    Record of scrapmaterial, suspension

    21 Prelimenarniquestionnaire to

    assessRecord of thecomplaint

    20 Book onadmission

    19 Evaluation

    Report

    The questionnaire

    for the ssessment

    The completed

    questionnaire

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    Reengineering of the procurement process is complete redesign processes to improve business performance,the company strives to create an organizational environment in which the lower hierarchy of decision-making, and system structure has become much more flexible. Reengineering of the procurement process inthe company 's dedication to change and one of the modern methods of organization and management thatneed to respond to the challenges of competition in the era of new information and communicationtechnologies.

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    4. Davenport, TH , Short , JE The New Industrial Engenering , Elephant Management Review ,Summer , 11-27

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    Hammer, M. and Champy , J. (1993), Reengineering the Corporation , New York: HarperCollinsPublishers6. Hanrahan , P.Robert , (June 1995) , The IDEF Process Modeling Methodology, Software

    Technology Support Center , Ogden ALC / TISE7. ILOG (2002). " Powering Your Decisions ," ILOG Optimization Suite , www.ilog.com8. Jacobs , F. R. Bendoly , E. (2003 ) Enterprise resource planning : Developments and directions for

    operations management research , European Journal of Operations Research , 146, pp . 233-2409. Maximal Software, Inc. . Developing Large -Scale Optimization Models with the MPL Modeling

    Systems A White Paper, www. maximalsoftware.com , May 2002.10.Rebecca M.Riordan , (2006) , Database design , (translated from English ) , Addison-Wesley , Micro

    Book, Belgrade11.Turban , E. , McLean , E. , Wetherbe , J. (2003 ) , Information Technology for Management, Office

    of Textbooks , Belgrade12.Veljovi A., (2003), Information System Design , Lifehacker , Light - aak13.Yao , DD , et al . , (2000) , Extended Enterprise Supply - Chain Management at IBM , Interfaces

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