cii institute of logistics virtual class slide 1 21-aug-15 session 2 topics 1.enterprise resource...
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CII Institute of Logistics Virtual Class Slide 1Apr 19, 2023
Session 2Topics
1. Enterprise Resource Planning (ERP)
2. Inter-Enterprise Integration (XRP)
3. Demand Driven Supply Network (DDSN)
4. Supply Chain Decisions
5. Supply Chain Modeling
6. eSupply Chain Managment
7. eProcurement
8. eDemand Network Management (CRM)
9. Data Warehousing
CII Institute of Logistics Virtual Class Slide 2Apr 19, 2023
1. Enterprise Resource Planning (ERP)
Enterprise Resource PlanningEnterprise-wide information system designed to coordinate all the resources, information, and activities needed to complete business processes such as order fulfillment or billing.
Based on Common DatabaseFunctions
Manufacturing, Supply Chain Management, Financials, Projects, Human Resources Customer Relationship Management
CII Institute of Logistics Virtual Class Slide 3Apr 19, 2023
1. Enterprise Resource Planning (ERP).
Evolution of ERP1960s Inventory
Management and Control
Combination of information technology and business processes of maintaining the appropriate level of stock in a warehouse. The activities include identifying inventory requirements, setting targets, providing replenishment techniques and options, monitoring item usages, reconciling the inventory balances, nd reporting inventory status.
1970s MRP Utilizes software applications for scheduling production processes. Generates schedule for operations and raw material purchases based on the production requirement of finished goods, the structure of production system, the current inventory, and the lot sizing procedure for each operation
CII Institute of Logistics Virtual Class Slide 4Apr 19, 2023
1. Enterprise Resource Planning (ERP).Evolution of ERP
1980s MRP II Utilizes software applications for coordinating manufacturing processes from product planning, parts purchasing, inventory control to production distribution.
1990s ERP Uses multi-module application software for improving the internal business processes. Integrates business activities across fuctional departments from product planning, parts purchasing, inventory control, product distribution, fulfillment, to order tracking. Also includes modules for supporting marketing, finance, accounting and human resource planning.
CII Institute of Logistics Virtual Class Slide 5Apr 19, 2023
1. Enterprise Resource Planning (ERP).Components in ERP SystemERP Software –
Module based ERP software is the core of an ERP system. Each software module automates business activities of a functional area within an organization.
Business Processes ERP offers solutions at different levels - strategic planning, management control and operational control.
ERP UsersThe users of ERP systems are employees of the organization at all levels, from workers, supervisors, mid-level managers to executives.
Hardware and Operating SystemsMany large ERP systems are UNIX based. Windows NT and Linux are other popular operating systems to run ERP software. Legacy ERP systems may use other operating systems
CII Institute of Logistics Virtual Class Slide 6Apr 19, 2023
1. Enterprise Resource Planning (ERP).
Modules in ERP 1. Sales (forecasting, customer prospecting, follow-up, telemarketing support and database management)2. Order Processing (Inquiry, order taking, shipping, invoicing)3. Asset Management4. Cost Accounting, Financial Accounting5. Manufacturing
Engineering, Bills of Material, Scheduling, Capacity, Workflow Management, Quality Control, Cost Management, Manufacturing Process, Manufacturing Projects, Manufacturing Flow 6.
6 Materials Management7. Quality project8. Data Warehouse9. Human Resource Management Payroll, Training, Time & Attendance, Rostering, Benefits 10 Project Management Costing, Billing, Time and Exp Mgmt
CII Institute of Logistics Virtual Class Slide 7Apr 19, 2023
1. Enterprise Resource Planning (ERP).ERP Life Cycle
ERP Readiness assessment. This prepares an organisation for ERP. Both physically and mentally ERP feasibility study. How much of ERP does an organisation really require? How much of ERP is good enough? Process modelling and documenting ‘as is’ processes and ‘to be’ processes. BPR comes into the scene here Detailed plan for ERP implementation Preparing to ‘Go Live’ including data migration. This means that once ERP is implemented, users will have to get accustomed to it and feel comfortable in its presence. That is, Going and Living in the ERP jungle. These steps prepare for that process Going Live. After the complete implementation of ERP, organisation will decide a day to shift to newly implemented ERP from existing system. This is called Going live. They fix up a date when they will shift. It is usually the first day of the financial year, like April 1st for India. Performance assessment, documentation, training and future plans
CII Institute of Logistics Virtual Class Slide 8Apr 19, 2023
1. Enterprise Resource Planning (ERP).
ERP ImplementationBig Bang Approach
Location-wise implementation• To be on the safer side, organisation implements ERP in one of
their offices. For instance, ERP gets implemented in the head office and based on the comfort level, it gets extended, again location wise
Module-wise implementation• It should be easy to guess by now. Organisation installs finance
module of ERP first and based on the comfort level it attains extends the implementation to other modules. Again module by module
CII Institute of Logistics Virtual Class Slide 9Apr 19, 2023
1. Enterprise Resource Planning (ERP).
ERP Vendor ServicesConsulting
Process Preparation
Configuration
Customization
Data migration
Training
Performance measuring and tuning
Maintenance and Support
CII Institute of Logistics Virtual Class Slide 10Apr 19, 2023
1. Enterprise Resource Planning (ERP).
ERP – Advantages
ERP can be useful in helping a company find the best design process.
Order Tracking
Planning and Execution – Measure and correct
Accounting, A/R, A/P, unit-wise Profit Analysis
Sales force automation, performance analysis
Improve design and manufacturing process
Helps to improve CRM and SCM
CII Institute of Logistics Virtual Class Slide 11Apr 19, 2023
1. Enterprise Resource Planning (ERP).
ERP – LimitationsHuge Cost – Recoverable over a period after implementation.Customization of the ERP software is limited Re-engineering of business processes to fit the "industry standard" prescribed by the ERP system may lead to a loss of competitive advantage ERPs are often seen as too rigid and too difficult to adapt to the specific workflow and business process of some companies—this is cited as one of the main causes of their failure Resistance in sharing sensitive internal information between departments can reduce the effectiveness of the software High Training and support cost
CII Institute of Logistics Virtual Class Slide 12Apr 19, 2023
1. Enterprise Resource Planning (ERP).
Applications in Core ERP framework
C
U
S
T
O
M
E
R
Sales and Distribution
Service Applications
Central
Database
Financial Applications
Manufacturing Applications
Inventory Management
Human Resource Management
Other Functions
S
U
P
P
L
E
R
S
CII Institute of Logistics Virtual Class Slide 13Apr 19, 2023
1. Hidden costs in ERP implementation
TrainingIntegration and testingCustomizationData ConversionData AnalysisConsultantsChanging the staffWaiting for ROIPost-ERP depression
CII Institute of Logistics Virtual Class Slide 14Apr 19, 2023
2. Inter-Enterprise Integration (XRP)
Better synchronization with trading partnersReduce inventories
Foster strategic pricing
Improve cycle times
Increase customer satisfaction
Complement ERP Intelligent decision support capabilities
Collects data in every step in the supply chain
Planning capability by demand supply chain execution
Depends on tightly coupled decision-making and execution
CII Institute of Logistics Virtual Class Slide 15Apr 19, 2023
2. Inter-Enterprise Integration (XRP)XRP Vs. ERP
Real Time EnterpriseERP Applications
XRP Applications
Sales
Logistics
PurchaseHR
Production
Mfg. Res. Plng
FinancialsSales
Integrated Plant Systems
Supply Chain Planning
Collaborative Product Commerce
CRM
Supply Chain Execution
Partner Relationship Mgmt
Integrated Plant Systems
e-Procurement
CII Institute of Logistics Virtual Class Slide 16Apr 19, 2023
3. Demand Driven Supply NetworkWhat is Demand Driven Supply Network?
Method of supply chain management which involves building supply chains in response to demand signals supply chain processes are managed to deliver best value according to the demand of the customers Involves pull techniqueMore opportunities to share information and to collaborate with others in the chainModel consists of four levels• Reacting• Anticipating• Collaborating• Orchestrating
Bridge the gap between CRM and SCM
CII Institute of Logistics Virtual Class Slide 17Apr 19, 2023
3.1 DDSN – Model
Simple SCM Model
TraditionalIndependent operations by functional unitsIndividual objectives but conflicting
• Cost Vs Inventory, Productivity Vs Quality
SCM is the mechanism for integrating
Vendor
Production
(Transform)
Distribution
Distribution
Customer
CII Institute of Logistics Virtual Class Slide 18Apr 19, 2023
3. Demand Driven Supply NetworkDDSN
Demand-driven supply networks are driven from the front by customer demand. Instead products being pushed to market, they are pulled to market by customersDefines that companies in a supply chain will work more closely to shape market demand by sharing and collaborating information
AdvantagesParticipants in the supply chain are all able to take part in shaping demand as apposed to merely accepting it The customer centric approach, as apposed to the factory-centric approach of DDSN accepts that product design and ongoing product innovation are key requirements Modeling enables simulation of "what-if" scenarios so managers can randomly vary their initial conditions
CII Institute of Logistics Virtual Class Slide 19Apr 19, 2023
3. Demand Driven Supply Network
DDSN – ImplementationObjectives of aligning planning processes• Agility - The ability to respond quickly to short-term
change in the demand and supply equation and manage external disruptions more effectively.
• Adaptability - The ability to adjust the design of the supply chain to meet structural shifts in markets and modify supply network strategies, products, and technologies.
• Alignment - The ability to create shared incentives that aligns the interests of businesses across the supply chain.
CII Institute of Logistics Virtual Class Slide 20Apr 19, 2023
3. Demand Driven Supply Network
DDSN MethodsMonitor economies all over the world to spot new supply bases and markets.
Create flexible product designs.
Use intermediaries to develop fresh suppliers and logistics infrastructure.
Evaluate the needs of ultimate consumers—not just immediate customers.
Determine where companies' products stand in terms of technology and product life cycles
CII Institute of Logistics Virtual Class Slide 21Apr 19, 2023
4. Supply Chain DecisionsStrategic Decisions
Product Development• Product Cycle mature or Sales decline• New product or another version of existing product or rationalize the
productCustomer
• Identify key customer segmentManufacturing
• Technology and infrastructure requirement• New manufacturing facility or increase productivity or subcontracting
Suppliers • Volume and value of purchase• Identify suppliers with reliability and max discount• Decision in confirmation with overall company objective for deciding
factorsLogistics
• Decide on design and operation of network• Decide on warehouses and distribution centers or use of third parties
CII Institute of Logistics Virtual Class Slide 22Apr 19, 2023
4. Supply Chain Decisions
Operational DecisionsLocation
• Geographic location of stocking points, sourcing points
• Commitment of resource to a long term plan
• Significant for accessing customer markets
• Impact on cost, revenue and customer service
• Depend on production cost, distribution cost, taxes and duties, duty drawbacks, production limitation, customer spread, etc.
• Decision on strategic and operational level
CII Institute of Logistics Virtual Class Slide 23Apr 19, 2023
4. Supply Chain Decisions
Operational DecisionsInventory
• Type of inventory adopted (kanban or just-in-time)
• Level of buffer inventory for material
• Setting goals – strategic decision
• Identify stock points, reorder levels and order
quantities for different material
• Impact on cost, productivity and Customer service
level
CII Institute of Logistics Virtual Class Slide 24Apr 19, 2023
4. Supply Chain Decisions
Operational DecisionsLogistics
• Closely linked with inventory decisions
• Focus on third party7 logistic companies
• Trade-offs in mode of transports – Air/Ship/Road
• Depends on customer service level and geographic location of customers and suppliers
Production• Operational decision on production scheduling,
increasing the productivity, reducing the down time, workload balancing and quality assurance
CII Institute of Logistics Virtual Class Slide 25Apr 19, 2023
5. Supply Chain Modeling
ModelsSpecifications and guidelines that describe the implementation of supply chain decisions.
Network design Method• Minimize cost and time elements
• Lay down manufacturing and distribution strategies far into the future
• Integration of production, location, inventory and transportations
Rough-cut Method• Thrust is on Inventory policies
• Limitations: Production side ignored Distribution assumes receipt from one-distribute to many approach
CII Institute of Logistics Virtual Class Slide 26Apr 19, 2023
6. eSupply Chain Management
ERP – Backbone for eBusiness
XRP – Collaboration business with partners
SCOR 7.0 Model for Supply chain
Supplier’s Supplier
Deliver
Return
Supplier
Plan
Source
Deliver
Return
Company
Plan
Source
Deliver
Return
Customer
Plan
Source
Deliver
Return
Customer’s Customer
Deliver
Return
CII Institute of Logistics Virtual Class Slide 27Apr 19, 2023
6.1 Processes in eSCMProcesses
PlanSourceMake (produce)DeliverReturn
Processes interdependentDemand Supply network – Collaborative modelERP vendors system architecture to meet requirementExamples: SAP, Oracle
CII Institute of Logistics Virtual Class Slide 28Apr 19, 2023
6.2 Categories of eSCM
eSNP – planning functionsDemand forecasting, inventory simulations, manufacturing planning and scheduling
Benefits
eSNE – execution functionsProcurement
Manufacturing
Distribution
Warehouse management
CII Institute of Logistics Virtual Class Slide 29Apr 19, 2023
6.3 Modules in eSNP
Enterprise Architecture
eSNP Modules
Order Commitment
Advanced Planning
Demand Planning
Transportation Planning
Distribution Planning
CII Institute of Logistics Virtual Class Slide 30Apr 19, 2023
6.4 Functions automated in eSNE
Replenishment Process
Production Process
Distribution Process
Order Planning Process
Order Entry & Planning
Order Entry & Planning
Order Entry & Planning
Pick & Load
Home/Site Delivery
Customer Service
Schedule Production
Allocate Inventory prioritize Orders
Distribution Scheduling
Forecasting
Aggr. Inv. Planning
Capacity Planning
MPS/Sourcing
CII Institute of Logistics Virtual Class Slide 31Apr 19, 2023
6.5 Classic example of eSNE
mySAP – SCMExecution Processes• Order Fulfillment
• Procurement
• Transpiration
• Warehousing
• Manufacturing
CII Institute of Logistics Virtual Class Slide 32Apr 19, 2023
7. e-Procurement
ObjectiveReduce paperwork, delay and focus in more planning and controlling
From support function to strategic functionFocus on five Key challenges
Order Processing cost and cycle timeAccess to corporate procurementDesktop requisitioningIntegration of procurement s/w with back-officeElevating to strategic importance
CII Institute of Logistics Virtual Class Slide 33Apr 19, 2023
7.1 e-Procurement Trading Models
EDI networksMany manufacturing companies
B2E requisitioning Fords Intranet requisitioning software
Corporate Procurement modelIBM e-Procurement model
First generation trading exchangesCommunity catalog and storefronts
Second generation trading exchangesTransaction-oriented
Third generation trading exchangesCollaborative supply chain
CII Institute of Logistics Virtual Class Slide 34Apr 19, 2023
7.2 Traditional Vs. e-Procurement
Tradition purchase – managed by transaction
e-Procurement – managed by execeptionCharacteristics Traditional Purchase e-Procurement Product Selection Search large paper or online
catalog Personal views, templates and shopping lists
Requisition and Authorization
Multiple level of manual approval
Automatic approval online based on business rules
PO transmission Fax, Email or EDI. Supplier retypes the order data
Online dispatch of order through central hub
Payment authorization Dependent on three way match of PO with invoice and receipts (delivery)
Immediate based on receipt notice
Anlysis Adhoc Not linked to supplier Perfomance
CII Institute of Logistics Virtual Class Slide 35Apr 19, 2023
8. e-Demand Network Management (CRM)
What is CRM?Customer Relationship Management (CRM) is an information industry term for methodologies, software, and usually Internet capabilities that help an enterprise manage customer relationships in an organized and efficient manner.
In many cases, an enterprise builds a database about its customers. This database describes relationships in sufficient detail so that management, salespeople, and customer service reps can access information; match customer needs with product plans and offerings; remind customers of service requirements; know what other products a customer had purchased; etc.
CII Institute of Logistics Virtual Class Slide 36Apr 19, 2023
8.1 Why CRM
Facts to rememberCost of selling to new customer
Effect of negative feedback
Primary reason for customer dissatisfaction
Odds of selling a new product to a new customer
Are the dissatisfied jump to competitors?
Cost for customer service?
Who make-up the “customers” in CRM?
Process-centric to customer-centric approach
CII Institute of Logistics Virtual Class Slide 37Apr 19, 2023
8.2 Aspects of CRMFront office operations
Direct interaction with customers, e.g. face to face meetings, phone calls, e-mail, online services etc
Back office operations Operations that ultimately affect the activities of the front office (e.g., billing, maintenance, planning, marketing, advertising, finance, manufacturing, etc.)
Business relationships Interaction with other companies and partners, such as suppliers/vendors and retail outlets/distributors, industry networks (lobbying groups, trade associations). This external network supports front and back office activities
Analysis Key CRM data can be analyzed in order to plan target-marketing campaigns, conceive business strategies, and judge the success of CRM activities (e.g., market share, number and types of customers, revenue, profitability
CII Institute of Logistics Virtual Class Slide 38Apr 19, 2023
8.3 Types of CRM
Operational CRM
Sales Fore Automation
Analytical CRM
Sales Intelligence CRM
Campaign Management
Collaborative CRM
Consumer Relationship CRM
CII Institute of Logistics Virtual Class Slide 39Apr 19, 2023
8.4 CRM Implementation Issues
Data quality and availability
Multiple sources of data
Proper pre-planning
Human aspect and involvement
Phased Approach
Organization Commitment
Privacy and data security
CII Institute of Logistics Virtual Class Slide 40Apr 19, 2023
8.5 Critical Success Factors of CRM
Strategic Planning
Architectural Design
Phased Approach
Data Requirement Analysis
Data Gathering
Organization commitment
CII Institute of Logistics Virtual Class Slide 41Apr 19, 2023
8.5 Leading vendors of CRM
Vendor Percentage of implementations
Siebel (Oracle) 41%
SAP 8%
Epiphany (Infor) 3%
Oracle 3%
PeopleSoft (Oracle) 2%
salesforce.com 2%
Amdocs 1%
Chordiant 1%
Microsoft 1%
SAS 1%
Others 15%
None 22%
CII Institute of Logistics Virtual Class Slide 42Apr 19, 2023
8.6 Phases of CRM
Acquiring
Enhancing
Retaining
Intimacy and understanding with Customers
CII Institute of Logistics Virtual Class Slide 43Apr 19, 2023
8.7 Core competencies of CRM
Prospect or
Customer
Fax
Email Web
Telephone
Manufacturing & Fulfillment
Cust Service & Billing
Loyalty & Retention Prog
Field Sales & Service
SalesCross-sellUp sellTele-Sales
APPLICATION
INTEGRATION
CUSTOMER
PARTNERS
PURCHASE
HISTORY
OPERATIONS
MRKETING
BILLING
WEB
CALLCENTER
SFA
POS
DIRECT MAIL
BILLING
CUSTOMER
CII Institute of Logistics Virtual Class Slide 44Apr 19, 2023
9. Data Warehousing
What is data warehouse?Data warehouse is a repository of an organization's electronically stored data. Data warehouses are designed to facilitate reporting and analysis with business intelligence tools, tools to extract, transform and load data into repository, and tools to manage and retrieve metadata.
How does it differ from database?
CII Institute of Logistics Virtual Class Slide 45Apr 19, 2023
9.2 Data warehouse Vs Operational Systems
Operational Systems Optimized for data integrity. Uses database normalization and entity-relationship modelSmall amount of data. Fast transactions for update/insert.Older data periodically purged
Data warehouseOptimized for speed of data retrievalDenormalized vis dimension-based modelData stored in granular and summarized formData gathered fro0m operational system and maintained even after purging operational data
CII Institute of Logistics Virtual Class Slide 46Apr 19, 2023
9.1 Layers in Data warehouseOperational database layer
The source data for the data warehouse - An organization's Enterprise Resource Planning systems fall into this layer.
Data access layerThe interface between the operational and informational access layer - Tools to extract, transform, load data into the warehouse fall into this layer.
Metadata layerThe data directory - This is usually more detailed than an operational system data directory. There are dictionaries for the entire warehouse and sometimes dictionaries for the data that can be accessed by a particular reporting and analysis tool.
Informational access layerThe data accessed for reporting and analyzing and the tools for reporting and analyzing data - Business intelligence tools fall into this layer. And the Inmon-Kimball differences about design methodology, discussed later in this article, have to do with this layer.
CII Institute of Logistics Virtual Class Slide 47Apr 19, 2023
9.3 What is included in Data warehousing
Transactional Applications
Extraction and transformation tools
Scrubbing tools
Movement tools
Repository tools
Access tools
Data Delivery
CII Institute of Logistics Virtual Class Slide 48Apr 19, 2023
9.4 Benefits of Data warehousing A data warehouse provides a common data model for all data of interest regardless of the data's source. This makes it easier to report and analyze information than it would be if multiple data models were used to retrieve information such as sales invoices, order receipts, general ledger charges, etc.Prior to loading data into the data warehouse, inconsistencies are identified and resolved. This greatly simplifies reporting and analysis.Information in the data warehouse is under the control of data warehouse users so that, even if the source system data is purged over time, the information in the warehouse can be stored safely for extended periods of time.Because they are separate from operational systems, data warehouses provide retrieval of data without slowing down operational systems.Data warehouses can work in conjunction with and, hence, enhance the value of operational business applications, notably customer relationship management (CRM) systems.Data warehouses facilitate decision support system applications such as trend reports (e.g., the items with the most sales in a particular area within the last two years), exception reports, and reports that show actual performance versus goals
CII Institute of Logistics Virtual Class Slide 49Apr 19, 2023
9.5 Disadvantages of data warehouses
Data warehouses are not the optimal environment for unstructured data.Because data must be extracted, transformed and loaded into the warehouse, there is an element of latency in data warehouse data.Over their life, data warehouses can have high costs. The data warehouse is usually not static. Maintenance costs are high.Data warehouses can get outdated relatively quickly. There is a cost of delivering suboptimal information to the organization.There is often a fine line between data warehouses and operational systems. Duplicate, expensive functionality may be developed. Or, functionality may be developed in the data warehouse that, in retrospect, should have been developed in the operational systems and vice versa.
CII Institute of Logistics Virtual Class Slide 50Apr 19, 2023
9.6 Future of Data warehousingA 2009 Gartner Group paper predicted these developments in business intelligence/data warehousing market
Because of lack of information, processes, and tools, through 2012, more than 35 per cent of the top 5,000 global companies will regularly fail to make insightful decisions about significant changes in their business and markets. By 2012, business units will control at least 40 per cent of the total budget for business intelligence. By 2010, 20 per cent of organizations will have an industry-specific analytic application delivered via software as a service as a standard component of their business intelligence portfolio. In 2009, collaborative decision making will emerge as a new product category that combines social software with business intelligence platform capabilities. By 2012, one-third of analytic applications applied to business processes will be delivered through coarse-grained application mashups.