10.4 ERP Support for Business Processes

Question 1

what is a cross departmental process

Answer 1

a process that originates in one department and ends in a different department, or

origininates and ends in the same department, but involves other departments

Question 2

3 examples of cross departmental processes

Answer 2

1) procurement process: originates in the warehouse department (need to buy), and ends in the accounting department (send payment)

2) fulfilment process: starts in the sales department (customer request to buy) and ends in the accounting departmetn (Recieve payment)

3) production process: originates and ends in the warehouse department, but involves the production department as well

Question 3

do ERP systems manage end to end cross departmental processes?

Answer 3

yes!!

Question 4

what are the flow of 4 departments in the procurement process

Answer 4

WAREHOUSE, PURCHASING, WAREHOUSE, ACCOUNTING

purchase requistion, purcahse order, packing list + goods recipet document, supplier invoice (Sent) + payment (sent)

Question 5

Steps in the procurement process

Answer 5

1) the process orgiinates in the warehouse department- creates a purchase req

2) the warehouse forwards the requisiton to the purchasing department, creates a Purchase Order, sends it to vendor

3) after company places order, it recieves goods in warehouse dept, person compares goods recieved to the PO (purchase order)

4) The warehouse issues a goods recipit document (proving that the shipment is correct)

5) at the same time or shortly after, acct department recieves invoice. Compares the PO, thegoods recipt doc, and the supplier invoice (3 WAY MATCH)

6) after accounting verifies the amtch, processes the payments and sends it to the vendor using e-payment or physical payment

Question 6

what is a purchase requisiton

Answer 6

request for goods or services to be purchases

Question 7

what 3 docs are compared in a 3 way match

Answer 7

The purchase order from warehouse, the goods recipt doct from the warehouse, and the supplier invoice

Question 8

What are the departments in the stages of the order fulfillment process

Answer 8

sales, sales, warehouse, accounting

Question 9

What are the steps of the order fulfillmetn process

Answer 9

1) sales recieves customer inquiry (Request for info about the prive and avilability of a good)

2) sales gives a quotation about the avialablity and price

3) if customer wants to buy, sales creates a CUSTOMER PURCHASE ORDER (PO) and a SALES ORDER

4) Sales order sent to warehouse, (sales order includes quantity, price, and other characteristics of product)

5) Warehouse prepares shipments and 2 internal docs: A) The picking document B) Packing list

6) Accounting issues an incoice to the customer

7) when accounting recieves a payment that is matched to the invoice amount the prcoess is done

Question 10

two strategies of the order fulfillment process

Answer 10

1) sell from stock
2) configure to order

Question 11

what is the sell from stock strategy (order fulfillment)

Answer 11

use goods that are in the warehouse (Stock) to complete orders

STANDARD GOODS !! NOT CUSTOMIZED

Question 12

What is the configure to order strategy (order fulfilmment)

Answer 12

the company customizes the product in response to the customer request

Question 13

what is the picking document

Answer 13

the doc warehouse uses to remove goods from the warehouse

Question 14

what is the packing list

Answer 14

the doct which goes with the shipment to the customer, provides details about the delivery

Question 15

do the same 6 steps apply to configure to order and sell from stock orders?

Answer 15

yes!!

Question 16

what are the 5 departmental stages of the produciton process

Answer 16

1) warehouse
2) production
3) warehouse
4) production
5) warehouse

Question 17

does the production process occur in all companies?

Answer 17

no! only those that sell phsyical goods

Question 18

what are 2 strategies of the production process

Answer 18

1) make to stock: when company produces goods to create or increase an inventory

2) make to order: when production is generated by a specific customer order

Question 19

what are the 6 steps of the production process?

Answer 19

1) the warehouse department issues a PLANNED ORDER: (either when there is insufficienct inventory, or because the customer placed an order for a good that is not in stock)

2) Managementin production approves production, issues PRODUCTIOON ORDER, to start production

3) Production requires materials, and they create a material withdrawl slip!!! this lists all the parts that are needed and forwards it to the warehouse

4) Warehouse sees if parts are available from MATERIAL WITHDRAWAL SLIP, and if so, send the parts to production

5) after production has created products, updates the PRODUCTION ORDER, and send the specific number of units to the warehouse

6) warehouse recieives the finished goods, ISSUES A GOODS RECIPT DOC certifiying how many units of a product it has recieved

Question 20

what are the potential errors in the procurement, fulfillment, and production processes

Answer 20

1) delay in the recipt of products
2) issues related to a bad 3 way match regarding goods recieved
3) delay in shimpent
….

Question 21

A number of events can occur that create exceptions or deviations in the procurement, fulfillment, and production processes. Deviations may include the following:

A delay in the receipt of products
Issues related to an unsuccessful three-way-match regarding goods received and its associated supplier invoice (procurement)
Rejection of a quotation
A delay in a shipment
A mistake in preparing the shipment or in invoicing the customer (fulfillment)
Overproduction of a product
Receipt of parts that cannot be used in the production process (due to poor quality, for example)
Unavailability of certain parts from a supplier

Answer 21

A number of events can occur that create exceptions or deviations in the procurement, fulfillment, and production processes. Deviations may include the following:

A delay in the receipt of products
Issues related to an unsuccessful three-way-match regarding goods received and its associated supplier invoice (procurement)
Rejection of a quotation
A delay in a shipment
A mistake in preparing the shipment or in invoicing the customer (fulfillment)
Overproduction of a product
Receipt of parts that cannot be used in the production process (due to poor quality, for example)
Unavailability of certain parts from a supplier

Question 22

why do companies use erp in the procurment, fulfilment and production processes?

Answer 22

stores all the documents and makes info avilable in real time!!!

MISTAKES CAN BE HANDLED RIGHT AWAY BY SIMPLE QUERYING!!

Question 23

are SCM processes interorganizational

Answer 23

yes! there is a lot of firms present in any given supply chain

Question 24

HOW CAN erp manage interorganizational processes

Answer 24

they can help manage things like supply chain management

Question 25

are CRM systems interorganizational

Answer 25

YES!!

Question 26

How does ERP improve SCM?

Answer 26

->ERP places automatic requests to suppliers
-> ERP can be used to predict order requests

Question 27

How does ERP help CRM?

Answer 27

-> generates forecasting analysis of product consumption based on many variables
-> can figure out how to better recommend goods to customers!! converts sales opportunities to sales orders

Question 28

Demand to order process

Answer 28

convering sales opps to sales orders using CRM

Question 29

What’s In IT For Me?

For the Accounting Major
Understanding the functions and outputs of TPSs effectively is a major concern of any accountant. It is also necessary to understand the various activities of all functional areas and how they are interconnected. Accounting information systems are a central component in any ERP package. In fact, all large CPA firms actively consult with clients on ERP implementations, using thousands of specially trained accounting majors.

For the Finance Major
IT helps financial analysts and managers perform their tasks better. Of particular importance is analyzing cash flows and securing the financing required for smooth operations. Financial applications can also support such activities as risk analysis, investment management, and global transactions involving different currencies and fiscal regulations.
Finance activities and modelling are key components of ERP systems. Flows of funds (payments), at the core of most supply chains, must be executed efficiently and effectively. Financial arrangements are especially important along global supply chains, where currency conventions and financial regulations must be considered.

For the Marketing Major
Marketing and sales expenses are usually targets in a cost-reduction program. Also, sales force automation improves not only salespeople’s productivity (and thus reduces costs) but also customer service.

For the Production/Operations Management Major
Managing production tasks, materials handling, and inventories in short time intervals at a low cost and with high quality is critical for competitiveness. These activities can be achieved only if they are properly supported by IT. IT can also greatly enhance interaction with other functional areas, especially sales. Collaboration in design, manufacturing, and logistics requires knowledge of how modern information systems can be connected.

For the Human Resource Management Major
Human resources managers can increase their efficiency and effectiveness by using IT for some of their routine functions. Human resources personnel need to understand how information flows between the HR department and the other functional areas. Finally, the integration of functional areas through ERP systems has a major impact on skill requirements and scarcity of employees, which are related to the tasks performed by the HRM department.

For the MIS Major
The MIS function is responsible for the most fundamental information systems in organizations: the transaction processing systems. The TPSs provide the data for the databases. In turn, all other information systems use these data. MIS personnel develop applications that support all levels of the organization (from clerical to executive) and all functional areas. The applications also enable the firm to do business with its partners.

Answer 29

What’s In IT For Me?

For the Accounting Major
Understanding the functions and outputs of TPSs effectively is a major concern of any accountant. It is also necessary to understand the various activities of all functional areas and how they are interconnected. Accounting information systems are a central component in any ERP package. In fact, all large CPA firms actively consult with clients on ERP implementations, using thousands of specially trained accounting majors.

For the Finance Major
IT helps financial analysts and managers perform their tasks better. Of particular importance is analyzing cash flows and securing the financing required for smooth operations. Financial applications can also support such activities as risk analysis, investment management, and global transactions involving different currencies and fiscal regulations.
Finance activities and modelling are key components of ERP systems. Flows of funds (payments), at the core of most supply chains, must be executed efficiently and effectively. Financial arrangements are especially important along global supply chains, where currency conventions and financial regulations must be considered.

For the Marketing Major
Marketing and sales expenses are usually targets in a cost-reduction program. Also, sales force automation improves not only salespeople’s productivity (and thus reduces costs) but also customer service.

For the Production/Operations Management Major
Managing production tasks, materials handling, and inventories in short time intervals at a low cost and with high quality is critical for competitiveness. These activities can be achieved only if they are properly supported by IT. IT can also greatly enhance interaction with other functional areas, especially sales. Collaboration in design, manufacturing, and logistics requires knowledge of how modern information systems can be connected.

For the Human Resource Management Major
Human resources managers can increase their efficiency and effectiveness by using IT for some of their routine functions. Human resources personnel need to understand how information flows between the HR department and the other functional areas. Finally, the integration of functional areas through ERP systems has a major impact on skill requirements and scarcity of employees, which are related to the tasks performed by the HRM department.

For the MIS Major
The MIS function is responsible for the most fundamental information systems in organizations: the transaction processing systems. The TPSs provide the data for the databases. In turn, all other information systems use these data. MIS personnel develop applications that support all levels of the organization (from clerical to executive) and all functional areas. The applications also enable the firm to do business with its partners.

Question 30

purpose of transaction processing systems.

Answer 30

TPSs monitor, store, collect, and process data generated from all business transactions. These data provide the inputs into the organization’s database.

Question 31

types of support that information systems can provide for each functional area of the organization.

Answer 31

The major business functional areas are production/operations management, marketing, accounting/finance, and human resources management. Table 10.1 provides an overview of the many activities in each functional area supported by FAIS.

Question 32

Identify advantages and drawbacks to businesses of implementing an enterprise resource planning (ERP) system.

Answer 32

Enterprise resource planning (ERP) systems integrate the planning, management, and use of all of the organization’s resources. The major objective of ERP systems is to tightly integrate the functional areas of the organization. This integration enables information to flow seamlessly across the various functional areas.
The following are the major benefits of ERP systems:

Because ERP systems integrate organizational resources, they make organizations more flexible, agile, and adaptive. The organizations can, therefore, react quickly to changing business conditions and capitalize on new business opportunities.
ERP systems provide essential information on business performance across functional areas. This information significantly improves managers’ ability to make better, more timely decisions.
ERP systems integrate organizational resources, resulting in significant improvements in the quality of customer service, production, and distribution.

The following are the major drawbacks of ERP systems:

The business processes in ERP software are often predefined by the best practices that the ERP vendor has developed. As a result, companies may need to change existing business processes to fit the predefined business processes of the software. For companies with well-established procedures, this requirement can be a huge problem.
ERP systems can be extremely complex, expensive, and time consuming to implement. In fact, the costs and risks of failure in implementing a new ERP system are substantial.

Question 33

Describe the three main business processes supported by ERP systems.

Answer 33

The procurement process originates in the warehouse department (need to buy) and ends in the accounting department (send payment).

The fulfillment process originates in the sales department (customer request to buy) and ends in the accounting department (receive payment).

The production process originates and ends in the warehouse department (need to produce and reception of finished goods), but involves the production department as well.

Question 34

what are the flow of documents in the procurement process

Answer 34

1) WH: purchase req
2) Purchasing: PO (PURCHASE ORDER)
3) WH: Packing list
4) WH: goods reciept doc
5) ACCT: Supplier invoice recieived
6) ACCT: Payment sent

Question 35

What are the flow of docus in the fulfilmment process

Answer 35

1)Sales: customer inquiry
2) Sales: quotation
3) Sales: customer PO
4) Sales: sales order
5) WH: Picking document
6) Warehouse: Packing List
7) Acct: invoice setn
8) Acct: payment recieved

Question 36

WHat are the flow of docs in the production process

Answer 36

1) WH: planned order
2) Production: Production Order
3) Production: Material withdrawal slip
4) WH: material withdrawl slip
5) Production :Production order updates
6) WH: Goods reciept