Enterprise Business Processes and Reporting

(IS 6214)

MBS MIMAS

5th Jan 2011

Fergal CartonBusiness Information Systems

Covered last term

o Definition of business processeso Different aims of organisational functionso Key information resources shared by those functions o Significance of data integrityo Benefits of integration and standardisation o Enterprise systems (ERP): benefits and challengeso Revenue and expenditure cycles and accountingo Reporting and data access in the enterpriseo The role of business intelligence toolso Advanced Excel features for data manipulationo Data import, data parsing, data export. o Data functions (database, pivot table, formulae, …)

… and discussed in class• Meaning of enterprise systems• Identifying signs of inefficiency in organisations• Overuse of Excel• Bad data on phone, process for clean-up• Your own bad data examples

– A process or a data issue?• Role of information technology in processes • Porters value chain• Importance of data integrity• Revenue recognition• Physical and virtual elements of processes• Sales process for Cucina: assessment

This week• ERP system sample screens• ERP and control• Evolution of ERP• Integration is a question of design• Main modules• Cucina project overview• Sales orders example : separating header and line items• Notes on Arbutus breads• First IS 6216 class on Friday 7th Jan, Lab 1.111

SAP R/2SAP R/2

• SAP created in 1972 in Germany (Walldorf) SAP created in 1972 in Germany (Walldorf) (Bavaria) by 5 ex-IBM programmers(Bavaria) by 5 ex-IBM programmers

SAP R3 V1.0SAP R3 V1.0

SAP R3 V4.7SAP R3 V4.7

Oracle v 11.3Oracle v 11.3

ERP : it’s about control

• Revenues Sales Orders

• Costs Purchase Orders

• Profitability P&L

Finance: eyes on the road ahead and on the rear-view mirror

• Control of costs and revenues• Report on results to directors

and shareholders• Plan expenditure (budgets)• Pay suppliers (including

employees!)• Collect cash from customers• Manage cash flow and

currency exposure• Plan for financing

requirements (eg. acquisitions)

DeliverCustomerMakeSupplier

1950’s: unlimited demand

DeliverCustomerMakeSupplier

Bill of materials links demand to supply

Raw materials Finished goods

Plan, buy

Bill of materials

DeliverCustomerMake

Buy

Supplier

Plan

1960’s : inventory costs money!

DeliverCustomerMake

Buy

Supplier

Plan

MRP

1960’s : inventory costs money

MRP II

Sell

CustomerMake

Buy

Supplier

Plan

MRP

Deliver

1970’s : first wave of integration

MRP II

Sell

CustomerMake

Buy

Supplier

Plan

MRP

Deliver

1980’s : sales order processing

SOP

MRP II

Sell

CustomerMake

Buy

Supplier

Plan

MRP

Deliver

1990’s : back-office integration

ERP

Accounting & Finance Human Resources

Degrees of integration

• Integration is a matter of organisational design as well as procedure– first degree: people talk to one another (informal)– Second degree: exchange of documents– Third degree: integrated systems shared by

several functional areas– Fourth degree: single integrated system shared by

the whole firm

• Substantial preliminary work is required for setting this up

Plan

Buy

Make

Deliver

Bill and collect

Approve & Pay

Report results

Sell

Install

Maintain

Recruit

Manage

Reward

Manufacturing

Finance Sales / CS HR

Market

DevelopBudget

Management informationProduct

s

Cash Customers

People

•Integrated data (single point of entry)

Managers require information

Key modules

Cucina project• You are bidding for the contract to supply Cucina with a solution• Each group builds a demand management prototype for Cucina

– sales order processing– customer invoicing – management reporting

• Starting from the business narrative in January, each group of students is responsible for

– The management of the project through to completion in March – Analysis of requirements (process flows for as-is and to-be) – Design and build a suitable system, including the database, user interface and

management reports. – Presentation of the prototype to the Cucina board of management

Northwind Data : Customers

CustomerID CompanyName ContactName ContactTitle Address City PostalCode Country PhoneALFKI Alfreds Futterkiste Maria Anders Sales Representative Obere Str. 57 Berlin 12209 Germany 030-0074321ANATR Ana Trujillo Emparedados y heladosAna Trujillo Owner Avda. de la Constitución 2222México D.F. 05021 Mexico (5) 555-4729ANTON Antonio Moreno Taquería Antonio Moreno Owner Mataderos 2312 México D.F. 05023 Mexico (5) 555-3932AROUT Around the Horn Thomas Hardy Sales Representative 120 Hanover Sq. London WA1 1DP UK (171) 555-7788BERGS Berglunds snabbköp Christina Berglund Order Administrator Berguvsvägen 8 Luleå S-958 22 Sweden 0921-12 34 65BLAUS Blauer See Delikatessen Hanna Moos Sales Representative Forsterstr. 57 Mannheim 68306 Germany 0621-08460BLONP Blondel père et fils Frédérique Citeaux Marketing Manager 24, place Kléber Strasbourg 67000 France 88.60.15.31BOLID Bólido Comidas preparadas Martín Sommer Owner C/ Araquil, 67 Madrid 28023 Spain (91) 555 22 82BONAP Bon app' Laurence Lebihan Owner 12, rue des Bouchers Marseille 13008 France 91.24.45.40BOTTM Bottom-Dollar Markets Elizabeth Lincoln Accounting Manager 23 Tsawassen Blvd. Tsawassen T2F 8M4 Canada (604) 555-4729BSBEV B's Beverages Victoria Ashworth Sales Representative Fauntleroy Circus London EC2 5NT UK (171) 555-1212CACTU Cactus Comidas para llevar Patricio Simpson Sales Agent Cerrito 333 Buenos Aires 1010 Argentina (1) 135-5555CENTC Centro comercial Moctezuma Francisco Chang Marketing Manager Sierras de Granada 9993 México D.F. 05022 Mexico (5) 555-3392CHOPS Chop-suey Chinese Yang Wang Owner Hauptstr. 29 Bern 3012 Switzerland 0452-076545COMMI Comércio Mineiro Pedro Afonso Sales Associate Av. dos Lusíadas, 23 São Paulo 05432-043 Brazil (11) 555-7647CONSH Consolidated Holdings Elizabeth Brown Sales Representative Berkeley Gardens12 BreweryLondon WX1 6LT UK (171) 555-2282DRACD Drachenblut Delikatessen Sven Ottlieb Order Administrator Walserweg 21 Aachen 52066 Germany 0241-039123DUMON Du monde entier J anine Labrune Owner 67, rue des Cinquante OtagesNantes 44000 France 40.67.88.88EASTC Eastern Connection Ann Devon Sales Agent 35 King George London WX3 6FW UK (171) 555-0297ERNSH Ernst Handel Roland Mendel Sales Manager Kirchgasse 6 Graz 8010 Austria 7675-3425FAMIA Familia Arquibaldo Aria Cruz Marketing Assistant Rua Orós, 92 São Paulo 05442-030 Brazil (11) 555-9857FISSA FISSA Fabrica Inter. Salchichas S.A.Diego Roel Accounting Manager C/ Moralzarzal, 86 Madrid 28034 Spain (91) 555 94 44

Northwind Data : Order headers

OrderID CustomerIDEmployeeIDOrderDate RequiredDate ShippedDate ShipVia Freight ShipName ShipAddress10248 WILMK 5 04/07/1996 01/08/1996 16/07/1996 3 €32.38 Vins et alcools Chevalier 59 rue de l'Abbaye10249 TRADH 6 05/07/1996 16/08/1996 10/07/1996 1 €11.61 Toms Spezialitäten Luisenstr. 4810250 HANAR 4 08/07/1996 05/08/1996 12/07/1996 2 €65.83 Hanari Carnes Rua do Paço, 6710251 VICTE 3 08/07/1996 05/08/1996 15/07/1996 1 €41.34 Victuailles en stock 2, rue du Commerce10252 SUPRD 4 09/07/1996 06/08/1996 11/07/1996 2 €51.30 Suprêmes délices Boulevard Tirou, 25510253 HANAR 3 10/07/1996 24/07/1996 16/07/1996 2 €58.17 Hanari Carnes Rua do Paço, 6710254 CHOPS 5 11/07/1996 08/08/1996 23/07/1996 2 €22.98 Chop-suey Chinese Hauptstr. 3110255 RICSU 9 12/07/1996 09/08/1996 15/07/1996 3 €148.33 Richter Supermarkt Starenweg 510256 WELLI 3 15/07/1996 12/08/1996 17/07/1996 2 €13.97 Wellington Importadora Rua do Mercado, 1210258 ERNSH 1 17/07/1996 14/08/1996 23/07/1996 1 €140.51 Ernst Handel Kirchgasse 610259 CENTC 4 18/07/1996 15/08/1996 25/07/1996 3 €3.25 Centro comercial Moctezuma Sierras de Granada 999310260 OLDWO 4 19/07/1996 16/08/1996 29/07/1996 1 €55.09 Ottilies Käseladen Mehrheimerstr. 36910261 QUEDE 4 19/07/1996 16/08/1996 30/07/1996 2 €3.05 Que Delícia Rua da Panificadora, 1210262 RATTC 8 22/07/1996 19/08/1996 25/07/1996 3 €48.29 Rattlesnake Canyon Grocery 2817 Milton Dr.10263 ERNSH 9 23/07/1996 20/08/1996 31/07/1996 3 €146.06 Ernst Handel Kirchgasse 610264 FOLKO 6 24/07/1996 21/08/1996 23/08/1996 3 €3.67 Folk och fä HB Åkergatan 2410265 BLONP 2 25/07/1996 22/08/1996 12/08/1996 1 €55.28 Blondel père et fils 24, place Kléber10266 WARTH 3 26/07/1996 06/09/1996 31/07/1996 3 €25.73 Wartian Herkku Torikatu 3810267 FRANK 4 29/07/1996 26/08/1996 06/08/1996 1 €208.58 Frankenversand Berliner Platz 4310268 GROSR 8 30/07/1996 27/08/1996 02/08/1996 3 €66.29 GROSELLA-Restaurante 5ª Ave. Los Palos Grandes10269 WHITC 5 31/07/1996 14/08/1996 09/08/1996 1 €4.56 White Clover Markets 1029 - 12th Ave. S.

Northwind Data : Order detailsOrderID ProductID UnitPrice Quantity Discount

10248 11 €14.00 12 010248 42 €9.80 10 010248 72 €34.80 5 010249 14 €18.60 9 010249 51 €42.40 40 010250 41 €7.70 10 010250 51 €42.40 35 0.1510250 65 €16.80 15 0.1510251 22 €16.80 6 0.0510251 57 €15.60 15 0.0510251 65 €16.80 20 010252 20 €64.80 40 0.0510252 33 €2.00 25 0.0510252 60 €27.20 40 010253 31 €10.00 20 010253 39 €14.40 42 010253 49 €16.00 40 010254 24 €3.60 15 0.1510254 55 €19.20 21 0.15

Arbutus bread 1•  Product quality is the number one (and two, and three!) competitive

advantage for Arbutus, with good customer service a pre-requisite • Arbutus breads are fresh and par-baked, with customers choosing

between the option that suits their business. In volume it looked like the fresh might have >75% of the business?

• Bread is a regular business, with customers tending to re-order the same products and quantities repeatedly. In this way, exceptions to one day’s orders can be handled manually, with the template order only modified if the exception becomes the rule. Weekend orders are much higher in general, with customers placing larger orders for Saturdays. Consumers take the time to choose their bread at the weekend.

• Customer orders are generally not taken by drivers, although they can do this. There is no requirement for a more real time method for placing orders, given the general stability of the demand patterns

Arbutus bread 2• Flexibility is key when allowing customers to place orders or to pay for

invoices. Arbutus currently accept orders by email, fax and phone, with voice mail picking up out of hours orders. Payment methods are cash, cheques and electronic transfer.

• Two drivers carry out three delivery runs during the morning, the first at 07h30 being the most critical. Drivers have 15 minutes at the end of the morning’s baking to load the vans and start on the first delivery run, otherwise congestion becomes a problem. One driver looks after city center, the other does south suburbs (Halfway, Airport, Grange, …) and smaller runs (eg. Glanmire).

• Orders coming in after hours are listened to by production staff before commencing their 2am shift, thus any late changes in customer requirements are taken into account

• Direct sales at Farmers markets account for the single biggest destination of Arbutus products, and this is a cash business

Arbutus bread 3• Customer orders are input directly into an Excel spreadsheet, this sheet

summarises daily production figures into quantities of raw materials for production staff. This data is also used as the basis for the production of Delivery notes for customers

• A separate accounting system (TAS books) is used to run aged invoice reports and P&L statements

• The running of the operation has costs that break down into ingredients, plant overheads, vehicle running costs and labour. There is a notion of standard costs, but currently it is difficult to establish unit costs to a point where the taking on of a new high volume customer will be profitable or not.

• The cost of distribution is the real issue in this business. The use of parbaked products opens up the possibility to use third party distributors. In some new markets, for example with the new Granny Ryan bread mix, it may be envisaged to enter into a distribution agreement with an international logistics provider.

• The biggest challenge for the business is the bureaucracy surrounding legislative requirements for Health and Safety.