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VIEWS: 9 PAGES: 53

									Its all about Integration

Paul Hawking
Background




                            SAP University Alliance Program (UAP)
University                        SAP                               SAP User Group
   SAP Academic Program             SAP Mentor                       Presenter
    Director                            22 SAP million users
                                                                       Design Events
                                        2.5 million SAP
   Research                            Community Network              Advisor
   Industry Reports                    members
                                                                       Past Chairperson
                                        6,000 active contributors
   Best selling author                 100 SAP Mentors
   ERP Systems and                     1 academic
    Business Intelligence            Teach Academics
   Visiting Professor               Develop curriculum
                                     2009 + 2010 Top 10 Most
                                      Influential SAP People
Who? What? Why?

Tim Berners Lee




                  INTEGRATION
Journey




  Business       Information
                                 ERP Systems
   Basics          Systems




                   Business
 Supply Chain
                   Network          SAP
 Management
                Transformation
Strategy and Business Processes
  Business Process Examples


Sales



             Sales                                       Warehouse                              Accounting

    Receive                                           Prepare              Send
                       Create                                                           Create & Send             Recieve
   Customer                                          Shipment            Shipment
                     Sales Order                                                           Invoice                Payment
 Purchase Order                                    (Pick & Pack)          (Ship)



 Procurement
                                       $
                                           $




                                               $




 Warehouse                   Purchasing                       Warehouse                  Accounting

                              Create & Send
      Create                                                        Receive         Receive              Send
                                 Purchase
    Requisition                                                    Shipment         Invoice             Payment
                                  Order
Business Process Elements




        Organisational Units
            Sales Area
               Distribution Channel
        Transactions
               Sales Order Creation
               Goods Issue
        Data
        Master Data
                                       Process Indicator
               Customer
               Material
        Transactional Data
             Sales Quantity
               Sales Price
Journey




  Business       Information
                                 ERP Systems
   Basics          Systems




                   Business
 Supply Chain
                   Network          SAP
 Management
                Transformation
Traditional Business Landscape


                                                    Executive
                                                    Management



                                                    Middle
                                                    Management



                                                    Operational
                                                    Management



                                                     Operations


                Sales
        Finance &            Production Human
                                        Resources
                Distribution
Traditional Business Landscape


                                                    Executive
                                                    Management



                                                    Middle
                                                    Management



                                                    Operational
                                                    Management



                                                     Operations


                Sales
        Finance &            Production Human
                                        Resources
                Distribution
   Intel (1995)
                                        SECURITY
                                                                                                    ELECTRONIC
                                                                                      DAISY         TRANSFER
                                                         HELP   PRICE
                                        RCC                     BOOK
                                                                                                                 WMS
                                                                     Configurator
                                    CUSTOMER
               EUC                                                                                  SARP
                                                          PNA     PRICE
               EXTRACTS                                                                                          NOVA
                                 INFRASTRUCTURE                                     AGREEMENTS
                                                                                                                  MDS
 JAPAN
 FORECAST                                                                                                          CWS

        JAPAN                                                                                              DARE           EDI
        DAISY
                      JASTAR                        STAR                            ESTAR
                                                                                                         PRICE     OEM
                                                                                                         BOOK      QUOTE
                                                                                                                    EUC
         PGS                                                                                         DPA            EXTRACTS

JAPAN
PRICE                                              A/R               A/P
                                                            G/L              PRODUCT               RST                 MAX
BOOK                       EDI
            PMS                                                              CODE
                                                    COMPONENTS
                                                    COST                                        EUC                             CLS
                                                                           DEMAND
                                                                                                EXTRACTS
                                        NIMS                               FORECAST                                AMAPS
                    EUC
                    EXTRACTS      DPA      AVAILABILITY
                                                                                       GPS II
   DATA
   WAREHOUSE                                                                                               ISET         GIMS

                                                                                MPS
Traditional Business Landscape


                                                    Executive
                                                    Management



                                                    Middle
                                                    Management



                                                    Operational
                                                    Management



                                                     Operations


                Sales
        Finance &            Production Human
                                        Resources
                Distribution
Integration Problems



             Data
             • 9/11/2011
             • Last name
             • Subject vs Course

             Process
             • Weekly vs Fortnightly
             • Workflow (goods receipt)



             People
             • Application Screens
             • Information
Traditional Business Landscape


                                                    Executive
                                                    Management



                                                    Middle
                                                    Management



                                                    Operational
                                                    Management



                                                     Operations


                Sales
        Finance &            Production Human
                                        Resources
                Distribution
Public Sector Procurement Process? - Complexity
Journey




  Business       Information
                                 ERP Systems
   Basics          Systems




                   Business
 Supply Chain
                   Network          SAP
 Management
                Transformation
                       Why ERP?

                                       Systems Not Y2K Compliant                                                                                     42%

                                                Disparate Systems                                                                            37%

                                 Poor/Uncompetitive Performance                                                                27%

                                       Poor Quality/Visibility of Info                                                     26%

                                           Cost Structure Too High                                                       24%
Program Motivation




                             Not Responsive Enough to Customers                                                    21%

                          Complex, Ineffective Business Processes                                             20%

                     Business Processes or Systems Not Integrated                                            19%

                     Unable to Implement New Business Strategies                                     15%

                                        Business Becoming Global                                     15%

                                   Difficult to Integrate Acquisitions                        12%

                                                 Obsolete Systems                             11%

                                            Inconsistent Processes                       10%

                                         Unable to Support Growth                  6%

                                                                         0%   5%        10%         15%      20%         25%     30%   35%     40%     45%
                        Note: Based on multiple answers per respondent                                     % Respondents


                                       Source: Deloitte Consulting and Benchmarking Partners
                                       (Based on a study of 62 companies that have gone live with an ERP system)
          ERP Evolution

                      EDI            e-Commerce
                                     SFA
                                                  e-business
                                     CRM
                      Planning
                      Scheduling
                                     SCM
                      Distribution

MRP                   MRP11

Payroll
                      Human
                      Resources
General Ledger
                      Financial      ERP
                      Management
Accounts Payable
                                                  ERP11
                      Information
Accounts Receivable   System
    1970s             1980s          1990s        2000s
What is an Enterprise Resource Planning System?


   An ERP System can be defined as a
    “modularised, integrated, real time
information system with broad functional
scope responsible for the processing and
 management of business transactions”

                (Hawking 2005)
ERP System


                                             Executive
                   Enterprise                Management
                   Resource
                   Planning     Human
        Finance
                                Resources    Middle
                   System                    Management



                                             Operational
                                             Management

         Sales
         &                      Production
         Distribution                         Operations
ERP Characteristics

Links all business processes automatically

Reduce inter-processing time (transactions occur one time at the
source)

Maintain an audit trail of all transactions

Utilises a common database

Perform internal conversions automatically (tax, foreign currency,
legal rules for payroll)

Empowers employees by putting data at the fingertips of employees

Involve employees in the entire functional cycle
Raytheon’s Goals

Replace thirty year old non-integrated legacy systems

 Obtain benefits of business process re-engineering

 Use ERP to drive integration

 One time entry and access to information

 Facilitate achievement of Raytheon Aircraft Company five year
plan




  $19.8 billion in revenues

  More than 100,000 employees worldwide
ERP Example

5,500 SAP users

6 countries

8 major business units

Over 40 key systems replaced, including primary
 manufacturing support system, corporate and field
 financial and purchasing systems, marketing
 expense control systems, and project management
 systems

7,500+ SAP transactions, 100+ reports, 150+ forms,
  50+ interfaces to existing systems
Benefits Achieved




                    Davenport 2003
        SAP R/3 Order Entry IBM Storage
        Benchmarks - 110 days after production
                                                       9/1/93          Reengineered     SAP
            Focus Area                                                                  Performance
                                                     Cycle Time        Target 10/1/93
                                                                                        01/20/95

   Enter pricing data into system                   5 - 80 Days          5 Minutes     5 Minutes

   Check customer credit upon order                 15 - 20 Minutes     Automatic      Automatic

   Enter customer order in system                   30 Minutes           5 Minutes     15 Minutes

   % Manual order/ship to total # of orders/ships       75%                  0%            0%

   Generate customer invoice after ship             2 - 23 Days            1 Day        8 Hours

   Respond to customer billing inquiry              15 - 20 Minutes     Real Time      Real Time

   Ship evaluation unit from customer request       3 - 30 Days           2 Days         2 Days

   Ship repair/replacement part                     3 - 44 Days           2 Days         3 Days

   Credit returned drive                            1 - 5 Months          5 Days        10 Days

   Obtain commit date for customer order              2 Hrs -           Real Time
         Unconstrained SJ manufactured drives          3 Weeks                          Real Time
                                                                                         2 Hrs-
         Allocated; non-SJ manufactured drives
                                                                                         3 Weeks
         Toyota’s Benefits

            Create                                                                    Create       Payment   Create
                        Final       Create      Complete   Enquiry on   Complete
            Sales                                                                     Invoice to   From      Retail
                        Prod'n      Sales       Finished   Vehicle      Delivery to
            /Prod’n                                                                   Finance      Finance   Delivery
                        Schedule    Order       Vehicle    Status       Dealer
            Plan                                                                      Company      Company   Record
Systems
            TOPS                                BSS
                        POST        VTS                    BSS                        VTS
Current     POST                                ALC                     VTS                        MSA       VTS
                        BSS         VOS                    VTS                        MSA
            EXCEL                               VTS

Future      ERP         ERP         ERP         ERP        ERP          ERP           ERP          ERP       ERP
            POST        POST                    ALC

Benefits
Lead-
time        O           D           D           D          D            D             D            D         O
Flexi-
bility      O           O           O           D          O            D             O            O         D
Cost
           D           D           D           D          D            D             D            D         O
Lean
Org.        D           D           O           O          O            D             O            O         O
          O = No Change D = Improvement X = Detriment
ERP Systems and Value Creation




   Integrate       Optimise      Informate
ERP Evolution
Journey




  Business       Information
                                 ERP Systems
   Basics          Systems




                   Business
 Supply Chain
                   Network          SAP
 Management
                Transformation
Supply Chain
Supply Chain Challenges
Forces Driving the Evolution of the SCM


Forces of Change




    Globalization
    Worldwide reach is not a competitive advantage but a necessity

    Cost Leadership
    Cost targets and industry consolidation

    Innovation
    Suppliers need to be involved earlier in product development

    Outsourcing
    Focus on core activities, trusted partnership
Forces Driving the Evolution of the SCM



       Retailer                 Time to Market



Traditional Clothing Retailer     36 weeks



Zara                               4 weeks
Forces Driving the Evolution of the SCM




North American Glass
Suppliers

2001                       2006

Owens-Illinois             Owens-Illinois

Corning

Consumers

Anchor Hocking
Software Company Consolidation
Forces Driving the Evolution of the SCM




 Date             Entry               Price


May 2002         Coca Cola          $2.87/6-pack
                 „Vanilla Cola‟


May 2003         Sam‟s Choice       $1.00/6-pack
                 „Vanilla Cola‟


August 2003      Pepsi              $1.99/6-pack
                 „Vanilla Cola‟
Key Industry Trends




           Quick Copying Erodes Price and Market Share

                                       Product           Date         Price
   Proctor &Gamble introduces          Swiffer           1999        $9.62

                                       Pledge            1999        $7.32
                                       Grabber

                                       Magic             2001        $7.09
                                       Sweeper kit

                                       Clorox            2002        $6.69
                                       Ready Mop


                                                                37% Price
                                                                Decline
Forces Driving the Evolution of the SCM




Focusing on Core (Moore)

Core:
  Processes that create unique competitive differentiation
  Source of growth in revenues and profits

Context:
  All other processes
  No prize for doing these well
  But there are penalties for doing them poorly



This is not the same as your core competence

This is not the same as your core business
Journey




  Business       Information
                                 ERP Systems
   Basics          Systems




                   Business
 Supply Chain
                   Network          SAP
 Management
                Transformation
Business Network (Moore)

Business networks are core/context ecosystems
  Each member contributes a unique core—their “claim to fame”
  Every other member supplies the context to support that core

Business network create higher returns
  Differentiating spend is greater, duplicated spend is less
  Higher differentiation creates higher returns on capital for all

Business networks are competitive weapons
  Silicon Valley, New York, Milan, Bangalore, Shanghai
  The Internet has made this a “virtual” phenomenon
Dell Business Network
Business Networks: A Dell Laptop for Thomas
Friedman

                                                                                                  17
                        21                                                                        5 10
                   20                                           19
               1                                                                          16 12
              13                                                               2           9    17
                   4                                                                      6
                                                                               18            8
                                                                                           14
                                                                                         3
                                                                                           11
                             1.    Laptop was designed               11.   Wireless card*      15
                             2.    Order was taken by phone          12.   Modem*
                             3.    Order hit the Dell factory        13.   Battery*
                             4.    Intel microprocessor*             14.   Hard Drive*
                             5.    Memory *                          15.   CD/DVD drive*
                             6.    Graphics card*                    16.   Notebook bag*
                             7.    Cooling Fan*                      17.   Power adapter*
                             8.    Motherboard*                      18.   Power Cord*
                             9.    Keyboard*                         19.   Memory stick*
                             10.   LCD*                              20.   Repackaged
                                                                     21.   Sent to Tom Friedman




Total order lead time was 13 days.

The order was delayed 9 days because of a Wireless card “control issue”.

Total supply chain estimated at 400 companies in North America, Europe, & Asia.
Dell Laptop Story

 1. Laptop was designed jointly in Austin, TX and Taiwan
 2. Order was taken by Mutjeba Naqvi over Dell‟s 800 number
 3. Order hit the Dell Factory in Penang, Malaysia
 4. Intel microprocessor came from either Phillipines, Costa Rica, Malaysia, or China
 5. Memory from either Samsung in Korea, Nanya in Taiwan, Infineon in Germany, or Elpida in
    Japan
 6. Graphics card from MSI or Foxcom both in China
 7. Cooling Fan from CCI or Auras both in Taiwan
 8. Motherboard from Samsung or Quanta, both in Shanghai, or Compal or Wistron in Taiwan
 9. Keyboard from Alps, Sunrex, or Darfon, all in China
 10.LCD from Korea, Japan, or Taiwan
 11.Wireless card from Malaysia, Taiwan or China
 12.Modem from China
 13.Battery from Mexico, Maylasia, China, Taiwan, or Korea
 14.Hard Drive from Singapore, Thailand, or Phillipines
 15.CD/DVD drive from Indonesia, Philippines, China, or Malaysia
 16.Notebook bag from China
 17.Power adapter from Thailand, Taiwan, Korea, or China
 18.Power Cord from India, China, or Malaysia
 19.Memory stick from Israel or Malaysia
 20.Repackaged w/ external options in Nashville, TN
 21.Sent to Tom Friedman in Maryland
Apple
And companies must employ new strategies to
survive in the new SCM reality

                       It is all about INTEGRATION




         Cost Focus                                  Value Focus

     Outsource everything                       Partner Strategically

     Cut Spending                               Spend Wisely

     Squeeze Suppliers                          Collaborative/Win-win

     Sell to “best”                             Acquire “non”
      customers                                   customers

     Eliminate headcount                        Increase productivity
ERP Systems and Business Network
Journey




  Business       Information
                                 ERP Systems
   Basics          Systems




                   Business
 Supply Chain
                   Network          SAP
 Management
                Transformation
SAP
SAP
Summary

   Corporate Strategy
                        ERP/Enterprise systems are
                        the second most important
                        technology of the last
                        decade (after the Internet)

                        Considered essential
                        infrastructure

                        Immense investment (time,
                        money and attention) by
                        businesses

                        Support global business
                        networks

                        NOT all companies realize
                        the benefits of these
                        systems
Thankyou




           Paul Hawking
           SAP Academic Programs Director
           School of Management and
           Information systems
           Telephone: +61-3-99194031
           Mobile:     +61-419301628
           Email       Paul.Hawking@vu.edu.au

								
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