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Terms in this set (91)
the processes associated with selling a product or service
create customer record; check credit; create order; allocate stock; pick, pack, and ship; prepare and send invoice; collect payment
consequences of ineffective order-to-cash process
manual input causes errors; not optimal in picking and shipping processes; high rate of disputes; ineffective collection process; defecting customers.
Advantage of effective order-to-cash process
customer satisfaction, speed up the collection process, provide valuable inputs into business intelligence and customer relationship management applications.
procuring goods from external vendors are together
consequences of ineffective procure-to-pay process
increase error rates iin purchase or der and invoice processing; inhibits a company from developing close relationships with preferred vendors, increase cost per transaction, increase in disputes to be resolved, prohibit the company from obtaining the most favorable conditions from its vendors
advantage of effective procure-to-pay process
obtain favorable conditions, reduce transaction costs; create customer goodwill
core business processes
order-to-cash, procure-to-pay, make-to-stock/make-to-order
goods are produced based on forecasts and are stocked in a warehouse; sales orders are then fulfilled from inventory.
raw materials, subcomponents, and accessories are procured based on forecasts, but actual manufacturing does not start until sales orders are received
other name of make-to-stock process
other name of make-to-order process
negotiate price and terms, issue purchase order, receive goods, receive invoice, settle payment
procure inputs, schedule production, production, quality control, stock product
process sales order, design/engineer product (optional), procure inputs, schedule production, production, quality control, ship product
the set of business activities that add value to the end product. In which information flows through functional areas that facilitate an organization's business processes
functional areas that process inputs and produce outputs
those activities that enable core activities to take place
core activities components
inbound logistic (receiving), operations and manufacturing, outbound logistics (shipping), marketing and sales, and customer service
other name for inbound logistic
other name for outbound logistic
involves the business activities associated with receiving and stocking raw materials, parts, and products.
Operations and manufacturing
can involve such activities as order processing (e.g., at Amazon.com) and/or manufacturing or assembly processes (e.g., at Dell) that transform raw materials and/ or component parts into end products (i.e., the make-to-stock and make-to-order business processes)
focuses on the distribution of end products within the order-to-cash business process.
Marketing and sales activities
are associated primarily with the presales (i.e., before the sale) activities of the company. These activities include the creation of marketing literature, communication with potential and existing customers, and pricing of goods and services.
are business activities that enable the primary activities to take place.
Components of Support activities
administrative activities, infrastructure, human resources, technology development, and procurement.
focus on the processes and decision making that orchestrate the day to day operations of an organization, particularly those processes that span organizational functions and levels
refers to the hardware and software that must be implemented to support the applications that the primary activities use. It provides the necessary components to facilitate the order entry process
Human resource activities
encompass all business activities associated with employee management, such as hiring, interview scheduling, payroll, and benefits management.
includes the design and development of applications that support the primary business activities, so as to improive product and/or services
refers to the purchasing of goods and services that are required as inputs to the primary activities. Allowing each functional area to send out purchase orders can create problems for companies, such as maintaining relationships with more suppliers than necessary and not taking advantage of volume discounts.
How the procurement business activity can leverage information system
accumulating purchase orders from the different functional areas within the organization. Procurement personnel can then combine multiple purchase orders containing the same item into a single purchase order. Ordering larger volumes from its suppliers means that the company can achieve dramatic cost savings through volume discounts.
How a company can crate additional value
integrating internal applications with suppliers, business partners, and customers.
information flows from one company's value chain to another company's value chain.
What source are considered part of the value system
any information that feeds into a company's value chain, whether its source is another company's value chain or an end consumer
What is a supply chain can be viewed as
An upstream information flow
consists of information that is .received .from another organization
a downstream information flow
relates to the information that IS produced by a company and sent along to another organization.
Systems that focus on the specific needs of individual departments are typically not designed to communicate with other systems in the organization
they are typically either fast approaching or beyond the end of their useful life within the organization
disadvantage of legacy system
data redundancy, data inconsistency, unnecessary costs associated with entering, storing, and updating data redundantly
other name of enterprise-wide information system
An enterprise-wide information system (or enterprise system)
is an integrated suite of business applications for virtually every department, process, and industry, allowing companies to integrate information across operations on a company-wide basis using one large database.
Internally focused system
support functional areas, business processes, and decision making within an organization
Externally focused systems
coordinate business processes with customers, suppliers, business partners, and others who operate outside an organization's boundaries.
interorganizational system (IOS)
A system that communicates across organizational boundaries
Systems that facilitate interorganizational communications focus on
the upstream and downstream information flows.
Customer relationship management applications concentrate on
the activities involved in promoting and selling products to the customers as well as providing customer service and nourishing long-term relationships.
supply chain management applications
integrate the value chains of business partners within a supply chain, improving the coordination of suppliers, product or service production, and distribution
applications written by third-party vendors for the needs of many different users and organizations,
Other name for packaged software
are applications that are designed and developed exclusively for a specific organization
core Applications of SAP's Business Suite
customer relationship management, enterprise resource planning, product life cycle management, supplier relationship management, supply chain management
components that can be selected and implemented as needed.
The features and modules that an enterprise system comes with out of the box
"Finanacials" Key Capabilities of SAP's Enterprise Systems
allows organizations to manage corporate finance functions by automating financial supply chain management, financial accounting, and management accounting
"human capital management" Key Capabilities of SAP's Enterprise Systems
gives organizations the tools needed to maximize the profitability potential of the workforce, with functionality for employee transaction management and employee life cycle management
"operations" Key Capabilities of SAP's Enterprise Systems
empowers organizations to streamline operations with integrated functionality for managing end to end logistics processes while expanding collaborative capabilities in supply chain management, product life cycle management, and supplier relationship management
"Corporate services" Key Capabilities of SAP's Enterprise Systems
allows organizations to optimize centralized and decentralized service for managing real estate, corporate travel, and incentives and commissions
industry standard business processes. It reflect the techniques and processes, identified through experience and research, that have consistently shown results superior to those achieved with other means.
Business process management (BPM)
is a systematic, structured improvement approach by all or part of an organization whereby people critically examine, rethink, and redesign business processes in order to achieve dramatic improvements in one or more performance measures, such as quality, cycle time, or cost
business process management
business process reengineering
BPM change to BPR when
The basic steps in BPM
1. Develop a vision for the organization that specifies business objectives, such as reducing costs, shortening the time it takes to get products to market, improving quality of products and/or services, and so on; 2. Identify the critical processes that are to be redesigned; 3. Understand and measure the existing processes as a baseline for future improvements; 4. Identify ways that information systems can be used to improve processes; 5. Design and implement a prototype of the new processes
Similarity of BPM and total quality management, continuous process improvement
they are intended to be cross functional approaches to improve an organization
differences of BPM and total quality management, continuous process improvement
These quality improvement approaches tend to focus on incremental change and gradual improvement of processes, while the intention behind BPM is radical redesign and drastic improvement of processes.
What was BPR's reputation
a nice way of saying "downsizing"
Reasons for BPR's failures
the lack of sustained management commitment and leadership, unrealistic scope and expectations, and resistance to change.
Reasons for BPR's success
support by senior management; shared vision by all organizational member; realistic expectations; participants empowered to make changes; the right people participating; sound management practices; appropriate funding
Implementation cost of enterprise systems
over budget 56% of the time
Benefits of enterprise systems
improved availability of information, increased interaction throughout the organization, improved (reduced) lead times for manufacturing, improved customer interaction, reduced operating expenses, reduced IS costs, improved supplier integration, improved compliance with standards, rules, and regulations
Cost of enterprise systems
software licenses and maintenance costs; technical implementation; hardware costs; travel and training costs for personnel; ongoing customization and integration costs; business process studies; project governance costs
enterprise resource planning
Issues in choosing an ERP system
control and business requirements
refers to the locus of control over the computing systems and data contained in those systems, as well as decision-making authority; or the consistency of policies and procedures
Two major categories of ERP components
core and extended components
ERP core components
support the important internal activities of the organization for producing their products and services.
Components of ERP core components
financial management, operations management, and human resource management
"Financial management" in ERP core components
Components to support accounting, financial reporting, performance management, and corporate governance
"operations management" in ERP core components
Components to simplify, standardize, and automate business processes related to inbound and outbound logistics, product development, manufacturing, and sales and service
"Human resource management
in ERP core components: Components to support employee recruitment, assignment tracking, performance reviews, payroll, and regulatory requirements
ERP extended components
support the primary external activities of the organization for dealing with suppliers and customers.
Components of ERP extended components
supply chain management and customer relationship management
Industry specific versions of the Microsoft dynamics ERP system
construction, education, government, manufacturing, professional services, distribution, financial services, health care, not-for-profit, retail
An activity that is widely underestimated in implementing ERP system
configuration of ERP systems
ERP core components are designed primarily to support internal business activities, they tend not to be well suited for managing value system activities.
Industry survey about ERP systems
90 percent of companies that undertake enterprise system implementation realize some benefits; around 50 percent realize about half of the expected benefits and 6 percent report that they did not realize any benefits
Recommendation when implementing ERP system
secure executive sponsorship, get help from outside experts, thoroughly train users, take a multidisciplinary approach to implementations, look beyond ERP
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