Enterprise Business Processes and Reporting (IS 6214) MBS MIMAS 5 th Jan 2011 Fergal Carton Business Information Systems

Covered last term oDefinition of business processes oDifferent aims of organisational functions oKey information resources shared by those functions oSignificance of data integrity oBenefits of integration and standardisation oEnterprise systems (ERP): benefits and challenges oRevenue and expenditure cycles and accounting oReporting and data access in the enterprise oThe role of business intelligence tools oAdvanced Excel features for data manipulation oData import, data parsing, data export. oData 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 7 th Jan, Lab 1.111

SAP R/2 SAP created in 1972 in Germany (Walldorf) (Bavaria) by 5 ex-IBM programmersSAP created in 1972 in Germany (Walldorf) (Bavaria) by 5 ex-IBM programmers

SAP R3 V1.0

SAP R3 V4.7

Oracle v 11.3

ERP : it’s about control RevenuesSales Orders CostsPurchase Orders ProfitabilityP&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)

Deliver CustomerMakeSupplier 1950’s: unlimited demand

Deliver CustomerMakeSupplier Bill of materials links demand to supply Raw materials Finished goods Plan, buy Bill of materials

Deliver CustomerMake Buy Supplier Plan 1960’s : inventory costs money!

Deliver CustomerMake 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 & FinanceHuman 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 ManufacturingFinanceSales / CSHR Market DevelopBudget Management information ProductsCashCustomersPeople 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

Northwind Data : Order headers

Northwind Data : Order details

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 , 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.