Matthias Mekschrat h_DA WS 2012/13Logistical applications and optimizationsslide 1 Logistical applications and optimizations

Matthias Mekschrat h_DA WS 2012/13Logistical applications and optimizationsslide 2 overview Introduction November 02 - definition of business processes November 16 - overview of logistical business processes December 07 - functionality of production processes January 18 - special problems within the supply chain handling December 21 - functionality of sales and distribution processes November 23 - functionality of purchase and supply processes

Matthias Mekschrat h_DA WS 2012/13Logistical applications and optimizationsslide 3 Introduction About me About this lecture Your participation About the written test

Matthias Mekschrat h_DA WS 2012/13Logistical applications and optimizationsslide 4 Introduction About me About this lecture Your participation About the written test

Matthias Mekschrat h_DA WS 2012/13Logistical applications and optimizationsslide 5 About me Degree: Diplom Wirtschaftsinformatiker, TU Darmstadt in 1984 I started my business career in 1985 at the BASF AG, working on IT solution development of logistical processes for BASF worldwide From 1988 working for Software AG - responsible for the development of an overall logistical IT system for an energy supplying company Since 1992 working for Röhm GmbH, now Evonik Industries - responsible for SAP logistical processes and for optimizations of production applications Now responsible for the competence center “Innovation and Compliance” for Evonik Industries worldwide Contact: or

Matthias Mekschrat h_DA WS 2012/13Logistical applications and optimizationsslide 6 Introduction About me About this lecture Your participation About the written test

Matthias Mekschrat h_DA WS 2012/13Logistical applications and optimizationsslide 7 About this lecture All sessions are split into 2 blocks: from 08:30 to 10:00 and from 10:15 to 11:45 Each session starts with a short review of the last lectures subjects Each group will then present the results of their discussions I will show an example solution for a potential written test question Finally I will give a summary of the key messages for this session You probably will have to develop certain subjects in a brainstorming session in groups

Matthias Mekschrat h_DA WS 2012/13Logistical applications and optimizationsslide 8 Introduction About me About this lecture Your participation About the written test

Matthias Mekschrat h_DA WS 2012/13Logistical applications and optimizationsslide 9 Your participation Your active contribution in the practical parts is highly appreciated Your participation in the lecture is not mandatory Your questions are welcome at any time Your feedback about my presentation (e.g. spelling mistakes) is very helpful

Matthias Mekschrat h_DA WS 2012/13Logistical applications and optimizationsslide 10 If you are interested in a students job a practical training or a master thesis at our company, please let me know Your participation

Matthias Mekschrat h_DA WS 2012/13Logistical applications and optimizationsslide 11 Introduction About me About this lecture Your participation About the written test

Matthias Mekschrat h_DA WS 2012/13Logistical applications and optimizationsslide 12 About the written test The written test will be on Friday, February 8th 2013 from 8:30 to 10:00 For the subjects of each session there will be 4 to 5 test questions Furthermore you have to solve 4 practical problems

Matthias Mekschrat h_DA WS 2012/13Logistical applications and optimizationsslide 13 overview Introduction November 02 - definition of business processes November 16 - overview of logistical business processes December 07 - functionality of production processes January 18 - special problems within the supply chain handling December 21 - functionality of sales and distribution processes November 23 - functionality of purchase and supply processes

Matthias Mekschrat h_DA WS 2012/13Logistical applications and optimizationsslide 14 Definition of business processes General specification of business processes Types of business processes Analyse, visualise and document business processes Components of IT application systems System integration and communication Transforming business processes into IT applications Short break Part 1 Part 2

Matthias Mekschrat h_DA WS 2012/13Logistical applications and optimizationsslide 15 Definition of business processes General specification of business processes Types of business processes Analyse, visualise and document business processes Components of IT application systems System integration and communication Transforming business processes into IT applications Short break Part 1 Part 2

Matthias Mekschrat h_DA WS 2012/13Logistical applications and optimizationsslide 16 Overview business processes The need to understand business processes and their integration is very often underestimated Very often suboptimal business processes are translated as they are into IT processes thus mapping the inadequacies into the IT application system Problems and potentials In the end the IT application system is focussed as being the problem of the suboptimal business process. This very often leads to a costly adjustment or even replacement of the existing IT application system, but the new system will not solve the problem either, because the business process is still suboptimal

Matthias Mekschrat h_DA WS 2012/13Logistical applications and optimizationsslide 17 Overview business processes Understand the need to analyze and restructure an business process Understand, that therefore reference models and tools are used Understand the different views of business processes Learning targets Understand, that analysing, describing and redesigning business processes is the necessary basis to develop IT application processes

Matthias Mekschrat h_DA WS 2012/13Logistical applications and optimizationsslide 18 definition of business processes general specification of business processes types of business processes analyse, visualise and document business processes components of IT application systems system integration and communication transforming business processes into IT applications short break Part 1 Part 2

Matthias Mekschrat h_DA WS 2012/13Logistical applications and optimizationsslide 19 General specification of business processes A business process is an assemblage of sequential or parallel activities to accomplish a business need determined by the business goals Business processes can be composed to even more complex business processes Composed business processes are mostly high integrated and interactive Business processes and their complexity vary according to the structure of the viewed branch In this lecture only business processes of branches are considered that produce and / or trade with products

Matthias Mekschrat h_DA WS 2012/13Logistical applications and optimizationsslide 20 general specification of business processes BP A Activity BP B Composed BP

Matthias Mekschrat h_DA WS 2012/13Logistical applications and optimizationsslide 21 general specification of business processes BP A Activity BP B Composed BP BP used e.g. in a certain Branch

Matthias Mekschrat h_DA WS 2012/13Logistical applications and optimizationsslide 22 definition of business processes general specification of business processes types of business processes analyse, visualise and document business processes components of IT application systems system integration and communication transforming business processes into IT applications short break Part 1 Part 2

Matthias Mekschrat h_DA WS 2012/13Logistical applications and optimizationsslide 23 Types of business processes Business support processes 1.represent all non-logistical activities to support the main logistical activities 2.often interacting only with a few main activities Supply chain business processes 1.represent all main logistical activities for creation of value according to the business definition 2.often named as supply chain management (SCM) Logistical crossover business processes 1.represent all logistical activities to support the main logistical activities 2.Often interacting with almost all main activities

Matthias Mekschrat h_DA WS 2012/13Logistical applications and optimizationsslide 24 Types of business processes Logistical Crossover Business Processes Supply Chain Business Processes Business Support Processes

Matthias Mekschrat h_DA WS 2012/13Logistical applications and optimizationsslide 25 definition of business processes general specification of business processes types of business processes analyse, visualise and document business processes components of IT application systems system integration and communication transforming business processes into IT applications short break Part 1 Part 2

Matthias Mekschrat h_DA WS 2012/13Logistical applications and optimizationsslide 26 Analyse, visualise and document business processes First task is always to analyse the business processes Only after that a promising IT process design is possible After analysing business processes a redesign of business processes very often is needed. Just describing the “as-is” situation and trying to convert this into an IT application system will most surely fail Analysing only a specific separate business process without checking the dependency to other business process is risky General aspects of analysing a business process Lacking exchange of information is one of the main problems, why business processes do not run optimal. Very often you will find human factors as a reason

Matthias Mekschrat h_DA WS 2012/13Logistical applications and optimizationsslide 27 Analyse, visualise and document business processes Performance measurement is used to analyse the actual performance of a business process Performance measurement Key performance indicators (KPI) are defined to make measurement visible

Matthias Mekschrat h_DA WS 2012/13Logistical applications and optimizationsslide 28 Analyse, visualise and document business processes The Supply Chain Operations Reference (SCOR) is a model to analyse, visualise document and configure supply chain business processes The SCOR Model There are more concepts and tools to analyse and configure supply chain business processes, especially to develop the design IT processes (e.g. ASAP) The SCOR-model is a reference model that standardises terminology and process descriptions The SCOR-model uses 1.Process types like PLAN, SOURCE, MAKE and DELIVER 2.Process categories like planning, executing and enabling to refine the process types 3.Process elements

Matthias Mekschrat h_DA WS 2012/13Logistical applications and optimizationsslide 29 Summary and key messages Analysing, describing and redesigning business processes is the necessary basis to develop IT application processes Literature 1.Stadtler, Kilger – Supply chain management and advanced planning, Springer Verlag, Berlin Heidelberg, Dangelmaier, Busch (Hrsg.) – (in german) Integriertes Supply Chain Management, Gabler Verlag, Wiesbaden, 5/2004 There are models and tools to describe business processes

Matthias Mekschrat h_DA WS 2012/13Logistical applications and optimizationsslide 30 Definition of business processes general specification of business processes types of business processes analyse, visualise and document business processes components of IT application systems system integration and communication transforming business processes into IT applications short break Part 1 Part 2

Matthias Mekschrat h_DA WS 2012/13Logistical applications and optimizationsslide 31 Definition of business processes general specification of business processes types of business processes analyse, visualise and document business processes components of IT application systems system integration and communication transforming business processes into IT applications short break Part 1 Part 2

Matthias Mekschrat h_DA WS 2012/13Logistical applications and optimizationsslide 32 Overview business processes Problems and potentials Now that we have understood why business processes and their integration must be analysed first we have to translate this knowledge into a running IT application system The IT application system must be configured to fulfil the demands of the redesigned business processes What happens, if the demands required by the business process analysation cannot be configured in the existing system To consider the analysation and possible redesign of the business process and the configuaration of the IT apllication system as one joint iterative approach increases the chance of installing an optimal IT application system significantly. This is a mostly underestimated potential to reduce development and running costs

Matthias Mekschrat h_DA WS 2012/13Logistical applications and optimizationsslide 33 Overview business processes Learning targets Understand the need to harmonise the business processes and the IT application processes Understand, that therefore tools are used, which not necessarily fit together with the tools used for business process analysation Understand the need for the different components of an IT application system Understand, that configuring an IT application system might lead to a change in the business process Understand the need to translate the business processes into an IT application system

Matthias Mekschrat h_DA WS 2012/13Logistical applications and optimizationsslide 34 Definition of business processes General specification of business processes Types of business processes Analyse, visualise and document business processes Components of IT application systems System integration and communication Transforming business processes into IT applications Short break Part 1 Part 2

Matthias Mekschrat h_DA WS 2012/13Logistical applications and optimizationsslide 35 Components of IT application systems Master data files contain all information of permanent value which are needed by the transaction programms Reporting systems extract data from the transaction program results The customizing is the main part of an appliction system to configure the system Usualy there are different levels of customizing entries, such as 1.Control tables (e.g. switches to activated certain modules) 2.Master data tables to define which master data are used 3.Tables to define range of values 4.Tables to define the steering of the user interface In case the requirements of the business processes can not be matched by the system standards, the need and the effort for user exits or even for modifications must be checked Transaction programs are delivered by the system supplier and run according to the set up of the customizing

Matthias Mekschrat h_DA WS 2012/13Logistical applications and optimizationsslide 36 Definition of business processes General specification of business processes Types of business processes Analyse, visualise and document business processes Components of IT application systems System integration and communication Transforming business processes into IT applications Short break Part 1 Part 2

Matthias Mekschrat h_DA WS 2012/13Logistical applications and optimizationsslide 37 Transforming business processes into IT applications Tools to design an IT application process are usually integrated in the delivered standard (e.g. ASAP). These tools are mainly very complex and lead to direct entries in the customizing component Choosing the appropriate moduls is an important task while implementing an IT application system. In general this can only be handled with experience about the functionality of the tools Unfortunately they are usualy not linked to the tools and models describing the business process. A translation phase in the IT application project must be established to ensure the fulfilment of the business process requirements. As a consequence checking the functionalities of the system standard modules is an important part preparing the implementation of IT application processes

Matthias Mekschrat h_DA WS 2012/13Logistical applications and optimizationsslide 38 Definition of business processes General specification of business processes Types of business processes Analyse, visualise and document business processes Components of IT application systems System integration and communication Transforming business processes into IT applications Short break Part 1 Part 2

Matthias Mekschrat h_DA WS 2012/13Logistical applications and optimizationsslide 39 System integration and communication Process or system integration is the most important issue to assure a stable and harmonised functioning of composed IT application processes In a running system one part of system integration is the urgent need for checking the impact of a change in one IT application process onto other IT application processes before they are installed. To check the integration before implementing new components test systems and tools should be used. Usualy it is the system suppliers task to ensure that the needed interfaces are existing. Depending on the size and the complexity of the system the existance of tested and proper working interfaces can not be taken for granted If the needed interfaces do not existing, they must be developed individually. This is a very costly intention that in many cases leads to the rejection of the new components

Matthias Mekschrat h_DA WS 2012/13Logistical applications and optimizationsslide 40 Summary and key messages Avoid individual developed interfaces if ever possible Process integration is an important factor for an optimal IT application system Literature Heinrich, Betts – Adapt or die, John Wiley & Sons, Hoboken New Jersey, 2003 Dangelmaier, Busch (Hrsg.) – (in german) Integriertes Supply Chain Management, Gabler Verlag, Wiesbaden, 5/2004 Downes, Mui – Digital strategies for market dominance, Harvard Business School Press, Boston, 1998 Translating business processes into IT application processes is very challenging task which needs some experience

Matthias Mekschrat h_DA WS 2012/13Logistical applications and optimizationsslide 41 Thank you very much for your participation …… and see you on Friday, 16th of November