Download presentation
Presentation is loading. Please wait.
1
Chapter 9 Process Integration
Magal and Word | Integrated Business Processes with ERP Systems | © 2011
2
Learning Objectives Define process integration, and explain why this concept is fundamental to modern business operations. Explain how the procurement, fulfillment, and IWM processes interact when a company fills a customer order for trading goods. Indentify and discuss the various integration points among the procurement, fulfillment, production, and warehouse management processes. Analyze the financial and material impacts of the various steps in the integrated processes. Magal and Word | Integrated Business Processes with ERP Systems | © 2011
3
Background Thus far the book has covered the following key processes:
Financial accounting Procurement Fulfillment Production Inventory and warehouse management Material planning Each of these processes has triggers, data, tasks, and outcomes Magal and Word | Integrated Business Processes with ERP Systems | © 2011
4
Background Chapter 1 introduced the concept of process integration
Various processes are interdependent Steps in one process frequently impact steps in other processes This chapter approaches the same processes discussed in the previous chapters but from an integrative perspective. Magal and Word | Integrated Business Processes with ERP Systems | © 2011
5
Integrated Business Processes
Magal and Word | Integrated Business Processes with ERP Systems | © 2011
6
Background Production strategies Procurement strategy
Make-to-stock Make-to-order Procurement strategy Procure-to-stock Procure-to-order Fulfillment strategy Sell-from-stock Magal and Word | Integrated Business Processes with ERP Systems | © 2011
7
Background Make-to-stock, procure-to-stock, and sell-from-stock strategies use inventory as a buffer between processes to de-couple them or make them less dependent on one another. To illustrate integration among processes, the scenarios will no longer assume that there is a sufficient inventory of raw materials for production or of finished goods for fulfillment. The discussion will focus on the make-to-order and procure-to- order strategies. Magal and Word | Integrated Business Processes with ERP Systems | © 2011
8
Background Two scenarios are presented
Scenario one - Filling a customer order for trading goods Procurement, fulfillment, IWM Scenario two – Filling a customer order for finished goods Procurement, fulfillment, production, IWM Magal and Word | Integrated Business Processes with ERP Systems | © 2011
9
Procurement, Fulfillment, and IWM Processes
Rocky Mountain Bikes (RMB), a GBI customer, has ordered 800 t-shirts (SHRT1000) from GBI GBI will ship the t-shirts from its San Diego plant, which is warehouse management enabled Assumptions The San Diego plant has 200 t-shirts in stock valued at a moving average price of $15.43 each The Miami plant has 1,500 t-shirts in stock valued at a moving average price of $15.25 each GBI can purchase t-shirts from Spy Gear at $14.95 each Magal and Word | Integrated Business Processes with ERP Systems | © 2011
10
Procurement, Fulfillment, and IWM Processes
Assumptions (continued) RMB has sent GBI a purchase order (PO) for 800 t-shirts GBI sells t-shirts for $30 each Magal and Word | Integrated Business Processes with ERP Systems | © 2011
11
Plant Stock Valuation – Start of the Process
Magal and Word | Integrated Business Processes with ERP Systems | © 2011
12
Account Balance - Start of the Process
Magal and Word | Integrated Business Processes with ERP Systems | © 2011
13
Demo 9.1 Review Financials and Inventory (Plant, Storage Location, and Bin Stock and Value)
Magal and Word | Integrated Business Processes with ERP Systems | © 2011
14
Demo 9.2 Create Two Customer Orders
Review creation of two customer orders Magal and Word | Integrated Business Processes with ERP Systems | © 2011
15
Procurement, Fulfillment, and Warehouse Management Processes
Magal and Word | Integrated Business Processes with ERP Systems | © 2011
16
Fulfillment Process - Initial Steps
The fulfillment process is triggered by a customer purchase order. Fulfillment continues with the next step, which is sales order processing. Magal and Word | Integrated Business Processes with ERP Systems | © 2011
17
Fulfillment Process – Initial Steps
Magal and Word | Integrated Business Processes with ERP Systems | © 2011
18
Procurement Process – Initial Steps
A shortage of materials creates a requirement for GBI to purchase trading goods, which triggers the procurement process. Two options for procurement: Internally Externally Magal and Word | Integrated Business Processes with ERP Systems | © 2011
19
Procurement Process – Initial Steps
Magal and Word | Integrated Business Processes with ERP Systems | © 2011
20
Demo 9.3 Create Two Requisitions and POs to Fill Customer Orders
Review the creation of two requisitions and POs Magal and Word | Integrated Business Processes with ERP Systems | © 2011
21
Procurement Process – Internal Procurement
San Diego plant can procure the t-shirts from the Miami plant STO processing has several options Select STO without delivery document Goods issue Material impact Financial impact Valuation impact Goods receipt Magal and Word | Integrated Business Processes with ERP Systems | © 2011
22
Procurement Process – Internal Procurement
Magal and Word | Integrated Business Processes with ERP Systems | © 2011
23
Material and FI Documents at GI for STO
Magal and Word | Integrated Business Processes with ERP Systems | © 2011
24
Plant Stock Valuation at GI for STO
Magal and Word | Integrated Business Processes with ERP Systems | © 2011
25
Account Balances at GI for STO
Magal and Word | Integrated Business Processes with ERP Systems | © 2011
26
Material and FI Documents at GR for STO
Magal and Word | Integrated Business Processes with ERP Systems | © 2011
27
Plant Stock Valuation at GR for STO
Magal and Word | Integrated Business Processes with ERP Systems | © 2011
28
Demo 9.4 Internal Procurement for First PO
Review internal procurement for first PO Magal and Word | Integrated Business Processes with ERP Systems | © 2011
29
Procurement Process – External Procurement
GBI sends a purchase order for 1,000 t-shirts to Spy Gear. Followed by: Goods receipt Invoice receipt Payment Impacts Material impact FI impact Plant stock valuation Magal and Word | Integrated Business Processes with ERP Systems | © 2011
30
Procurement Process – External Procurement
Magal and Word | Integrated Business Processes with ERP Systems | © 2011
31
Material and FI Documents at GR for PO
Magal and Word | Integrated Business Processes with ERP Systems | © 2011
32
Plant Stock Valuation at GR for PO
Magal and Word | Integrated Business Processes with ERP Systems | © 2011
33
Account Balances at GR for PO
Magal and Word | Integrated Business Processes with ERP Systems | © 2011
34
Account Balances after Procurement
Magal and Word | Integrated Business Processes with ERP Systems | © 2011
35
Demo 9.5 External Procurement for Second PO
Review external procurement for second PO Magal and Word | Integrated Business Processes with ERP Systems | © 2011
36
Warehouse Management Steps Related to Procurement
San Diego plant is WM enabled WM steps: TR/TO No material or FI documents Magal and Word | Integrated Business Processes with ERP Systems | © 2011
37
WM Steps Related to Procurement
Magal and Word | Integrated Business Processes with ERP Systems | © 2011
38
Demo 9.6 WM Steps for Goods Receipt for PO
Review WM steps for goods receipt for PO Magal and Word | Integrated Business Processes with ERP Systems | © 2011
39
Fulfillment Process - Shipping
Create delivery WM steps for picking Goods issue Invoice Payment Magal and Word | Integrated Business Processes with ERP Systems | © 2011
40
Fulfillment Process - Shipping
Magal and Word | Integrated Business Processes with ERP Systems | © 2011
41
Demo 9.7 Create Delivery for PO
Review create delivery for PO Magal and Word | Integrated Business Processes with ERP Systems | © 2011
42
WM Steps Related to Fulfillment
Magal and Word | Integrated Business Processes with ERP Systems | © 2011
43
Demo 9.8 WM Steps for Delivery
Review WM steps for delivery Magal and Word | Integrated Business Processes with ERP Systems | © 2011
44
Fulfillment Process – Concluding Steps
Magal and Word | Integrated Business Processes with ERP Systems | © 2011
45
Material and FI Documents for Delivery
Magal and Word | Integrated Business Processes with ERP Systems | © 2011
46
Plant Stock Valuation at GI for Delivery
Magal and Word | Integrated Business Processes with ERP Systems | © 2011
47
Account Balances after GI for Delivery
Magal and Word | Integrated Business Processes with ERP Systems | © 2011
48
GL Account Balances after Customer Billing and Payment
Magal and Word | Integrated Business Processes with ERP Systems | © 2011
49
Demo 9.9 Complete Fulfillment
Review complete fulfillment Magal and Word | Integrated Business Processes with ERP Systems | © 2011
50
Procurement, Fulfillment, Production, and IWM Processes
Rocky Mountain Bikes (RMB) has ordered 40 Red Deluxe Touring Bikes (DXTR3000) from GBI. Assumptions The San Diego plant has 10 Red Deluxe Touring Bikes valued at a standard price of $1,400 each. The Dallas plant currently does not have any touring bikes in inventory. When it does have these bikes, the standard price is also $1,400. The Dallas plant has 200 aluminum wheel assemblies that are needed to produce touring bikes. The standard price for these wheel assemblies is $110. Magal and Word | Integrated Business Processes with ERP Systems | © 2011
51
Procurement, Fulfillment, Production, and IWM Processes
Assumptions (continued) GBI’s vendor -- Space Bike Composites -- is able to supply all of the raw materials needed to make touring bikes. GBI purchases raw materials in lot sizes of 200. It produces bikes in lot sizes of 50. RMB has sent GBI a purchase order for 40 Red Deluxe Touring Bikes. GBI sells these bikes for $2,800 each. Bikes are produced in Dallas and shipped to San Diego via STO Magal and Word | Integrated Business Processes with ERP Systems | © 2011
52
BOM for Touring Bikes Magal and Word | Integrated Business Processes with ERP Systems | © 2011
53
Raw Material Cost per Bike
Magal and Word | Integrated Business Processes with ERP Systems | © 2011
54
Plant Stock Valuation at Start of Process
Magal and Word | Integrated Business Processes with ERP Systems | © 2011
55
Account Balances – Start of Process
Magal and Word | Integrated Business Processes with ERP Systems | © 2011
56
Procurement, Fulfillment, Production, and Warehouse Management Processes
Magal and Word | Integrated Business Processes with ERP Systems | © 2011
57
Demo 9.10 Review Financials and Inventory (Plant, Storage Location, and Bin Stock and Value)
Magal and Word | Integrated Business Processes with ERP Systems | © 2011
58
Fulfillment Process – Initial Steps
This following scenario for the fulfillment process is very similar to the one that was previously discussed. RMB’s purchase order triggers the integrated process and prompts GBI to create a sales order. The ERP system performs an availability check. Magal and Word | Integrated Business Processes with ERP Systems | © 2011
59
Fulfillment Process – Initial Steps
Magal and Word | Integrated Business Processes with ERP Systems | © 2011
60
Demo 9.11 Create a Sales Order
Review create a sales order Magal and Word | Integrated Business Processes with ERP Systems | © 2011
61
Inventory Management (STO) Initial Steps
Availability check results in a deficit. Bikes are produced in Dallas and must be transferred to San Diego (via STO) Magal and Word | Integrated Business Processes with ERP Systems | © 2011
62
Inventory Management – Initial Step
Magal and Word | Integrated Business Processes with ERP Systems | © 2011
63
Demo 9.12 Create an STO Review how to create an STO
Magal and Word | Integrated Business Processes with ERP Systems | © 2011
64
Production Process – Initial Steps
Insufficient inventory of bikes in Dallas to meet the requirements in the STO Execute the production process Insufficient raw materials to produce the bikes Magal and Word | Integrated Business Processes with ERP Systems | © 2011
65
Production Process – Initial Steps
Magal and Word | Integrated Business Processes with ERP Systems | © 2011
66
Demo 9.13 Create a Planned Order and a Production Order
Review how to create a planned order and a production order Magal and Word | Integrated Business Processes with ERP Systems | © 2011
67
Procurement Process (External)
The requirement for raw materials triggers the procurement process to acquire these materials. Magal and Word | Integrated Business Processes with ERP Systems | © 2011
68
Procurement Process (External)
Magal and Word | Integrated Business Processes with ERP Systems | © 2011
69
Plant Stock Valuation after External Procurement
Magal and Word | Integrated Business Processes with ERP Systems | © 2011
70
Account Balances after External Procurement
Magal and Word | Integrated Business Processes with ERP Systems | © 2011
71
Demo 9.14 Execute the Procurement Process
Review how to execute the procurement process Magal and Word | Integrated Business Processes with ERP Systems | © 2011
72
Production Process - Continued
GBI has received the raw materials The production process continues Magal and Word | Integrated Business Processes with ERP Systems | © 2011
73
Production Process - Continued
Magal and Word | Integrated Business Processes with ERP Systems | © 2011
74
Plant Stock Valuation after Production
Magal and Word | Integrated Business Processes with ERP Systems | © 2011
75
Account Balances after Production
Magal and Word | Integrated Business Processes with ERP Systems | © 2011
76
Demo 9.15 Complete Production
Review complete production Magal and Word | Integrated Business Processes with ERP Systems | © 2011
77
Inventory Management - Continued
Bikes are received into the Dallas plant inventory. GI for STO in Dallas GR for STO in San Diego Magal and Word | Integrated Business Processes with ERP Systems | © 2011
78
Inventory Management - Continued
Magal and Word | Integrated Business Processes with ERP Systems | © 2011
79
Plant Stock Valuation at GI for STO
Magal and Word | Integrated Business Processes with ERP Systems | © 2011
80
Account Balances after a Goods Issue against an STO
Magal and Word | Integrated Business Processes with ERP Systems | © 2011
81
Plant Stock Valuation at GR for STO
Magal and Word | Integrated Business Processes with ERP Systems | © 2011
82
Demo 9.16 Complete the GI and GR for STO
Review complete GI and GR for STO Magal and Word | Integrated Business Processes with ERP Systems | © 2011
83
Warehouse Management Process Related to STO
Bikes arrive in the San Diego plant, which is WM enabled Complete WM steps related to GR Magal and Word | Integrated Business Processes with ERP Systems | © 2011
84
Warehouse Management Steps
Magal and Word | Integrated Business Processes with ERP Systems | © 2011
85
Demo 9.17 Complete WM Steps Related to STO
Review complete WM steps related to STO Magal and Word | Integrated Business Processes with ERP Systems | © 2011
86
Fulfillment Process - Continued
The bikes are now in stock in the San Diego plant. The fulfillment process, which had been interrupted, can continue. Magal and Word | Integrated Business Processes with ERP Systems | © 2011
87
Fulfillment Process - Continued
Magal and Word | Integrated Business Processes with ERP Systems | © 2011
88
Demo 9.18 Create a Delivery for a Sales Order
Review how to create a delivery for a sales order Magal and Word | Integrated Business Processes with ERP Systems | © 2011
89
Warehouse Management Process
Magal and Word | Integrated Business Processes with ERP Systems | © 2011
90
Demo 9.19 Complete the WM Steps Related to the Sales Order
Review how to complete the WM steps related to the sales order Magal and Word | Integrated Business Processes with ERP Systems | © 2011
91
Fulfillment Process – Concluding Steps
Magal and Word | Integrated Business Processes with ERP Systems | © 2011
92
Plant Stock Valuation at GI for SO
Magal and Word | Integrated Business Processes with ERP Systems | © 2011
93
Account Balances after Fulfillment
Magal and Word | Integrated Business Processes with ERP Systems | © 2011
94
Demo 9.20 Complete Fulfillment Steps
Review how to complete the fulfillment steps Magal and Word | Integrated Business Processes with ERP Systems | © 2011
Similar presentations
