MIS Final Study Guide Chapter 6 – Supporting Processes with ERP Systems ∙ An ERP system solves Information Silo problems, where data is isolated in separate information systems. Solutions to this problem are: 1) Enterprise Application Integration (EAI), 2) Enterprise Resource Planning (ERP). ∙ Where did ERP systems come from? Grew out of manufacturing sWe also discuss several other topics like backyard professor
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Don't forget about the age old question of What is the synchronization of a firm’s processes with those of its suppliers and customers to match the flow of materials, service and information with customer demand?
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oftware MRP (Material Requirement Planning) —To efficiently manage inventory, production & labor. MRP 2 —adds in: Financial tracking of manufacturing processes, and ability to schedule capabilities. Other drivers of ERP systems 1) Y2K and 2) Sarbanes-Oxley (SOX). ∙ JIT (Just-in-time) – Synchronizes manufacturing and supplying. ∙ What are the elements of an ERP system? - SCM (Supply Chain Management) – P2P (Person to person), O2C (Order to Cash), inventory management, supplier management - Manufacturing – scheduling, capacity planning, quality control, BOM (Bill of Material – receipe for final product) - CRM – sales prospecting, customer management, marketing, customer support, call center supportMIS Final Study Guide - Human Resources – payroll, time and attendance, HR management, commission calculations, benefits admin - Accounting – General Ledger, Accounts receivable, Accounts Payable, cash management, fixed-asset accounting ∙ Five components of an ERP system: 1) Software (configuration) 2) Hardware – ERP Hardware Dilemma 3) Data 4) Procedures (train the trainer (in-house training)) 5) People (users, analysts, consultants) ∙ ERP Hardware Dilemma: Should companies provide smartphones for their employees in the company to use to access and use the ERP system? – Because it increases efficiency, but this will mean increased expenses for the company. ∙ Information Silos occurs when data are isolated and replicated in separated information systems (such as accounting, human resource, sales, operations). ∙ The Sarbanes-Oxley Act is the federal law that required companies to exercise greater control over their financial processes.MIS Final Study Guide ∙ The major benefit of an EAI system is that it enables organizations to use existing applications. ∙ CRM includes activities such as manufacturing scheduling, capacity planning, quality control, and other related activities. ∙ Small organizations employ only one or two IT analysts who not only manage the ERP system, but also the entire IS department. ∙ A developer writes additional code where necessary for implementing ERP systems. ∙ AX and NAV are the ERP products offered by Microsoft that have the most capabilities. ∙ ABAP A high-level application language of SAP that is used to enhance the functionality of an SAP implementation. ∙ Benefits Administration is an activity that is included in human resources. ∙ The inherent processes defined in an ERP solution are also known as process blueprints.MIS Final Study Guide Chapter 7 – Supporting the Procurement Process with SAP ∙ The three fundamentals of the procurement process are: Order (purchasing manager) Receive (warehouse manager) Pay (accounting). ∙ Value chain The network of value creating activities. These include: inbound logistics, operations, outbound logistics, sales and marketing, and customer service. ∙ How does CBI implement SAP? CBI had to reexamine and refocus their strategy Involved three activities: 1) Determine industry structure 2) Commit to a specific competitive strategy 3) Develop objectives and measures for processes ∙ Benefits of SAP for CBI’s procurement process: - Single database - Shared information in real time - Reduction of errors - Improved financial controls - Increased responsiveness ∙ How can SAP improve the integration of supply chain processes at CBI? - Sharing dataMIS Final Study Guide - Increasing process synergy (interaction) - Other IS that improve supply chain processes ∙ Other IS that improve supply chain processes: - Augmented reality - REID (Radio Frequency Identification, eg. Easy Pass) - Sensors (eg. Tire sensors in tires; weather sensors; light sensors; gas tank gauge) - Robotics – helps build stuff, move stuff around, etc. - 3D Printing – make prototypes RFID vs. Barcodes You have to SEE the barcode to scan it. RFID tags can be inside the box and you can still scan them. RFID tags can hold more information than barcodes. Though RFID tags are a bit more expensive. Both RFID tags and barcoses are types of sensors. ∙ How does the use of SAP change CBI? - New skills are needed - Process focus – Processes are now much more computerized and automated than ever before. - More data sharing - Outsourcing ∙ SRM (Supplier Relationship Management) It automates, simplifies and accelerates supply chain processes.MIS Final Study Guide ∙ Bullwhip effect It occurs when companies order more supply than needed due to sudden change in demand. ∙ Addictive manufacturing Objects are manufactured through the deposition of successive layer of material. Chapter 8 – Supporting the Sales Process with SAP Chapter 8 – Improving Supply Chains and Strengthening Customer Relationships Using Enterprise Information Systems ∙ Potential benefits of supply chains: - Process innovations - Just-In-Time production (JIT) – Raw materials arrive just when needed. - Vendor-Managed Inventory (VMI) – Keeping pre-established MIS Final Study Guide service/inventory level between supplier and manufacturer (retailer). Benefits include: cost savings, minimized stock-out situations, accurate forecasts, reduced errors, prioritized goods shipments. ∙ Potential problems (with primitive supply chains): - Distorted information - Excessive inventories - Inaccurate capacity plans - Missed product schedules ∙ Functions that optimize the supply network: Demand planning and forecasting- forecast and plan anticipated demand for products ∙ Safety stock planning- Assign optimal safety stock and target stock levels in all inventories in the supply network ∙ Distribution planning- Optimize the allocation of available supply to meet demand ∙ Supply network collaboration- Work with partners across the supply network to improve accuracy of demand forecasts, reduce inventory buffers, increase the velocity of materials and improve customer service ∙ Materials management- Ensure that the materials required for production are available where needed when needed ∙ Manufacturing execution- Support production processes taking into account capacity and material constraintsMIS Final Study Guide ∙ Order promising- Provide answer to customer relationship management queries regarding product availability, costs, and delivery times ∙ Transportation execution- Manage logistics between a company locations or from company to customers, taking into account transportation modes and constraints ∙ Warehouse management- Support receiving, storing, and picking of goods in a warehouse ∙ Supply chain analytics- monitor key performance indicators to assess performance across the supply chain. ∙ Supply Chain Management (SCM) Improves the coordination of suppliers, product or service production, and distribution: main objectives are to accelerate product development and innovation and to reduce costs. ∙ SCM is used to improve business processes that span organizational boundaries. ∙ SCM uses data about customer orders (from CRM) and payments (from ERP). ∙ SCM Architecture: SCM modules support two functions: 1) Supply chain planning (SCP) – development of resource plans to support effective and efficient production of goods MIS Final Study Guide and services. (Steps: 1) demand planning and forecasting, 2) distribution planning, 3) product scheduling, 4) inventory and safety stock planning.) 2) Supply chain execution (SCE) – putting SCM into motion. Efficient flow of products, information, and financing. ∙ Supply Chain Visibility – The ability to track products as they move through the supply chain but also to foresee external events. ∙ Supply chain analytics – The use of key performance indicators to monitor performance of the entire supply chain, including sourcing, planning, production, and distribution. ∙ Radio Frequency Identification (RFID) Scanning can be done from greater distance than barcodes. Passive tags – inexpensive, range of few feet. Active tags – more expensive, range of hundreds of feets. ∙ Developing CRM strategy: 1) Organizing policies and procedures to reflect customer-focused culture. 2) Customer Service Changes for quality and satisfaction as well as process changes to enhance the customer experience. 3) Employee training changes for customer satisfaction. 4) Data collection, analysis and sharing changes (should be tracked, analyzed and shared to optimize the benefits of CRM).MIS Final Study Guide ∙ Architecture of a CRM system: 1) Operational CRM- System for automating the fundamental business processes- marketing, sales, and support- for interacting with the customers. a. Sales Force Automation (SFA)- support for day-to-day sales activities of an organization (order processing and tracking, account and contact management, sales management, customer history and preferences, sales forcasting) b. Customer services and support (CSS)- system that automates service requests (complaints, product returns, and information requests) c. Enterprise marketing management (EMM)- help a company in the execution of the CRM by improving the management of promotional campaigns. 2) Analytical CRM- System for analyzing customer behavior and perceptions (e.g. quality, price, and overall satisfaction) in order to provide business intelligence 3) Collaborative CRM- System for providing effective and efficient communication with the customer from the entire organization. (Greater customer focus- understanding customer’s needs, lower communication barriers- have complete information, increased information integration). Chapter 9 – Developing and Acquiring Information SystemsMIS Final Study Guide ∙ Productivity paradox – Not using information systems to its full potential. a) Measurement problems – company focusing on system efficiency more than effectiveness. b) Time lags – Benefit may not come until years later. c) Redistribution – new innovation may only improve a piece of a pie rather than make the pie bigger. d) Mismanagement – when the system has not been implemented and managed well. ∙ Arguments based on faith should be clearly described in the firm’s mission and objective. ∙ Arguments based on fear is that if the system is not implemented, the firm will lose out to the competition or, worse, go out of business ∙ Arguments based on fact are backed up on solid data, quantitative analysis, and/or indisputable factors ∙ Total cost of ownership (TCO)- focuses on understanding not only the cost of acquisition, but also all costs associated with ongoing use and maintenance of a system (nonrecurring costs and recurring costs; tangible costs and intangible costs)MIS Final Study Guide Systems development life cycle (SDLC) 1) Systems planning and selection 2) Systems analysis 3) Systems designing 4) Systems implementation and operations 5) Systems maintenance ∙ Phase 1: System Planning and Selection a) There is a limit on the number of projects that can be worked on based on time and resources. Organizations differ in how they identify, plan, and select critical projects ∙ Phase 2: System Analysis a) Purpose is for the designers to gain a thorough understanding of an organization’s current way of doing things in the area for which the new information system will be constructed. b) Requirements collection- process of gathering and organizing information from users, managers, customers, business processes, and documents to understand how a proposed information system should function i. Interview- operations and issues ii. Questionnaires- administer survey to gather opoinions iii. Observations- observe workers t selected times to see how data are handled iv. Document Analysis- discover issues, polocies, and rulesMIS Final Study Guide v. Joint Application Design (JAD)- group meeting based process for requirements collection c) Data flows represent the movement of data through an organization or with in an IS. ∙ Phase 3: System Design a) Human-Computer Interface (HCI)- point of contact between a system and user (amazon.com) b) Databases and Files- analyst must have a thorough understanding of an organization’s data and informational needs c) Processing and Logic- transforms raw data inputs into new modified information ∙ Phase 4: System Implementation and Operation a) Software programming and testing- transforming the system design into a working computer system. b) Conversion, Documentation, Training, and Support Conversion: the process of decommissioning the current way of doing things (automated or manual) and installing the new system in the organization. a. Parallel- old and new systems are used at the same time b. Direct- old system is discontinued on one day, new is used on the next c. Phased- part of the new system are implemented over time d. Pilot (single location)- Entire system is used in one location.MIS Final Study Guide ∙ Phase 5: System Maintenance - tested before initial development of the IS. a) Adaptive maintenance- evolve its functionality to accommodate changing business needs b) Perfective maintenance- making enhancements to improve processing performance c) Preventive maintenance- reduce the chance of future system failure d) Corrective maintenance- repair flaws in the design, coding, or implementation e) Patch management systems- check for available patches and updates. f) Prototyping- uses a trial-and-error approach for discovering how a system should operate. g) End-user development- build complex and useful application to improve day-to-day decision-making. (Possibly be inefficient for nonprofessionals) ∙ Steps in External Acquisition- Competitive bid process find the best system for lowest possible price ∙ Development of a request for proposal- a document that is used to tell vendors what your requirements are and to invite them to provide information about how they might be able to meet those requirements. (Summary of existing systems and application, system performance and features, reliability backup and service requirements, evaluation criteria, timetable, budget)MIS Final Study Guide ∙ Proposal Evaluation- include viewing system demonstrations, evaluating the performance of those systems, and examining criteria important to the organization and judging how the proposed system “stack up” to those criteria System benchmarking- use of standardized performance tests to facilitate comparison between systems. ∙ Vendor Selection- some “fit” are better than others. ∙ Application Service Providers (ASP)- problems: managing the software infrastructure is a complex task, high operating costs, scalability issue ∙ ASPs provide software as a service (SaaS)- reduce need to maintain or upgrade software, variable fee based on actual use of services, ability to rely on a provider’s expertise ∙ Outsourcing Systems Development- Turning over responsibility for some or all of an organization’s IS development and operating to an outside firm ∙ Why Outsourcing?: Cost and quality concern (higher quality at lower cost) Problem in IS performance (unmet standards) Supplier pressure (aggressive sales force) Simplifying, downsizing, and reengineering Financial factors (liquidation of assets) Organizational culture (devoid of political ties) Internal irritants (external IS group may be better accepted by other organizational users)MIS Final Study Guide ∙ Outsourcing relationships: no longer just a legal contract. Strategic, mutually beneficial partnership. ∙ Managing the IS Outsourcing Relationship- ongoing management of an outsourcing alliance is needed (strong active CIO and staff, clear realistic performance measurement of the system, multiple levels of interface between customer and outsourcer) ∙ Shrink-wrap licenses and click-wrap licenses- accompany software and are used for generic, off-the-shelf application and systems software. ∙ Enterprise license (aka volume license)- contain limitations of liability and warranty disclaimers that protect the software vendor from being sued if their software does not operate as expected. ∙ Software asset management helps organizations to avoid negative consequences from non use of licenses