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Enterprise Information Systems

by: Marco Moen

Enterprise Information Systems ISM 4153

Marco Moen
University of Central Florida
GPA 3.74


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Class Notes
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This 7 page Class Notes was uploaded by Marco Moen on Thursday October 22, 2015. The Class Notes belongs to ISM 4153 at University of Central Florida taught by Staff in Fall. Since its upload, it has received 35 views. For similar materials see /class/227447/ism-4153-university-of-central-florida in Information Systems Management at University of Central Florida.

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Date Created: 10/22/15
Fitter Snacker is a maketostock manufacturer That means they manufacture a product and they can only sell what they ve already manufactured Finished goods are produced and stored in the warehouse until they can be shipped to suppliers An alternative would be like Dell which has some maketoorder processes When you call and order a PC they manufacture it to your specifications The production process for maketostock companies involves many steps and appears confusing at first but it is actually not very complicated First a forecast is prepared at the beginning of a period say a quarter The forecast is used to plan how much product will be produced in a process called Material Requirements Planning MRP The inputs for MRP are l The demand forecast 2 A Bill of Material BOM 3 A routing The BOM is essentially a recipe for the product It lists all the raw materials and their amounts required to manufacture the product A routing is the description of the manufacturing process For example it will list which workstations are involved how long each step in the process takes etc MRP creates Planned Orders which determine how much of the finished product to produce and the dates the production process should begin It also calculates how much of each intermediary item dough is needed as well as how much of each raw material is required for this entire process The nice thing about an ERP system is that the MRP process can automatically create purchase requisitions for the raw materials At Fitter Snacker these include ingredients like oats and honey Purchasing can see the purchase requisitions on the system and can then choose a vendor and orders the raw materials Once the raw materials arrive they must be moved into the raw materials storage area When a planned production order becomes an active production order the raw materials then must be moved from the storage area to the production work center that begins the production For Fitter Snacker this is the mixing station where all the ingredients are mixed After the mixing process the dough is sent to the baking station Once production is completed the finished goods must be moved to the finished goods warehouse and the process is complete From this description you can see that this is a logical process but of course the devil is in the details The following interviews provide the details Your task is to create a swimlane process diagram for this process Bob Fergus Analyst You Did you read my email about why we are meeting today Bob Something about the production forecast You Yes I m mapping the production process from forecast to nished goods What I want to learn from you is how you create the forecasts that begin the production process Bob OK You Walk me through the process you go through Bob OK well a month before the end of a quarter I logon to the SAP system and retrieve the marketing projections for sales I use these figures as well as forecasts for raw material availability economic projections All this data is input into our forecasting system to create the forecast for the next quarter You Where do you get the information on raw material availability Bob From various industry groups for example blueberry future forecasts are reported by the extension service You How about the economic forecasts Bob They come from several places most of it comes from the Federal Reserve web site You What forecasting system do you use Bob It s a system called Trend Setter It s a standalone system We could use SAP software but we ve been successful with this system in the past so the company decided to stick with it You So after you get the forecast from Trend Setter what do you do Bob I just enter it into the SAP system That s the end of it for me Of course we periodically get updates so we can determine how accurate we were but that s a different process You After you enter the forecast that ends the process for you Bob That s correct You Okay thank you Bob No problem Jane Goodall Production You Hello Jane I spoke to you on the phone about why we re meeting Do you have any questions Jane No you want to understand how we create our planned production You That s correct Jane OK well when Analysis enters the forecast the system creates an independent requirement That contains all the details about what we should produce I use that to run the MRP routine You The MRP routine is that on the SAP system Jane That s right It s all integrated You What does the MRP routine do Jane The MRP routine creates planned production orders for our products You What is a planned production order Jane A planned production order specifies what product we re going to produce It takes into account how much material we need at what times how long it takes to produce the product how much product we already we have in stock it considers all factors It also tells us how much raw material we ll need You How is it able to determine raw material requirements Jane Well each of our products has a Bill of Materials we call it a BOM that specifies which products are required for the nal product including raw materials There is also a routing which specifies how the product is manufactured things like where the material should be moved what workstations are involved The MRP routine retrieves the BOM and current inventory levels and it s a simple calculation You What do you do with that information Jane You mean the raw material s requirements You Yes Jane I don t do anything with them I look at the planned production and determine whether it looks reasonable and if it does I approve it When I confirm it the system creates purchase requisitions for the raw materials I don t have anything to do with them You I assume Purchasing handles them Jane That s right You Okay what happens to the planned production orders Jane Well on the day before the planned order I double check to inventory levels and production lines to make sure capacity is available and then I convert the planned production order into a production order You So the production doesn t occur until you convert the planned production order into a production order Jane That s correct You Okay thank you I ll come back later to talk about what happens when you start production Jane Okay Don Trump Purchasing You Hello Don Don Hey how are you doing this morning You I m doing well Do you remember why we re meeting Don No sorry I ve been pretty busy You No problem I m trying to understand the production process from forecasting to nished goods I spoke to Jane in Production and she told me about the MRP process She said the process creates purchase requisitions for raw materials and so I want to learn from you what happens when you get those Don Oh okay Well as soon as they re created I can see the PRs on the system but Jane usually calls me to let me know they re there I go onto the system and retrieve those Our production system assigns a preferred vendor to the PRs and the latest pricing information I check those assignments to make sure they are uptodate but they usually are You What if they aren t Don I can override the vendor field You Okay what do you do next Don I have to convert the PR into a purchase order There is a separate PR for each raw material and the PO consolidates all the PRs for each vendor If the total for a PO is greater than 100000 an approval is required but usually I can approve it The P0 is then transmitted to the vendor electronically You What happens next Don That s it I m done with it The vendors ship the raw materials and Receiving unloads them and updates the inventories You Okay thank you Don Sure let me know if there s anything else Joe Rogan Receiving You Hello Joe nice to see you again Joe Yeah how d that other project work out You It was a great success Do you know why I m back Joe Something about receiving goods You That s right I m trying to understand the production process Italked to Don in Purchasing and he told me about issuing purchase orders to vendors for raw materials I want to know from you what happens when the vendors ship the goods Joe When the truck pulls up we pull the PO from the system and use that to check to make sure all the material is there and is in good order Sometimes they try to slip rotten blueberries or something past us After we check it we enter a goods receipt into the system That just says we received the goods You What if all the goods aren t there Joe We can just enter the goods we accepted into the goods receipt If the product isn t there we can receive it and if it s no good they have to take it back We re not going to pay for something we don t get You Is there anything else Joe We ll we have to physically move the material into the warehouse but that s about it You OK thank you Sally Forth Accounting You Hello Sally Sally Hello how are you today You I m good I m just trying to get all these interviews done Sally What exactly are we doing You I m trying to understand the production process and I m up to the point that we received raw materials and I m interested in the account part of it Sally OK well when Receiving posts a goods receipt the system automatically debits the raw materials inventory accounts and credits the GIUIR account You GIUIR Sally Goods receipt and invoice receipts clearing account It s an reconciliation account that holds the amount of the raw material purchase until we pay the vendor You OK What happens next Sally When we get an invoice from the vendor we enter that into the system That debits the GIUIR account and credits the taX and vendor accountpayable accounts We then pay the vendor and debit the vendor accountpayable account and credit the cash account You How do you receive invoices Sally Email You And how about payment How is that made Sally Electronic fund transfers You Is that it Sally That s it You Great well ifI need anything else I ll let you know Sally OK great Jane Goodall Production You Hello Jane I m back Jane Back to learn more about production What have you been up to You I spoke to Purchasing Receiving and Accounting I ve gotten to the point that we have the raw materials in inventory and now I want to know what happens when we actually start the production Jane Well the last time we talked about converting a planned production order into a production order Before production can actually begin we have to get the raw materials into the plant so we have to enter a goods issue that tells the warehouse people to move materials into the plant You Who enters the goods issue Jane We do You And who receives the goods issue Jane The supervisor in the warehouse pulls those up each morning prints them out and then organizes workers to actually move the materials When the materials have been moved the Supervisor con rms they have actually been moved and then enters a con rmation into the system That updates all the accounts You What accounts are updated Jane I presume the raw material inventory accounts are credited and the semi nished goods accounts are debited You What s next Jane When the product is completed a goods issue is entered into the system by the plant supervisor to move the nished goods from the plant to the warehouse Once the materials have been moved and the supervisor con rms the con rmation is entered into the system and that credits the semi nished goods account and debits the nished goods account And that s it You That s it Jane Yep after that point the sales department takes over


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