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8-31-2012

Design and implementation of ERP software in material supply

chain management for SIIX Corp.
Xing'er Chen

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Chen, Xing'er, "Design and implementation of ERP software in material supply chain management for SIIX
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 WORLD MARITIME UNIVERSITY
Shanghai, China

DESIGN AND IMPLEMENTATION OF

ERP SOFTWARE IN MATERIAL SUPPLY
CHAIN MANAGEMENT FOR SIIX Corp.

By

Chen Xing,er
China

A research paper submitted to the World Maritime University in partial fulfillments of

the requirements for the award the degree of

MASTER OF SCIENCE

ITL

2012

© Copyright Chen Xinger, 2012

 Declaration

I certify that all the material in this research paper that is not my own work has been
identified, and that no materials are included for which a degree has previously been
conferred on me.

The contents of this research paper reflect my own personal views, and are not
necessarily endorsed by the University.

Chen Xinger

2012-06-09

Supervised by
Professor : Zhao Gang
World Maritime University

1
 Acknowledgement

I am greatly indebted to my thesis supervisor, Zhao Gang. Without his patient

assistance and friendly encouragement, it would not be possible for me to complete
this thesis in such a short period of time without reducing its scholarly quality. His
willingness to give me his time so generously has been much appreciated. Truly,
without his painstaking efforts in revising and polishing my drafts, the completion of
the present thesis would not have been possible.

My sincere thanks should also go to all my teachers for their scholarly advice and
generous help during my study in Shanghai Maritime University of Linxi. Any
progress that I have made is the result of their profound concern and selfless devotion.

2
 Abstracts

Title of Research paper: Design and implementation of ERP system software in

supply chain management for SIIX Corp.

Degree: M.Sc.
Since the beginning of the 21th century, the enterprise in which the environment has
undergone great changes. Customer needs are rapidly changing, technological
innovation is accelerating continuously, product life cycles are altering to short, and
the competitive market is changing increasingly.

what is an ERP system? It’s a software system that facilitates the flow of your
businesses information—it pulls all of your businesses information together making it
quickly and easily accessible to those who need it. In the process, the system helps
reduce costs through decreased errors and a decrease in redundant tasks. It also
provides management with ways to track and analyze information across multiple
departments for a new window into the company’s processes. ERP is based on the
resources of the entire enterprise information management software system for
planning and control, which is based enterprise supply chain management thinking,
on the basis of MRPII expands the scope of management of modern management
software tools. The basic idea of ERP enterprise business processes look on as a close
connection of the supply chain, including suppliers, manufacturing plants,
distributors, distribution network and customers, and divide internal division into
several mutual collaboration the support systems.
This project starts from the analysis and discussion of concept of supply chain
management and strategic significance, and on this basis for the Higgs trading
company SIIX Corp, the Software of ERP system for material supply chain
management. This paper studies such as follows:
A. For the characteristics of the material supply chain management and according to
SIIX Corp the company's logistics, several important management decision-making
will be analyzed and researched, so that could lay a good foundation for the system.
B. Making researches for materials supply chain management and combining the
production of SIIX Corp, which could complete demand analysis of subsystem,
design the date flow and specific function and make detailed design.
C. In this thesis, we will use the C / S architecture as the development framework of
system. The ERP system of C / S structure has the advantages that adaptability,
maintenance easily, data security and unified and user-friendly interface, which are
the main method of the ERP system.

Keywords: enterprise resource planning (ERP), supply chain management, system

Software, the C / S structure

3
Contents

Declaration ....................................................................................................................................... 1
Acknowledgement ........................................................................................................................... 2
Abstracts .......................................................................................................................................... 3
Contents ............................................................................................................................................ 4
List of Figures .................................................................................................................................... 6
List of Tables ...................................................................................................................................... 7
Chapter 1 Introduction ...................................................................................................................... 8
1.1 General Background ............................................................................................................ 8
1.2 Relevant project research- SIIX Corp. .................................................................................. 9
1.2.1 SIIX Corp. .................................................................................................................. 9
1.2.2 Existing Problems ..................................................................................................... 9
1.3 The significance of the research........................................................................................ 11
1.4 Methodologies .................................................................................................................. 11
1.5 Structure: the layout of the thesis .................................................................................... 12
Chapter 2 Literature review ............................................................................................................ 14
2.1 Introduction of ERP ........................................................................................................... 14
2.2 Implementation of ERP system ......................................................................................... 15
2.3 Making use of ERP ............................................................................................................. 16
2.4 Nowadays Trends and perspectives of ERP ....................................................................... 16
Chapter 3 Software design theory .................................................................................................. 18
3.1 Basic concepts ................................................................................................................... 18
3.1.1 Item number .......................................................................................................... 18
3.1.2 Purchasing list ........................................................................................................ 18
3.1.3 Routing ................................................................................................................... 18
3.2 Supply chain management ................................................................................................ 19
3.3 The basic principles of material requirements planning. .................................................. 20
3.3.1 The basic idea of ERP system logistics management ............................................. 20
3.3.2 Problems in the application of ERP logistics management .................................... 21
Chapter 4 Analysis of management decisions-making model ........................................................ 22
4.1 The balance of resources .................................................................................................. 22
4.2 Purchase decision-making model ..................................................................................... 24
4.3 Supplier management model ............................................................................................ 28
4.4 The management of material requisitions ........................................................................ 31
4.5 SIIX’s ABC inventory classification ..................................................................................... 33
Chapter 5 Requirement analysis ..................................................................................................... 35
5.1 Analysis of the current status ............................................................................................ 35
5.2 Target of the System Software .......................................................................................... 37
5.3 Process design ................................................................................................................... 38

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 5.3.1 The general figure of material supply management business process .................. 38
5.3.2 Procurement and inventory ................................................................................... 40
5.3.3 Business process analysis ....................................................................................... 43
5.4 Functions Design ............................................................................................................... 47
5.4.1 Purchasing management ........................................................................................ 48
5.4.2 Audit material purchasing prices............................................................................ 50
5.4.3 Warehouse management Design ........................................................................... 51
5.4.4 Function requirement ............................................................................................ 52
5.4.5 Data interface ......................................................................................................... 53
5.5 Design of the database...................................................................................................... 53
5.5.1 Design of the Data structure .................................................................................. 53
5.5.2 Example for Design of the database....................................................................... 57
5.5.3 View design ............................................................................................................ 60
Chapter 6 System implementation.................................................................................................. 61
6.1 The tools and operating environment of system development ........................................ 61
6.1.1 Delphi programming language ............................................................................... 61
6.1.2 Database of ERP Software ...................................................................................... 61
6.1.3 Connection technologies for Delphi and Oracle .................................................... 62
6.1.4 Running environment............................................................................................. 63
6.2 Architecture of the C/S...................................................................................................... 63
6.2.1Characteristics and basic structure of Client／Server ............................................ 64
6.2.2 Advantage of the C/S model ............................................................................... 65
6.3 The C/S information system structure model ................................................................... 66
6.4 Effects of System Software designed for SIIX-Corp ........................................................... 66
6.4.1 Running effects of the purchasing subsystem ........................................................ 66
6.4.2 Running effects of the price checking subsystem .................................................. 67
6.4.3 Running effects of the warehouse management subsystem ................................. 68
Chapter7 Conclusion ....................................................................................................................... 69
7.1 Summary of Subject research ........................................................................................... 69
7.2 Prospect of Subject research ............................................................................................ 70
7.2.1 Problems of Enterprise supply chain management ............................................... 70
7.2.2 Countermeasures and suggestions for Enterprise supply chain management ...... 71
Reference ........................................................................................................................................ 74

5
 List of Figures

Figure 1-Business line of SIIX Corp ............................................................................... 10

Figure 2- Structure of the article.................................................................................. 13
Figure 3-Material supply management business process............................................ 39
Figure 4-purchasing process ........................................................................................ 41
Figure 5- Warehouse Process ....................................................................................... 42
Figure 6- Purchasing bill process .................................................................................. 44
Figure 7- Purchasing business process ......................................................................... 46
Figure 8 - Function tree of management system ......................................................... 48
Figure 9-3-tired C/S model ........................................................................................... 64
Figure 10-Procurement management system ............................................................. 67
Figure 11 -Price checking subsystem ........................................................................... 68
Figure 12- Warehouse management subsystem ......................................................... 69

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 List of Tables

Table 1 ABC inventory classification table ................................................................. 34

Table 2 The Structure of material inventory list........................................................... 57
Table 3 The structure of Bills Of Material library........................................................ 59

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Chapter 1 Introduction

1.1 General Background

The manufacturing industry is the support of China’s national economy. According to

the latest statistics of National Bureau of Statistics, the manufacturing enterprises
occupy 91.6% of the amount of industrial enterprises, 86.8% of main business
incomes and 73.1% of the profits. The manufacturing industry still takes the
domination position in China’s industry. In the past 20 years, China’s manufacturing
industry has undertaken the international industry transfer; its status has been rising in
the international division of labor.

At present, China’s manufacturing industry has ranked the world’s top three. With the
enhancement of the trend of global manufacturing industry transferring to China,
China’s manufacturing industry has played a more and more important role in the
economic arena. This has brought great and unprecedented opportunities for us.
Meantime, it also has brought great challenge, so how to deal with this challenge and
how to make good use of it are problems that must be solved in China’s enterprises
management. The implementation of ERP enterprise resource management planning
is one of our important measures.

According to statistics, there are 1.35 million manufacturing enterprises in China, of

which about 2000 are large enterprises, 34000 are small and medium-sized enterprises,
and 1.31 million are small-sized ones. Now the popularizing rate of ERP Software in
China’s manufacturing industry is only 10.4%, even in the machinery industry that
began information construction early, the popularizing rate is just 15.7%. The degree
of informatization of the whole manufacturing industry is very low. At the same time,
users’ informatization demands are constantly deepening and broadening, China’s
manufacturing industry ERP system Software has a huge potential for development

8
1.2 Relevant project research- SIIX Corp.

1.2.1 SIIX Corp.

SIIX Corp. is a global business organizer creating added value by fully utilizing its
experience in overseas operations, its extensive personal connections, and tis broad
based oversea network nurtured over 50 years to systematically link the business
requirements of various firms on global scale. In this way it is able to positively
respond to emerging needs by undertaking a comprehensive range of functions in
including design and development according to the specifications of individual
customers, the procurement and materials, the assembly of sub-units as well as
complete products, distribution, and merchandising.
SIIX runs a global outsourcing business taking on all or some of the parts
procurement work of OEM makers.
SIIX takes advantage of more than 50 years of experience handling electronic
components, a wide range of procurement sources not affiliated with big industrial
groups and an excellent logistics network to provide a global electronic parts
procurement service.
In addition, SIIX has arranged various logistics services in regard to delivery,
including kitting, VMI (Vendor Managed Inventory) and JIT (Just in Time) to support
the inventory management systems of our customers.

1.2.2 Existing Problems

Now, SIIX has established an overseas network located in 13 countries including 12

branches for different functions, such as Sales/ Parts & Materials Procurement,
distribution center, and manufacturing service. Some of these branches are the
predecessor of the Machine Parts Plant specialized factory subordinated to DFM
which was a State-owned extra-large enterprise. And some foreign obsolete
management concepts and methods of the former enterprise cannot adapt to the

9
current market competition obviously．As a result, SIIX decide to optimize the current
ERP manage system to solve the problems such as:
 The low level of information technology, the complex product structure, the
amateurish material coding, difficult to establish BOM(Bill Of Material,product
structure or material form),the obstruction in diversity of various system
interfaces,the lower level of customer synchronization.
 The enterprise improves its management by using effective ERP and resolves
problems mentioned above gradually in the process of ERP implementation．
 The system of ERP is realized by the functions of different modules．including：
market,production,warehouse,cost, purchase,BOM,finance．Each module is
independent and anti—divided and realizes sharing resources on the same platform in
order to fulfill information management．

Figure 1-Business line of SIIX Corp

Source：www.siix.com

The development, management system．Main functions of ERP and its combination to

material flow system of Our factory are introduced in the first part of this paper．Then
discussing my own research Off how to design,normalize and optimize operation flow
under the condition of maximizing its feasibility to make sure new operation flow
based on computer system Can be accepted by operators．My research also includes
the combination of advantage information system and current enterprise reality in the
whole system design．We achieved adaptability of information system in flexible
reconfiguration of operations, organizations and auditing flow without alteration of
10
key operation nodes．

1.3 The significance of the research

The most direct and profound impact of the informatization on manufacturing

companies is changes of the decision-making thinking ways of enterprises’ managers.
It is sure that the informatization will bring great impacts to the plan, organization,
coordination and control, which are main contents of enterprises’ management. After
enterprises implement the information technology, many significant differences have
emerged between aspects of information source ways, information integration patterns,
planning and decision-making modes, operating environments of plans, production
and control methods and these of the tradition mode.
The implementation of informatization construction will make the manufacturing
industry continually reform enterprises’ management organizations, management
methods and decision-making methods, and change enterprises’ management models
in all sides in a long time.
The use of the information system not only aims to improve the efficiency, but also
helps enterprises to make changes of organization and management when facing
challenges of the external environment. In addition, the use of the information system
has also changed organizations’ overall operation modes, improved their
competitiveness, and made them gain advantages in the competition.
As the core link of this information system, the material supply chain management
system has a pivotal position. Under such circumstance, the research, design and
implementation of material supply chain management system has become an urgent
subject to be solved.

1.4 Methodologies

In this research, the ERP theory will be combined with the actual situations of
enterprises’ production and operation, ERP system of C/S architecture has been
11
developed based on Oracle database. Meantime, through the study of the material
supply chain management subsystem in ERP system, specific functions designs of the
supply chain management subsystem has been provided to achieve the preconceived
goals.

Delphi is an integrated development environment (IDE), using the traditional Pascal

language developed from the Object Pascal language. Delphi is actually a version of
the Pascal language, but with traditional Pascal language worlds apart. Delphi
program is a first application framework, and application of this framework is the
"skeleton." In skeleton, even in the absence of attachment anything can still be strictly
in accordance with the design and operation.
Oracle9i is an excellent relational database management system, its database engine
can be expanded, easy to use and safe which becomes one of the best data storage
devices. So the ERP system of this article in mainly uses Oracle 9 I relation database.

In order to design Material supply chain Management software, this research

respectively contributes to the design decision, the function design, the design of data
structure and security design. Through the analysis of the functional requirements of
the system, to study the Business Function, draw the system Flow chart, and work out
a detailed subsystem with comprehensive planning and function design.

1.5 Structure: the layout of the thesis

12
Figure 2- Structure of the article
Source：Own presentation

The structure and layout of the thesis are as follows:

The first chapter is the introduction of ERP, its development history, technology
development trend and the current situation of ERP in China. And the research
significance and purpose of this project have been expounded as well.

The second chapter is the literature Review, the implementation of ERP, the
optimization of ERP, management through ERP, the ERP software, and the basic
concepts and principles of ERP for supply chain management.

The third chapter is the “related principles,” the basic concepts and principles of the
system have been introduced, which has provided the theoretical basis for the system
design and implementation.

The fourth chapter is the “analysis of management decisions”, combined with the
logistics characteristics of SIIX Corp, the decisions of several key points in the
material supply chain management have been analyzed and studied.

The fifth chapter is the “system design”, the data process of material supply chain
management system, specific functions of the corresponding system, database designs
and security designs have been completed.

The sixth chapter is the “implementation of the system” and the “operating effects of

13
the software”, the overall structure of ERP software and main supportive technologies
to realize functions of software have been introduced; operating interfaces of the
system’s several main subsystems have been demonstrated.

The seventh chapter is the summary of the whole thesis, problems discussed in the
thesis have been presented, and the future research ideas have been explained as well.

Chapter 2 Literature review

2.1 Introduction of ERP

The Enterprise Resource Planning (ERP) system is an enterprise information system

designed to integrate and optimize the business processes and transactions in a
corporation. The ERP is an industry-driven concepts and systems, and is universally
accepted by the industry as a practical solution to achieve integrated enterprise
information systems. The academic research community has been contributing to the
field in various ways. A typical way of contributing to a field is by publishing archival
journal papers for public benefits. (Abdinnour-Helm, S., Lengnick-Hall, M.L., et al.
(2003) ‘Pre-implementation attitudes and organizational readiness for implementing
an Enterprise Resource Planning system’， European Journal of Operational Research,
Vol. 146, No. 2, pp.258–273)

Implementing an ERP system is a major project requiring a significant level of

resources, commitment and changes throughout the organization. Often the ERP
implementation project is the single biggest project that an organization has ever
launched. As a result, the issues surrounding the implementation process have been
one of the major concerns in industry. And it further worsens because of numerous
failed cases including a few fatal disasters which lead to the demise of some
companies.( Al-Mashari, M. (2003b) ‘Enterprise Resource Planning (ERP) systems: a
research agenda’, Industrial Management & Data Systems, Vol. 103, No. 1, pp.22–
27.)
14
Finally, a group of articles is interested in any differences between cultures and
Nations in implementing ERP systems. Comparative studies are conducted and
analyses are provided in terms of differences and similarities. Explanations for such
findings are also attempted. The ERP research community is diverse and
comprehensive. The field is truly Multi-disciplinary and inter-disciplinary. In a
relatively short period of time, the researchers have contributed so much to the field
that newer topics are now covered from various points of view. (Barker, T. and Frolick,
M.N. (2003) ‘ERP implementation failure: a case study’, Information Systems
Management, Vol. 20, No. 4, pp.43–49.)

2.2 Implementation of ERP system

Implementing an ERP system is a major project requiring a significant level of

resources, commitment and changes throughout the organization. Often the ERP
implementation project is the single biggest project that an organization has ever
launched. As a result, the issues surrounding the implementation process have been
one of the major concerns in industry. And it further worsens because of numerous
failed cases including a few fatal disasters which lead to the demise of some
companies. Reflecting such a level of importance, the largest number of articles
belongs to this theme.
Implementing an ERP system inevitably involves a large portion of the organization
and often accompanies with major business process reengineering efforts. Therefore,
change management becomes a critical topic in the ERP implementation. A set of
articles address the change management by explaining why it is important in the ERP
implementation, how to do it effectively, the lessons learned, and the change
management strategies. ( Boersma, K. and Kingma, S. (2005a) ‘Developing a cultural
perspective on ERP’, Business Process Management , Vol. 11, No. 2, pp.123–13)

The ERP implementation has a life cycle beginning with a company’s decision to go

15
for it to final go live stage. The articles belonging to a sub-theme of ‘Focused
Stage’address a particular stage of the ERP implementation life cycle. They are the
ERP systemSelection process, the customization of the ERP system, the configuration
of the ERP system, the determination of a hosting service, etc. ( Ehie, I.C. and
Madsen, M. (2005) ‘Identifying critical issues in Enterprise Resource Planning(ERP)
implementation’, Computers in Industry, Vol. 56, No. 6, pp.545–557.)

2.3 Making use of ERP

Once the company successfully implements the ERP, the attention moves forward to
the most efficient use of the system. Especially since considerable resources have
been invested in the ERP implementation, the best possible utilization of the system is
anticipated. Indeed, the value of an ERP system draws from its effective and efficient
usage and not so much from the system itself. The articles under this theme address
various topics of using the ERP system during the post-implementation era, ranging
from end user acceptance, to end user satisfaction, to business process reengineering
after ERP implementation, to uncertainty management, to particular functions such as
designing return material process and handling Sarbanes-Oxley requirements. (Frank,
L. (2004) ‘Architecture for integration of distributed ERP systems and e-commerce
systems’, Industrial Management & Data Systems, Vol. 104, No. 5, pp.418–429)

2.4 Nowadays trends and perspectives of ERP

Best practices are incorporated into most ERP systems. This means that the software
reflects the vendor's interpretation of the most effective way to perform each business
process. Systems vary in the convenience with which the customer can modify these
practices. Companies that implemented industry best practices reduced time–
consuming project tasks such as configuration, documentation, testing and training. In

16
addition, best practices reduced risk by 71% when compared to other software
implementations.

The use of best practices eases compliance with requirements such as IFRS,
Sarbanes-Oxley, or Basel II. They can also help comply with de facto industry
standards, such as electronic funds transfer. This is because the procedure can be
readily codified within the ERP software and replicated with confidence across
multiple businesses who share that business requirement

The emphases seem to be on the intimate relation with Business Process

Reengineering (BPR) and a wide range of organizational changes accompanying with
the ERP implementation. Some articles attempt to clarify the basic meanings
surrounding ERP to provide reflections on many years’ of practices. Also, a number
of survey studies are reported from the findings of current industry’s experience with
ERP. These survey studies can complement the general introductory articles
supported by the real data.
A number of articles provide different perspectives on ERP. For example, they are
perspectives from managers, users, or vendors.
A common observation on the future trends in ERP is its further expansion in scope.
New integration technology such as software componentization, Enterprise
Application Integration (EAI), service-oriented architecture, web services is
introduced and their implications are discussed. A couple of articles attempt to
provide a sense of direction in the ERP research community by analyzing the ERP
literature. They identify the gaps between industry and academia and within the
academic research, thus point out the potential future trends in terms of further
expansion.
A few articles provide a similar information, but on a particular sector. The example
sectors include the public organizations, the educational organizations, the healthcare
organizations, the fashion industry, the manufacturing industry, the service industry.
(Enhanced Project Success through SAP Best Practices – International Benchmarking

17
Study". PP 35-67)

Chapter 3 Software design theory

In order to better design and implement the steel structure ERP material supply chain
management system, it is necessary for us to understand the basic theoretical
knowledge about principles of supply chain management first. In the following part,
the basic concepts, supply chain management, basic principles of material
requirements planning and business process reengineering have been separately
discussed.

3.1 Basic concepts

3.1.1 Item number

Item number is the unique identification code for the computer system to recognize
materials, which is the search basis for computers’ management of materials. To
encode all materials that are needed in running ERP system is ERP’s most basic work.

3.1.2 Purchasing list

The purchasing list is the technical description file of products structures. It indicates
the structure relationship among products components, subparts, parts and raw
materials, as well as the number of various subordinate components that are needed in
each assembly part.

3.1.3 Routing

The routing mainly states the operating sequence of the actual processing and
assembling of materials, the work center used in each process, various time quotas
(such as preparation time, processing time and transmission time) and time and costs
18
of outsourcing process.

3.2 Supply chain management

The core of ERP is the supply chain management. The supply chain management
combines enterprises’ manufacturing process, inventory system and data generated by
suppliers together; it demonstrates various influencing factors in the product
manufacturing process from a unified perspective. Its basic ideas are mainly
embodied in the following three aspects:

1) Integration. Realize the resource optimization through the integration of

enterprises’ departments and integration of enterprises, including the integration
of logistics, workflow, information flow and fund flow.
2) Systematization. It means that business activities in enterprises’ departments and
between various partners should be planned and controlled from the perspective
of the overall supply chain. The “win-win” cooperative model should be promoted
to guarantee the realization of the real overall resource optimization.
3) Coordination. That emphasizes the cooperation. Coordination functions of the
supply chain include: supply and manufacture, producing and distribution, the
coordination of multipoint inventory; the means of coordination include the
information coordination and non-information coordination.
A. The definition and essence of supply chain management
The essence of the supply chain management is to take both demand and supply into
account. Each link in the chain contains the two meanings of “supplying” and
“demanding”. For example, the retailer is not only the supplier of customers, but also
is the acquirer of the wholesaler; the wholesaler is the supplier of the retailer, but it is
also the acquirer of the manufacturer; the sales department of the manufacturer is not
only the supplier of the market, but also the acquirer of the purchasing department;
the purchasing department is the suppler of the production department, it is also the
acquirer of the supplier.

19
B. The position of supply chain management in ERP system
When implementing the ERP system project, the problem how to establish the
informational material supply system because ERP system mostly focuses on
enterprises’ internal production and operation, organization and coordination, while
enterprises’ material supply activities refer to commercial logistics activities with
enterprise’ external suppliers under the guidance of enterprises’ production plan, thus
the new management idea, theory and method are needed to guide the construction
and management of enterprises’ informationized material supply system.

3.3 The basic principles of material requirements planning.

1) Independent requirement
Users’ requirements for enterprises’ products and services are called independent
requirements. The most obvious characteristic of independent requirement is that the
required objects and amounts are uncertain, which can only be roughly predicted
through forecasting methods.
2) Dependent requirement
Requirements in enterprises’ internal materials transformation links are called
dependent requirements. The dependent requirement is also known as
non-independent requirement; it can be accurately calculated according to the
independent requirement of the final products. Once it is the independent requirement,
after determining the production tasks, the number of raw materials and parts that
form the products and needed time can be precisely obtained through calculating.

3.3.1 The basic idea of ERP system logistics management

The basic idea of ERP logistics management is to transform, organize and

manufacture resources around materials, and to achieve the on-time production
20
according to requirements. In the actual production process, the shape and nature of
materials are constantly changed. When gradually transforming from raw materials to
products, enterprises’ large amount of working funds has been occupied by materials.
Therefore, the management of materials has played a key role in improving the
economic efficiency of enterprises.

Organizing the production with materials as the center reflects the purpose of
servicing customers. The final form of materials is the products, which are things
needed by customers, the transformation of materials ultimately aims to provide
satisfactory products for customers. Thus transformation, organization and production
around materials are embodiments of the idea of organizing production according to
needs of the market.

3.3.2 Problems in the application of ERP logistics management

1) Safe stock
Setting safe stock is to deal with uncertainty. Although it is the dependent requirement,
there are still uncertainties, such as unaccepted products, delayed delivery of
bought-in components, equipment failures, power outages and absence. In general,
safe stock is only set for lowest level components in the structure; it does not have to
be set for the other level components.

2) Lead time
MRP lead time is the time standard to determine when to start parts processing and
partial assembly, which takes the manufacture time of the products as the starting
point. To determine the lead time needs to take the following factors into account:
waiting (waiting for processing) time, running time (cutting, processing and
assembly), adjusting set-up time, waiting for transportation time, checking time and
transportation time.

21
3) Lot size
No matter in the purchasing or producing, in order to save ordering costs or,
adjustment and preparation costs of production, a certain lot size must be formed. The
lot-size problem also interacts with the lead time, changes of lot size should lead to
changes of the lead time, and changes of the lead time will cause changes of lot size.
To simplify, it generally regards the lead time as the known fix quantify to handle. In
order to avoid the system tension, generally the lot size is only considered when
ordering lowest level components.

Chapter 4 Analysis of management decisions-making model

Through the analysis of management decisions, scientific management modes and
measures can be provided for the material supply chain management system;
meantime it can also create considerable economic benefits for enterprises and
achieve the goal of optimizing the distribution of resources. In the following part,
logistics characteristics of SIIX Corporation have been analyzed through management
decisions on several key points.

4.1 The balance of resources

1) Related concepts
The resources balance means that when the comprehensive planner receives the
instruction issued by the craft department, he makes a comprehensively balanced
work of the procurement directives based on the current material inventory situation
to achieve the goal of taking fully advantage of the inventory and reducing the
purchasing costs. Materials inventory status data includes: planned quantity, inventory
quantity, occupied quantity and inventory available quantity.

22
Planned quantity: the predicted purchasing quantity estimated according to the
design requirement in the procurement directives issued by the process.
Inventory quantity: the actual amount of storage in the warehouse.
Occupied quantity: the number of inventory occupied by the planned quantity, which
has not been actually used, is in a seizure condition.
Available quantity of inventory: the number of inventory that can be used by the
planned quantity.

2) Decision-making thought
Available quantity of inventory = stock amount - the occupied quantity.
When the first negative value of available quantity of inventory emerges, it means that
for the first time the net demand has come out, its value is equal to the absolute value
of this negative value. For later inventory level negative value, their absolute value is
used to represent accumulated value of net demand in the time zone. The net demand
of materials and its occurred time imply the impending shortage of materials. In order
to avoid such cases, the planned order quantity should be appointed in the time zone
that net demand occurred, and then the order lead time should be considered, the
issued time of purchase plan needs to be cleared out.

3) Decision-making steps
The comprehensive planner receives the purchasing list issued by the craft department,
and determines the purchasing methods according to the materials inventory.
If the stock quantity = 0, then the purchasing plane is issued.
Else if the available quantity of inventory < the planned quantity, then make the part
purchasing (one part uses the inventory, purchases one part)
Else if the available quantity of inventory > the planned quantity, then use the
inventory:
That means that for each purchasing ways issued by the craft department, the
comprehensive planner has the following three disposal pathways:
Issuing the purchasing plan
23
The comprehensive planner issues the purchasing plan according to material
categories, including appointing planners of each purchasing plans, requirements of
goods arrival time (determining based on the delivery time on the purchasing list),
truing to the purchasing process.

Part purchasing:
For the situation of insufficient inventory, the part purchasing is implemented. The
purchasing quantity equals the planned quantity minus the inventory quantity, a
purchasing plan is issued for this part of materials; for the remaining materials, the
inventory is used.
Using stockpiled materials
① Manual use of stockpiled materials
In the case of available quantity of inventory meets requirements, the comprehensive
planner chooses purchasing materials that need to use stockpiled materials, and then
specifies its warehouse account page corresponding to inventory, thus the occupied
quantity of the materials will generate.
② Automatic use of stockpiled materials
Automatically compare the planned quantity with inventory quantity by computers,
and then specify the warehouse account page in accordance with the principle that
materials put in storage first are used preferentially, thus the occupied quantity of the
materials will generate.

4.2 Purchase decision-making model

1) The principal of purchase decision-making

Purchasing material should take production process and stock current situation into
consideration to get the maximal benefit. Purchasing should follow the principles:
a. Meet the demand of production for next month.
b. Avoid a large backlog of inventory
c. Purchasing investment should achieve the best forecast benefit

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 d. Purchasing according to the order of process instructions

According to the principles above, it puts forward the decision-making plan:

If there are n types of materials in stock, the quantity of stock𝐄 = (𝐞𝟏 , 𝐞𝟐, … 𝐞𝐧 ), unit

price 𝐊 = (𝐤 𝟏 , 𝐤 𝟐, … 𝐤 𝐧 ) , the price of production operation contract is P, the

consumption of this month is 𝐁 = (𝐛𝟏 , 𝐛𝟐, … 𝐛𝐧 ). Now the investment is Y Yuan, the

quantity of each material to purchase is 𝐗 = (𝐱 𝟏 , 𝐱 𝟐, … 𝐱 𝐧 ). And the object is to get

maximum expected profit is 𝐦𝐚𝐱{𝐩 − ∑ 𝐣𝐢 𝐱 𝐢 }.

Constraints:
 Try to meet the consumption of production 𝐂𝐢 , 𝐞𝐢 + 𝐱 𝐢 ≥ 𝐜𝐢 ;
 Avoid a large backlog of inventory 𝐞𝐢 + 𝐱 𝐢 ≤ 𝟑𝐜𝐢 ;
 Purchases ∑(𝐤 𝐢 𝐱 𝐢 ) ≤ 𝐘
 Following the order of process instructions

2) Purchasing decision-making model

The invoice data of each material (n kinds) can be expressed as follows:

If there are n types of materials in stock, the quantity of stock 𝐄 = (𝐞𝟏 , 𝐞𝟐, … 𝐞𝐧 ),

unit price 𝐊 = (𝐤 𝟏 , 𝐤 𝟐, … 𝐤 𝐧 ), the price of production operation contract is P, the

consumption of next month is 𝐂 = (𝐜𝟏 , 𝐜𝟐, … 𝐜𝐧 ).

Now the purchase price is Y Yuan,the question can be concluded as the quantity

of each material to purchase 𝐗 = (𝐱 𝟏 , 𝐱 𝟐, … 𝐱 𝐧 ) to satisfy a series of limitations. In

order to make the purchase meet the consumption of production of next month, we
can calculate the minimum purchase amount

𝐘’＝∑（𝐜𝐢 − 𝐞𝐢）𝐤𝐢 (i means the stock out kind, 𝐜𝐢 ≥ 𝐞𝐢 )

Material purchasing decision model and algorithm will be established as below from
two situations.
25
 The purchase amount cannot meet the consumption of production of next month

(Ｙ ≤ Ｙ′).

Under this circumstance, the reasonable purchase should minimize the amounts of out
stock goods of next month and maximize the profit forecasts.
Suppose there are n kinds of goods out of stock, the purchase decision-making is to
choose m kinds of goods from n kinds to fulfill the object. Suppose decision-making

vector 𝐗 = (𝐱 𝟏 , 𝐱 𝟐, … 𝐱 𝐧 ), 𝐱 𝐢 = 𝟏 means i kind of good fulfill sales of next months,

or 𝐱 𝐢 = 𝟎 means that ikind of goods will not be purchase.

Object: max ∑ 𝒙𝒊 (minimize the amounts of out stock goods of next month);
max(𝐩 − ∑ 𝐤 𝐢 𝐱 𝐢 ) (maximize the profit forecasts);

Constraints: 𝐱 𝐢 （𝐱 𝐢 －１）＝𝟎 (𝐱 𝐢 = 𝟎 𝐨𝐫 𝐱 𝐢 = 𝟏);

∑（𝐜𝐢 − 𝐬𝐢 )𝐤 𝐢 𝐱 𝐢 ≤ 𝐘 (purchase price no more than Y)

It can be concluded from dynamic optimization principle available that if each stage
of the decision is the best, this decision can achieve the best sum of economic profit
and the optimization of economic efficiency, and then the entire decision-making is
the most optimal.

Suppose there are n decision-making stages in process, S presents the station of any
stage (state variables), and xi (s) is decision variable which means there are still i
stages to go when the station is S, next status to select. fi (s)stands for present status
S which means there are still i stages to go. The best optimal decision value is decided
by present status. d(s, xi (s)) stands for the value at i stage making decision of xi (s).
Therefore, dynamic optimization principle can be summarized in:

26
𝐅𝐢 (𝐬) = 𝐦𝐚𝐱{𝐝(𝐬𝐢 𝐱 𝐢 (𝐬)) + 𝐟𝐢−𝟏 (𝐱 𝐢 (𝐬))} (4.1)

In this problem, the whole purchasing activities can be regarded as a multi-stage

decision process and for a kind of purchasing of materials can be regarded as a stage
of the decision. As long as every time (kind of) purchasing of materials is the best,
then the whole purchasing activities is optimal. And every optimal decision of
purchase should take up minimum investment 𝐊 𝐢 (𝐂𝐢 − 𝐄𝐢 ) (to make all stages the
optimal value and so as many as possible kinds of goods procured),so as to do the best
purchase (the best profit and the lest kinds of out of stock goods). 𝐊 𝐢 (𝐂𝐢 − 𝐄𝐢 ) is the
decision factor.

 The purchase amount can meet the consumption of production of next month

(Ｙ ≥ Ｙ′).

Under this circumstance, the purchase object is to achieve the max profit forecast
under this precondition of satisfy the need of producing.
At first, to meet the consumption of producing, i kind of good which will be out of
stock next month should purchase for 𝐱 𝐢 , thus 𝐞𝐢 + 𝐱 𝐢 = 𝐜𝐢 .

Suppose the purchases areY1 , then the surplus purchases are𝐘 ′ = 𝐘 − 𝐘𝟏 (Y ′ ≥ 0),
The object of purchase turns to:
After investment of 𝐘 ′ , and then make the purchase decision to achieve the best
profit.
Limitations: the amounts of any material inventory add the procurement cannot be
more than sales of 3 months.

Decision-making model can be built according to above:

Suppose there are n kinds of materials, and the inventory of each materials is less than
the sales of three months.
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Objective: p − max ∑ k i xi [achieve the best profit]
Limitations: ∑ k i xi ≤ Y′[no more than surplus investmentY′;]
xi ≤ zci − ei (i = 1,2, … n) [the sum of the quantity of any kind of goods and
inventory should be no more than the sales of z months]

This is typical of linear programming problem which can be solved by the simplex
method.

4.3 Supplier management model

1) Problem description
There are a heavy industry company and i suppliers in a supply chain. In planning
period [1, T], it is need to procure j kinds of materials from supplier i to satisfy the
need of production. The company puts forward to purchase the sort of material
according to the demand of the market condition and actual situation of producing and
equipment. In a period t, t ∈ [1, t] the demand in quantity, quality and delivery time

𝐝𝐣𝐥 , 𝐝𝐣𝐥 ∈ [1, T]. 𝐗 𝐢𝐣𝐥 (𝐭) means the quantity of purchase at t period.

The objective of purchasing plan is to make a reasonable purchase plan to optimize

the cost of purchase, quality, delivery time and supply circulation time, and in the
meantime choose the reasonable optimal plan of suppliers and resources, providing
procure decision-making with a reliable mathematics basis.

Building model
Objective function:
Because of the importance of cost, quality and delivery time in selection of suppliers,
multiple target objective solution is put forward to solve the problem.

Minimize the total procurement costs: the total procurement costs is composed by
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material price and cost of transportation. Thus, cost objective function is:
𝐉
𝐌𝐢𝐧𝐟𝟏 = ∑𝐓𝐭=𝟏 ∑𝐈𝐢=𝟏 ∑𝐣=𝟏 ∑𝐋𝐥=𝟏 𝐂𝐭𝐣𝐥 𝐗 𝐭𝐣𝐥 (𝐭) ( 2)

Minimize supply chain cycle time: Supply chain cycle time is mainly composed by
the response time of the order and transportation time. Ignoring the suppliers' order
response time and putting emphasize on the transportation time is a purchasing
strategy by shorten the logistics of time.
𝐉
𝐌𝐢𝐧𝐟𝟐 = ∑𝐓𝐭=𝟏 ∑𝐈𝐢=𝟏 ∑𝐣=𝟏 ∑𝐋𝐥=𝟏 𝛄𝐭𝐣𝐥 𝐗 𝐭𝐣𝐥 (𝐭) （3）

Minimize the total late to delivery time: The company should choose a supplier with a
good reputation of delivery according to each supplier delivery history records and the
market prestige etc.
𝐉
𝐌𝐢𝐧𝐟𝟑 = ∑𝐓𝐭=𝟏 ∑𝐈𝐢=𝟏 ∑𝐣=𝟏 ∑𝐋𝐥=𝟏 𝛂𝐭𝐣𝐥 𝐗 𝐭𝐣𝐥 (𝐭) （4）

④Minimize unqualified product quantity: non-conforming products will directly

influence the quantity and the quality of the products. Thus, measures should be taken
to reduce the disqualification rate:
𝐉
𝐌𝐢𝐧𝐟𝟒 = ∑𝐓𝐭=𝟏 ∑𝐈𝐢=𝟏 ∑𝐣=𝟏 ∑𝐋𝐥=𝟏 𝛃𝐭𝐣𝐥 𝐗 𝐭𝐣𝐥 (𝐭) （6）

Because of the different geographic location of suppliers, the transportation time 𝐘𝐢

and the transportation price 𝐞𝐣𝐢 are different. Suppose the unit transportation cost is

fixed, the unit material cost is 𝐂𝐣𝐢 , the unit material price is Vji . Thus, 𝐂𝐣𝐢 = 𝐕𝐣𝐢 + 𝐞𝐣𝐢.

Yi . stands for the transportation time from supplier i to SIIX Corp. 𝐚𝐣𝐢 is the

disqualification rate that supplier provide SIIX Corp with J kinds of material..
Constrains:
① Limitation of demand
Suppliers plans should meet the demand of SIIX Corp. on the types, volume at a
given time.
The following equation：

∑𝐋𝐥=𝟏 𝐗 𝐣𝐭𝐥 (𝐭 − 𝛄𝐣𝐥 ) = 𝐐𝐣𝐥 （𝐭）；

j=1,2...,J, t=1,2,...,T, l=1,2,...L (6)

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and：Qjl （t）is demand of the j kinds of Material during a period of t .

②Supplier capacity constraints:

With limited resource in a period of time, purchase quantity of the plan cannot exceed
its given supply upper limit.
so：

∑𝐋𝐥=𝟏 𝐗 𝐣𝐭𝐥 (𝐭) ≤ 𝐒𝐣𝐥 （𝐭）

j=1,2...,j, t=1,2,...,t, l=1,2,...l (7)

③Procurement budget constraints

All kinds of purchasing expenditure should be controlled in purchasing budget, and
accord with total purchasing quantity,so that：

∑𝐓𝐭=𝟏 𝐂𝐭𝐣𝐥 𝐗 𝐭𝐣𝐥 (𝐭) ≤ 𝐂 (8)

and：C is the total procurement budget.

④Constraints of the nonnegative number for purchasing volume

As follows:

𝐗 𝐢𝐣𝐥 (𝐭) ≥ 𝟎

i=1,2,...i, j=1,2...,j, t=1,2,...,t, l=1,2,...l (8)

３）Solving the problem with model

From the above model ,we can see the model is multi-objective linear model. For
solving the multi-objective programming problem,there is a variety of methods. We
make the use of linear weighted sum method of the evaluation functions. And
then,we can use the classic Linear programming to solve the problem.
Objective function：
𝐌𝐢𝐧(𝛉𝟏 𝐟𝟏 + 𝛉𝟐 𝐟𝟐 + 𝛉𝟑 𝐟𝟑 + 𝛉𝟒 𝐟𝟒 );

30
 And 𝛉𝟏 + 𝛉𝟐 + 𝛉𝟑 + 𝛉𝟒 = 𝟏, 𝛉𝟏 > 𝟎, 𝛉𝟐 > 𝟎, 𝛉𝟑 > 𝟎, 𝛉𝟒 > 𝟎
θ1 , θ2 , θ3 , θ4 are weight coefficients corresponding different effective solution and
weak efficient solutions. In order to make the multi-objective optimization problem
with practical significance, the selection of reasonable weight coefficient is very
important.

Judge the importance of different targets and then make comparison matrix according
to the judgment standard 1.8 . The n element's weight is Wn = wn / ∑ wn . The
algorithm can givemulti effective solution set of target function whenthere are
different value of θ1 , θ2 , θ3 , θ 4, and the decision maker can choose satisfying
solutions in efficient solution.
solution：
First step :Build model and the objective function, according to the requirements of
each enterprise on supply chain and supplier capacity:
𝐌𝐢𝐧𝛉𝟏 𝐟𝟏 + 𝛉𝟐 𝐟𝟐 + 𝛉𝟑 𝐟𝟑 + 𝛉𝟒 𝐟𝟒
Second Step：Confirm the weight of θ1 , θ2 , θ3 , θ4 ；

Third step：Using general linear programming software to calculate the X ijt (t)and the

objective function values；

Forth step：Calculate the type and quantity of materials to be purchased from different
suppliers the suppliers plan to amount and type of purchase materials in every
time at the procurement center；
Fifth step：Make use of different value of （θ1 , θ2 , θ3 , θ4)to solve model, calculate the
efficient solution.

4.4 The management of material requisitions

In the material supply chain management of ERP system, the previous manually made
small material requisitions are gradually replaced by the form of material requisitions.
The supply department checks each specified account page of records on every
material requisition, when all records are specified warehouse account pages, this
31
material requisition is approved. In the case of materials are not be used, the audit can
be canceled, and continue to specify the account page.

The specified account age records the storage identification that meets production
requirements for each recipient detail on the material requisition (one or more). When
the warehouse inventory meets production requirements, there are two following
situations:
①the amount of one warehouse account page meets the quantity needed in the
production
Record the identification of occupied warehouse account page on the original
pre-determined material requisition
②the sum of amounts of several warehouse account pages meets the quantity needed
in the production
According to selected warehouse account pages, split the original pre-determined
material requisition into several pre-determined material requisitions.

For example:
The production demand is 100KG=50 KG for warehouse account page No.1+20 KG
for warehouse account page No.2+30 KG for warehouse account page No.3;
Thus the original pre-determined material requisition is divided into three
pre-determined material requisitions:
Pre-determined material requisition No.1: Change the original production demand
quantity to 50kg, and record the identification of the warehouse account page No.1;
Pre-determined material requisition No.2: Generate a new pre-determined material
requisition, the demand quantity is changed to 20kg, and record the identification of
the warehouse account page No.2;
Pre-determined material requisition No.3: Generate a new pre-determined material
requisition, the demand quantity is changed to 30kg, and record the identification of
the warehouse account page No.3;
Thus it ensures that each pre-determined material requisition corresponds to an
32
identification, which guarantees the correctness of warehouse’s charge-off.

Distribution of material requisitions

When material requisitions cannot be all distributed in one time:
The workshop first puts material requisitions in the warehouse, take materials, and
continue to take next time;
If materials are not sufficient on the specified account page when receiving, the
custodian can go to other warehouse account pages, as long as they are of the same
kind, they can be replaced; it can be checked out in the warehouse that materials of
one project are used in which projects.
Material receiving detail on material requisitions issued at different times

If the received number on the material requisitions is 10, but the actual received
number is 5, there are five others to receive in the next time.
①if it does not occur in the next month, the first 5 ones are sent out, for the next
receiving in the same month, the actual issued quantity is needed to be wrote.
②if it occurs in the next month, the custodian should delete the receiving detail
record that has not been charged off, and then recharge off in the next month.
The first five one can be sent out. For the other five, record the material requisition ID.
When manually make the list again, after receiving, delete the five receiving detail on
the material requisition.

4.5 SIIX’s ABC inventory classification

SIIX Corp involves a large number of transactions in the product engineering. In

order to produce effectively, managers must avoid distracting by unimportant details,
and need to focus on important business related with the manufacturing process. The
inventory control method should be adopted to separate materials that need to be
controlled precisely from those that do not need to be precisely controlled to make
key management. According to 20-80 phenomenon in the Pareto principle, as shown

33
in Table 1, the total value of materials that occupies 20% of varieties of materials in
inventory occupies 80% of that of the total plant inventory materials, and the total
value of materials that occupies 80% of varieties of materials only occupies 20% of
that of the total plant inventory materials.

Table 1 ABC inventory classification table

Occupied inventory Numbers of occupied

Type
funds varieties in inventory

A 80% 20%
B 15% 30%
C 5% 50%
Source：Own presentation

A-class materials belong to key inventory control objects, which demand accurate
inventory records, and are needed to be strictly checked according to their cycle
counting. Their quantities and quality conditions should be grimly examined; the use
and custody of this kind of materials must be closely monitored.
The inventory level of A-class materials should be reduced as much as possible.
Reasonable order cycle time and order quantity should be adopted to avoid waste and
the dead stock.
For C-class materials, a lot of management efforts do not need to be invested, the
cycle counting can be appropriately extended. B-class materials are between A-class
and B-class, so suitable methods can be used to utilize, keep and control.
ABC classification method is the simple and easy-to-use method in the inventory
control. But it should be noted that all kinds of materials that constitute products are
indispensable, as loosely manage C-class materials, special attentions must be paid to
quantities and qualities to avoid influencing the implementation of plans.
According to principles of ABC inventory, inventory costs of SIIX Corp’s steels (steel
plates, plates rolling, which are the main raw materials for production) storage are the
highest, and are listed in the A-class inventory management; because of the less
occupied amount of funds, welding materials and paint among products are listed in
the B-class inventory management; other various kinds of facilitating goods are listed
34
in the C-class inventory management due to cheap prices.

Chapter 5 Requirement analysis

The three main lines of ERP design are the supply chain management, production
management and financial management. These three main lines are mainstream
business in the manufacturing business processing, therefore when carrying out the
planning programming and design implementation, the division of labor and
coordination should be made closely around the three main lines.

The supply chain management is the main line of enterprises’ logistics business, it
deals with the whole process from raw material supply, products storage to products
sales, and the core of its logistic management is the management of the inventory.
Main information and data in this process are items inventory information, items code
information and data of suppliers and acquirers. Marketing plans, contracts and orders
are entry data for the master production schedule.

With the guidance of ERP thought, this system uses advanced computer information
management technologies to make effective management of SIIX Corp’s entire supply
chain. Previous business processes have been reorganized and reconstructed, mainly
including: purchasing management process, price trial management process and
warehouse management process. The material supply chain management subsystem
has been deployed to relevant units, such as basic resources, shop floor, cost, quality,
and finance.

5.1 Analysis of the current status

Since the material supply chain management system of SIIX Corp was officially ran
in 2004, it has been applied for nearly 3 years, the hardware and software of the
system are needed to be upgraded. With the increasing standardization of the
35
management, the supply department has many new requirements of the material
supply management software. Meantime, the enterprise’s emphasized informatization
construction project this year and finance department’s receivable and payable
management system which is ready to go on-line have also put forward the new
requirement of sharing information integration. To realize the sharing of material
supplying data in the whole company and avoid information islands, the system needs
to be ungraded and maintained, the database needs migrating, ungrudging and making
centralized management. Through the survey and analysis in the company, there are
still several problems in the material supply in production process:
At present, the system for material supply is an island, which does not associate
with other departments, because the information is not shared, the information delay
happens. The material supply department purchases materials according to purchasing
lists issued by craft department, due to the not timely communication, purchased
materials do not accord with needed materials. Moreover, the situation of materials
can not be fed timely; the operating control of workshops can not be guided.
The material system is divorced from the financial system; for payment requests and
invoices provide by the material supply department, the financial department can not
judge real sources of data, thus costs can not be controlled.
The material procurement plan has long cycle and unreasonable arrangement.
The enterprise is always waiting for materials, it is often that much needed goods do
not arrive, but temporarily unneeded goods arrive first. Advanced optimization tools
are lacked to assist procurement and inventory replenishment decisions. The
inventory occupies lots of funds.
Raw materials structures in the inventory are irrational. Raw materials much
needed in part productions are lack in the inventory; some other raw materials have
been stored for many year, which occupy a lot of funds. Material inventory
information and inventory information of articles being processed in the
manufacturing department have not been shared mutually, which are also not shared
with workshops, the inventory management is unable to play its role.

36
5.2 Target of the System Software

1) On the premise of guaranteeing the normal running of enterprise’s production,

operation and management, ultimate goals of the material supply management
software are to farthest simplify daily affairs, lower raw material costs and operating
costs, reduce inventory and occupied funds, increase enterprise’s flowing funds,
reduce financial account mistakes or delays, and make material management staff pay
more attention on strategic decision-making tasks, such as suppliers selections,
contract negotiations and benefit analyses.
2) Using computers to manage materials can not just copy labor management modes
and become the replica of the labor management. It should optimize and rationalize
business processes of the labor management, as well as making them scientific. The
current business should be surpassed, and management ideas and laws of business
should be also abstracted.
3) The logistics, capital flow, data flow and control flow should all be expedite to
form a complete closed loop feedback system. The entire material supply
management system should take planning and control as the main lines, and fully
reflects the management thought of organic integration of logistics, capital flow,
information flow and control flow. Meantime, the management efficiency of materials
is represented in information collection, transfer and disposing process. The
information flow is the image in material supply management process.
4) There should be abundant monitoring, assessment and management functions,
plans should be hold in advance, there is the control in the event and business
accounting after the event. Each business process should provide affluent
decision-making information and assessment data for managers (comprehensive
management).

37
5.3 Process design

5.3.1 The general figure of material supply management business

process

Through the analysis of information requirements and processing requirements, the

general flow-chart of information is shown in Figure 3.

38
Figure 3-Material supply management business process
Source：Own presentation

39
The main process of material supply chain management: issuing the purchasing
list-balancing resources-applying for purchasing-price checking-purchasing
-contract-the execution of contract-examining item by item-putting materials into the
storage-registering the bills of materials.
ordering the purchasing list: the craft department issues inventory instructions
according to requirements of the routing;

Balancing materials: the comprehensive planner receives the purchasing directives,

and creates the purchasing plan according to the inventory;
applying for purchasing: planners create purchase requests according to the
purchasing plan, inquire of suppliers about prices, and then submit to price auditors to
examine and verify;

Price checking: price auditors examine and verify each unit price of materials on the
purchase application according to best prices in the market and previous information;
Purchasing contract: from the audited purchase application the purchasing contract is
generated, purchasing material items are combined to form contract material items,
the contract fund item is filled at the same time;
The execution of the contract: the contract materials generate the warehousing entry,
the contract funds generate the check requests, record invoice information and
connect with the financial department’s receivable and payable system;

Examining item by item: examine materials that need to be technically tested item by
item, and submit to the quality assurance department;
Putting materials into the storage: materials that pass the examination cam be put into
the storage, and then make the account list;
Registering the bills of materials: for each warehouse account page, information of all
kinds of materials lists (material requisitions, materials returning slip,
switch-materials orders and sales bills) on it is recorded.

5.3.2 Procurement and inventory

Procurement and inventory is important link of SIIX Corp’s complete supply chain
operation, in the ERP environment process. As shown in Figures：

40
 The purchasing application
Purchasing inquiry sheet
Purchasing list
application generated

Supplier
Management
Purchasing application audit

Create purchasing
contract

Payment request Create storage inspection

audit certificate

Quarantined area material data query

The purchasing application status report

inquires
payable/receivable
system Overdue delivery purchase application
information statement

Purchasing
completed

Figure 4-purchasing process

Source：Own presentation

41
 Warehouse　receiving　
sheet registration of
account

Data entry of various

types of inventory
exchange

Inquire the data of Various types of data and

various types of inventory reports print

Cost accounting by
monthly weighted

Regular physical
inventory

Monthly accounting close Empty the bill of material

Figure 5- Warehouse Process

Source：Own presentation

1）For the purchasing management, ERP system is focused on determining the

reasonable order quantity, selection of excellent suppliers, maintaining optimal
reserve .Purchasing department is important entrance department of the enterprise
supplies, at the same time it is the logistics major departments, and is closely related
with all departments , but the main task of Purchasing department is to complete the
production of goods and materials procurement. the main content of Purchasing
management is supplier information management, procurement of materials table
maintenance, purchase order management. the main function of Procurement
management system designed is based on material requirements plan and lead time of
material purchasing to develop the purchase order, according to the order when the
material is arrived, after Goods receipt, inspection, then were passed the assigned to
inventory, registration warehousing single.

2）ERP system solves the inventory problem of SIIX Corp, commonly used by the
approach to control raw material inventory, which does not makes some occurs in
42
shorts, neither won't make it downtime to be expected and not delivering on time.
More importantly, inventory will cause a large capital keep long in stock, so we must
avoid excessive inventory backlog of funds, working difficulty and increase in the
rate of interest, further aggravating the cost burden.

5.3.3 Business process analysis

5.3.3.1 Purchase

From the point of the enterprise mode of produce and selling, its position is very
important. Procurement of goods timely meet the production and operation of
enterprises’ need is directly affecting the normal business activities of enterprises.
And we will introduce the procurement process of the system:

1）Procurement management process

Procurement management process is the source of the procurement, the interface of
the process and supply department. Comprehensive plan must distribution follow-up
purchasing plan based on the process line of the purchase list command.
List of business process as shown in figure 6：

43
 For the purchasing task
which cannot be satisfied,
Estimate for the the information should be
Supply Department bill feedback to the design
department, and then
modify the bill

Estimated bill Purchasing task

management Adding purchase Modify the
bill estimated bill

Substitute
management
process
resource balance Bill of CAM

Modify the material of

estimated bill
Process CAM
Approval
Department Bill Of Materials

Audit the
estimated bill

BOM spreads

Bill Of Purchase
Part

Figure 6- Purchasing bill process

Source：Own presentation

 Current situation
Process design department according to the drawing demand forecast procurement list,
fill out the "procurement list", by the Department Manager for approval, to supply
department. For the Department of integrated Scheduler according to "buy" list,
consider the inventory situation, make a "procurement schedule", and report to the
leader for approval; if emergency plan, the company leadership and the leadership of
the Ministry of supply and delivery of Scheduler execution of purchase, the official
plan to fill the next month, the required program subsequently filled; supply
department, financial department, director of company leadership level to
"procurement schedule" for approval signature, by category distribution to the
Scheduler. The existence of a large number of emergency plan, to follow the great
passive; integrated Scheduler cannot control the inventory quantity change, give the

44
plan brings difficulty; once monthly plan, on the demand of the production was too
slow to react: manual operation to increase the workload, but also easy to go wrong.

 Main business change driven by ERP

Through the creation of project resource library function application, has realized the
design department and the Department of materials supply and project management
department of mutual contact and communication (rationality, accuracy) requirements
of the procurement, procurement plan in real time processing, minimizing the
occurrence of emergency plan; real time query the various stocks inventory;
Scheduler operating supplies supply chain management system to automatically
generate purchase requisition; production department can keep track of demand for
implementation;
 Business process of the future
Process design based on estimated procurement list building engineering database,
and then issued a formal procurement list or library addition procurement list: the
technology director after confirmation, data flow for the department of. For the
Department of integrated planning according to the inventory, according to the region
to the Scheduler issued a procurement plan, fill in the requested delivery time.
Scheduler operating material supply chain management system, from procurement
planning generation application; to market purchase inquiry quotation process.
 relates to functional module
Create project resource library, Audit library resources, Issue project procurement list

2） Purchasing business process

Procurement process is the Scheduler execution purchase order business processes, by
purchasing requisition to purchase contract to the execution of the contract, all
processes are upstream data into the downstream, step by step driving

45
Figure 7- Purchasing business process
Source：Own presentation

 Current situation
According to contract execution purchasing，manual, error-prone, and the poor
traceability.
 Main business change driven by ERP
Establishing procurement list management, fitting the purchase plan, purchase
application management, price management into the information system management,
achieving the procurement management process control (by price, contract
management)
According to supplier's quotation, scheduler fill in the procurement of material price,
submitted to the price department price; in purchasing application date quotation;
Scheduler can accurately know the purchase application implementation;
Real time tracking the purchasing application makes a timely response to purchase
request changes t;
System for printing purchase application substitute for manual operation, to ensure
that the purchasing application code and data accuracy;

46
The disposable supplier and no material code purchasing price by the Scheduler in
purchasing application on maintenance, other purchase price by inquiry sheet sent by
the Scheduler, not free to modify, effective control of the purchasing price.
Price by purchasing application generates a purchase contract; purchasing contract
includes the contract goods and contract fund information;
 Business process in the future
Scheduler fill in material procurement price according to the inquiry sheet；
the system create purchase application, material procurement table from internal；
Schedulers print procurement application form, material procurement table from the
system;

5.4 Functions Design

The function structure of Material supply chain management system ,mainly

including purchasing management, appraisal management
And warehouse management .below we will discuss the function of these three
subsystems respectively.

47
Figure 8 - Function tree of management system
Source：Own presentation

5.4.1 Purchasing management

Purchasing management is the management of purchasing process, and related aspects

48
in an organization. Because of production companies purchase nowadays about 70%
of their turnover, and service companies purchase approximately 40% of their
turnover [1], purchasing management is one of the most critical areas in the entire
organization and needs intensive management. Purchasing management also covers
the areas of outsourcing and insourcing. Models used to aid purchasing managers
include the Newsboy model as well as the Order up To (OUT) model.
1）Purchasing Process：
Purchasing Process includes as usual 8 main stages as follows:
1. Market survey
 Requisitioning：
 Approving
 Studying Market
 Making Purchase Decision
 Placing Orders
 Receipting Goods and Services Received
 Accounting Goods and Services
 Receiving Invoices and Making Payment
 Debit note in case of material defect
2）Purchasing Management Process：
Purchasing Management Process consists usually of 3 stages:
 Purchasing Planning
 Purchasing Tracking
 Purchasing Reporting
3）Purchasing Planning
Purchasing Planning may include steps as follows:
• creating purchasing projects and tasks
• providing related information (files, links, notes etc.)
• assigning purchasing tasks to employees
• setting task priorities, start/finish dates etc.

49
• assigning supervisors
• setting reminders
• control and evaluation
4）Purchasing Tracking
Purchasing Tracking consists of:
• checking task's status and/or history of changes
• receiving status notifications
• sorting, grouping or filtering tasks by current status
• highlighting overdue tasks,,,
5）Purchasing Reporting
Purchasing Reporting includes:
• comparing actual and estimated values
• calculating purchasing task and project statistics
• sorting, grouping or filtering tasks by attributes
• creating charts to visualize key statistics and KPIs
The purchase order management module in resource ERP includes On-time
Requisition, Contract Management, Rate Sealing with vendors, Vendor Management.
This module also offers access to approved supplier, purchase order management,
purchase enquiry to be floated to multiple vendors on just a click of a button.
Further, Vendor evaluation process is integrated in purchase module enabling the
purchase orders to be raised only to the approved vendors. The purchase department
can also determine whether the vendors perform the services within the specified time
frames and appraised the quality of the work carried out.

5.4.2 Audit material purchasing prices

1) Trial price management

Purchase Requisition Audit: the planner generates purchase requisitions and finish the
price consultation, then submits to the members of the audit of the trial price. The
auditor compares the unit price of the supplier feedback and market best price and

50
past information, if it is in a reasonable range then be approved, or return the purchase
requisition. Only to be approved, the purchase requisition can enter into the process of
future procurement contracts.

Check request auditing: the auditor shall audit the check request provided by the
planner, only through the audit can be recognized by the Ministry of Finance; market
price information: the auditor maintenance the best price based on the material at the
first in the market dynamic state, when examining the shopping list of the plan
member, if the vendor-supplied materials unit price is lower than the market best price,
then the system will be replaced with market best price.

Data Report: Provides four types of statements, respectively, auditing summary tables
for the party to review, the price margin ranking table, the procurement plan check list
and the shall single audit list;

5.4.3 Warehouse management Design

Some of the more advanced features of warehouse management can include:

1）Review flexibility of warehouse location designations. If needed understand how
warehouse physical locations are then broken down as warehouse shelf or area
locations and how both are linked when necessary.
2）Determine warehouse pull structure between primary, secondary, and overstock
locations when large quantity orders are involved.
3）Verify that needed pick, pack, and ship functionality is available based on your
company’s detailed needs, particularly if your company is delivering to a major
retailer.
4）Verify support for activities like walking sequence for pulling orders, zone picking,
partial picking on incomplete line items, and early picking of future orders.
Key Functionality built into the latest version of SIIX Corp ERP WM:

51
• Added additional SIIX console (RF) transactions
• Ability to create a replenishment TO automatically
• Handling Unit Functionality
• Physical Inventory Changes – counting at quant level possible
• Basic interleaving possible
• Enhancements to dWM – posting changes initiated from dWM, delivery split
• Proof of Delivery functionality
• Packing Station
• 1 TO possible for multiple deliveries
• Partial GR for an IBDN possible
• TRM (Task and Resource Management
• Data changes to dWM can be timed
• Several ERP systems can be tied to a single dWM instance
• Support for DSD (Direct Store Delivery)
• Planned and Opportunistic Cross Docking functionality
• Value Added Services
• Yard Management
• Dynamic Cycle Counting
• RF serial number capture possible on the Delivery

5.4.4 Function requirement

1) The higher level of integration, to achieve information sharing.

2) The opening performance, the system should have good versatility, portability,
scalability and interoperability
3) Better reliability, system hardware, server and network with high reliability ensure
the normal operation of the system and cannot lose data.
4) Better adaptability to have a good user interface, easy to operate, simple to enter
and easy to maintain and expansion.
5) Fast response.

52
5.4.5 Data interface

Material supply chain management is the core part in ERP management, and among
multiple system the association exists ,Specific as follows：
1) Process interface：The Process Department place purchase list to the Supply
Department, namely the purchase order. Engineering resource database that
technology creates generates purchasing list issued to Supply department.
2) Financial interface：Scheduler generates invoice to the financial sector, treasurer
checks the relevant contract and payment information, and proceed accounts business.
3) Quality assurance interface：The supply station needs to confirm the material which
is to have special inspection. Only materials confirmed can flow to the quality
department.
4) Workshop interface：Workshop, can prompt understanding materials status through
the workshop work billboards（Planning, procurement, pricing, contract, in stock,
inventory, material）.

5.5 Design of the database

The database is the soul of ERP software. Each ERP software has its own database. In
general, the basic task of database design is: according to the information demand of a
unit and process demand and the Support environment of the database, the data model
and typical application can be designed.

5.5.1 Design of the Data structure

5.5.1.1 Data structure

As follows is the table structure that this system mainly makes use of ：
JZSJ：Data, handlers;
PDM project resource library：
construction number, serial number, material code number, Material code, material,
53
material specifications, standards, predicting gross, weight, type, identifier, if valid,
note, lead time, substitute materials, whether the board, Unit of measurement, the
generation time
Purchasing list：
Task number, craft file number, serial number, project number, account number, serial
number serial number processing, process, material type, material code, units of
measurement, weight, design unit, change notification number, date of birth, standards
and requirements on materials, remarks, whether effective, source, material, quantity,
the requested delivery date
Purchasing schedule：
Procurement planning ID, craft file serial number, serial number, the requested
delivery time, number of procurement, procurement task time, purchase task master,
Scheduler, Scheduler receives time, purchase task status, material procurement
contract material ID, ID, effectively marking, material code, units of measurement,
substitute number, a predetermined collar number, source identification, storage
allocation identifier, number, project number, standards and requirements on materials,
the responsibility of units, the task of purchasing ID, accounting, substitute
responsibility, processing number, service unit, remarks, asked to complete time,
actual finish time, setting time, setting, examination, evaluation, inspection time,
focus, weight, material, material specifications, material ID, notification No.
Supply -procure application form：
Application form number, to declare the Department, reporting date, price,
manufacturer ID, supply factory 1 number, 2 number supply plant, supply factory 3
number, the audit time, auditor, Scheduler, contract number, valid identification, notes,
have been recovered, external contract number
Supply -procure Materials table：
Application form number, serial number, material code, measurement units, quantity,
unit price, audit, project number, standards and requirements on materials,
procurement of goods procurement plan ID, ID, feeding the size and number of notes,
inquiry, identification, weight, material, material specifications
54
Supply -procure Product contract table：
Contract No., external contract number, contract time, supply factory number, amount,
Scheduler, payment, reimbursement, payment plan, uses, note, logoff time, shall take
delivery logo, responsibility unit, place of delivery, transport mode, the burden of
object data, software, standard or agreement, the station of arrival, the settlement
method duration, contract type, material aging, packaging related content, contract
liability, divided over time, tax, audit, contract audit opinion
Content for the contract goods table:
Contract number, contract number, commodity code, project number, quantity, unit,
contract delivery time, arrival weight, amount, to cancel the time, measurement unit,
factory number, contract material ID, unit price, purchase plan ID, notes, weight,
material, material specifications
Content for contract funds table：
Contract number, serial number for money, time, amount, abstract, has asked the
amount, the amount paid, project number, payment type, has been reported to the
amount, Scheduler
Content for the substitution table：
Project number, raw material substitution material code, the original code, material
specifications, substitute material specifications, substitute, review identification,
substitute time, applicant, approve, substitute number, failure identification, quantity,
production factory, name, part number, part number code, substitute, substitute
production plant, application department, raw material, raw material substitution
material, specifications, material specifications
Supplier File Table：
Supply factory number, file name, file time, period of validity, to cancel the time,
provide, ancillary products, document number
Supplier After-sales Service：
Document number, supply factory number, project number, product name, the nature
of the problem, time, Scheduler, service, repair, service personnel, complete break,
conclusion, unit, product over time, conclusion
55
Supply Reimbursement requests：
Request number, payment time, contract number, number of funds, project number,
amount, payment ID, supply factory number, being abstract, the time of payment,
reimbursement time, Scheduler, logoff time, payment, inspection ID, account number,
bank account, external contract number, payment type, auditor, auditing time,
payment certificate category, payment voucher number, payment vouchers,
department number, external invoice number, funding approval, print merge.
Supply packing list ：
Certificate number, material code, content, quantity, unit, unit price, amount, freight,
invoice number, supply factory number, production factory number, time, storage time,
contract number, contract number, project number, claim number, number, material
batch, notes, claims, Scheduler, storage ID, container classes, inspection status,
financial identification, modification time, production date, order basis, the
acceptance criterion, external contract number, passing time, units of measurement,
the contract goods ID, printing time, qualified self-inspection, mutual inspection
qualified time, specially qualified inspection time, inspection, inspectors, price
adjustment period, price difference, inspection number, number of re-inspection,
material, material specifications, BZ, reimbursement vouchers, reimbursement
document categories, reimbursement voucher number, check sequence
Supply materials invoice：
Internal contract No., invoice number, invoice, invoice, invoice, invoice tax, invoice,
note, receipt categories, tax reimbursement, document number, reimbursement
vouchers, excluding tax amount, internal invoice number, invoice category code,
reimbursement time, supply factory number, project number, the internal rate of, BZ
sequence, audit, audit date
Supply authority list：
Job number, position, material, serial number
Supply schedule stores requisition：
Material code, warehouse logo, quantity, unit of measurement, time, project number,
purchase plan ID, material batch, storekeeper, predetermined requisitions ID,
56
receiving unit, receiving time, printing time, picking list, under the material list,
approve, approval time, process ID, feeding task under the master, feeding task time,
affirm, confirm the time, substitute substitute responsibility person, number, number
of storage, the time to complete the task, the warehouse number, weight, material,
material specifications, set plate number
Supply Account page attributes: Account page attributes, account page ID,
Scheduler mark
Materials Code library ：
Current layer, material code, identification code, material name specification, variable
time, units of measurement, conversion coefficient, conversion unit, the operator, the
report code, an upper material code, thickness, width, length, the optimal price,
discount prices

5.5.2 Example for Design of the database

1）The material inventory list

The structure of material inventory list is as shown in Table 2：
Table 2- The Structure of materialinventory list
Serial data types and
Data element names illustrate
number length
1 Warehouse logo VARCHAR（7） keywords
2 Material code VARCHAR（9）
3 Warehouse code VARCHAR（10）
4 report code VARCHAR（2）
5 Scheduler VARCHAR（6）
6 storekeeper VARCHAR（6）
7 conversion factor NUMBER（10,5）
8 department VARCHAR（6）
9 variation time DATA
10 last year number NUMBER（15,5）
11 last year amount NUMBER（12,2）
12 Jan number NUMBER（15,5）
13 Jan amount NUMBER（12,2）
14 Feb.number NUMBER（15,5）
15 Feb.amount NUMBER（12,2）
16 Mar.number NUMBER（15,5）
57
 17 Mar.amount NUMBER（12,2）
18 April number NUMBER（15,5）
19 April amount NUMBER（12,2）
20 May number NUMBER（15,5）
21 May amount NUMBER（12,2）
22 Jun number NUMBER（15,5）
23 Jun amount NUMBER（12,2）
24 July number NUMBER（15,5）
25 July amount NUMBER（12,2）
26 Aug number NUMBER（15,5）
27 Aug amount NUMBER（12,2）
28 Sep number NUMBER（15,5）
29 Sep amount NUMBER（12,2）
30 Oct number NUMBER（15,5）
31 Oct amount NUMBER（12,2）
32 Nov number NUMBER（15,5）
33 Nov amount NUMBER（12,2）
34 Dec number NUMBER（15,5）
35 Dec amount NUMBER（12,2）
36 remark VARCHAR（50）
37 in storage time DATE
38 purpose VARCHAR（50）
39 construction number VARCHAR（15）
40 Lot Number VARCHAR（20）
41 number of storage VARCHAR（16）
42 Account attributes VARCHAR（1）
43 identification VARCHAR（1）
44 Date produce DATE
45 factory VARCHAR（11）
46 YEAR NUMBER（20）
47 plant num VARCHAR（11）
48 account price NUMBER（15,5）
49 Scheduler number VARCHAR（4）
50 storeman number VARCHAR（4）
51 Material VARCHAR（50）
52 material specification VARCHAR（50）
53 Alternative material VARCHAR（50）
Source：Own presentation

2）Bills Of Material library

The structure of Bills Of Material library：

58
Table 3-The structure ofBills Of Material library
Serial data types and
Data element names illustrate
number length
1 certificate number VARCHAR（7）
2 Material code VARCHAR（9） NOT NULL
associated
3 Warehouse code VARCHAR（10）
word
4 Warehouse logo VARCHAR（7）
5 number of storage VARCHAR（16）
6 bills type VARCHAR（1） NOT NULL
7 sales identification VARCHAR（1）
8 number VARCHAR（15,5）
9 amount NUMBER（12,2）
10 conversion factor NUMBER（9,5）
11 sort code VARCHAR（2）
12 department VARCHAR（6）
13 Transportation NUMBER（8,2）
14 TIME DATE
15 construction number VARCHAR（15）
16 Fetching department VARCHAR（4）
17 Route number VARCHAR（20）
18 report code VARCHAR（2）
19 Scheduler VARCHAR（6）
20 Date checkout VARCHAR（1）
Account page
21 VARCHAR（1） NOT NULL
attributes
22 Lot Number VARCHAR（20）
23 storeman number VARCHAR（6）
24 Ration identification VARCHAR（1）
25 identification VARCHAR（1）
26 statistical quantity NUMBER（15,5）
27 Units of Measurements VARCHAR（6）
28 Quantity NUMBER（15,5）
29 Requests for Payment NUMBER（12,2）
30 Processing Numbers VARCHAR（20）
31 accounting number VARCHAR（10）
32 Scheduler number VARCHAR（4）
33 storeman number VARCHAR（4）
34 requisition number VARCHAR（10）
35 weight NUMBER
36 Material VARCHAR（50）

59
 37 material specification VARCHAR（50）
Source：Own presentation

3）Supply- stores inventory Table

Supply- stores inventory Table structure is consistent with the structure of material
inventory table. The annual inventory table is used to store the situation of material
balance, in the end of the year, all data that balance to zero will be imported into the
Supply- stores inventory Table, only keeping the left and inventory data. This method
can preserve the historical information, and ensure the inventory table data is
relatively stable, so as to ensure the program running speed
4）Supply-Material list library
Supply-Material list library’s structure is consistent with Material list library’s
structure of the Month. Monthly settle accounts, importing the sheet database of
Material list library into the Supply-Material list library, and then empties the sheet
database, for prepare to the next month of entry.

5.5.3 View design

The view is a select statement stored in the SQL statement, when using the view name;
it will execute the SELECT statement. The View does not retain a copy of the data,
thus through the view, visible data is always new. If the view is a simple view (such as
not contains summary data, the query SELECT part does not alter column, no proud
table connection), you can through the view to insert, update and delete operations.
Using the view can be simplified for access complex data.
For example, there is a SELECT statement, of retrieval data from the multiple tables
that are using complex connections and function, and then we can create view as term
this query as the underlying SELECT statement. Every time you want to access these
complex data, you can run a simple query in the view; it will execute the SELECT
statement at the bottom.

60
Chapter 6 System implementation

6.1 The tools and operating environment of system development

6.1.1 Delphi programming language

1）Delphi is an integrated development environment (IDE), using the traditional

Pascal language developed from the Object Pascal language. Delphi is actually a
version of the Pascal language, but with traditional Pascal language worlds apart.
Delphi program is a first application framework, and application of this
framework is the "skeleton." In skeleton, even in the absence of attachment
anything can still be strictly in accordance with the design and operation.

2）Delphi is completely object-oriented; it is at your fingertips Delphi as a promotion

tool for the development of software reuse, which has powerful appeal. You do not
have to build their own object, as long as the procedures provided in the
framework of accession to complete the function of the code, and the rest have to
do to Delphi. To generate beautiful interface and well-structured procedures do
not have the slightest racked his brains, Delphi will help you easily completed.
3）Delphi has the following features: form-based and object-oriented methods, the
high-speed compiler, and strong database support, closely integrated with
Windows programming, the powerful and mature component technology. But the
most important thing is Object Pascal language, it is the entire fundamental.
Object Pascal language in the Pascal language is developed on the basis of, and
easy to learn.

6.1.2 Database of ERP Software

In the ERP system, database technology is one of the most important support
technologies.

61
 Database Technology includes theory and experimental methodology for
building computer systems that handles large data volumes. Central is development of
concepts, languages, software, and methods for describing, storing, searching,
analyzing, distributing, and other data processing to make access of data simple,
efficient, scalable, reliable, and adaptable for new application areas.

Database research deals with storing, searching, and analyzing very large
information volumes. The area has been very influential for today’s IT-systems.
Internet created vastly increased demand for systems to handle large data volumes,
Database Management Systems (DBMS). Three important technical achievements
have driven the technology: fast and efficient data storage, query languages for
searching data, and data distributed over many computers. Advanced queries are
central in modern software for inventory control, analysis, prognosis, planning, etc.
DBMSs are inside most large systems. New applications put new requirements on the
technology, e.g., for scalable search and analyzes in scientific and technical
applications within physics, medicine, and engineering. New applications require
management of large information volumes stored in different formats and sources.
E.g., some data may be stored in conventional relational databases while other data
are produced as streams from sensors.

6.1.3 Connection technologies for Delphi and Oracle

The developed system is based on database, so to set up the correct development

platform and data connection is necessary. From the aspects of Integrated operation
speed, easy installation, etc factors to consider, it will be connected with the BED
technology, and the specific procedure is as follows：
1) Install Oracle In the user client machine, connect to database service, and test
successfully

62
2）Install BDE engine
3） Configure BDE. What is Important is to set the two parameters：Server Name, Use
Name；these parameters are related to the database you have set up.

6.1.4 Running environment

1) Hardware configuration
 Based on the Pentium chip ・ 64 MB memory and 4 GB hard drive capacity of
the personal computer.
2) Software requirements
 Running under the operating system Windows 2000 or above,
Oracle Client
3) Network environment
According to the existing network and the company’s present needs of the application
system, the entire network system is divided into inside and outside network through
two level firewalls; the network solutions support the Internet access.
Information portal is access to validation according to the authority to realize
information.

6.2 Architecture of the C/S

The client/server model is a computing model that acts as distributed application

which partitions tasks or workloads between the providers of a resource or service,
called servers, and service requesters, called clients. Often clients and servers
communicate over a computer network on separate hardware, but both client and
server may reside in the same system. A server machine is a host that is running one
or more server programs which share their resources with clients. A client does not
share any of its resources, but requests a server's content or service function. Clients
therefore initiate communication sessions with servers which await incoming
requests.
63
Functions such as email exchange, web access and database access are built on the
client/server model. Users accessing banking services from their computer use a web
browser client to send a request to a web server at a bank. That program may in turn
forward the request to its own database client program, which sends a request to a
database server at another bank computer to retrieve the account information. The
balance is returned to the bank database client, which in turn serves it back to the web
browser client, displaying the results to the user. The client–server model has become
one of the central ideas of network computing. Many business applications being
written today use the client–server model, as do the Internet's main application
protocols, such as HTTP, SMTP, Telnet, and DNS.

Figure 9-Three-tired C/S model

Source：Own presentation

6.2.1Characteristics and basic structure of Client／Server

1、the characteristic of Client／Server

Client/Server is the separation of the logical entity, Through the LAN cooperation to
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complete a task has the following characteristics：
1）Function separation；Server progress is service providers, and Client progress is
Service users. They are a kind of relation in of run process in different computer .
2）Resources sharing； Server the server provides service for some Client server
and coordinates their access to Share resources at the same time.
3）Location transparency：Server can stay in the work site that is same or different
with the user.
4）Service package：Customer process only need to know Server interface, and don't
need to know the specific logic.
5）Synchronous/asynchronous operation：The user can request service way by using
the synchronous or asynchronous. Asynchronous can make the Server concurrently
handle multiple user tasks.
6）expandability：Support horizontal or vertical expansion.

2、 Basic structure of Client／Server

1）Client：The user is part of applications. It runs on a distributed service operation
system which supports and access GUI what the operating system need to do is
transmitting work to middleware, let Server process the local services.
2）Server：The application's server part. Server contacts a server request middleware
depending on the operating system.
3）Middleware：Running on both sides of an application of the user and the server.
Middleware is the connecting link between the preceding section of Client/Server
basic structure.

6.2.2 Advantage of the C/S model

1）interactivity
In c/s mode, there is a complete set of application in the client which are powerful
functions and can be free switching in the procedure on the aspects of wrong hints,
on-line help.

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2）secure access mode
Due to c/s mode is a point-to-point structure model, and it is applicable to local area
network, more secure network protocol, so security can be guaranteed.

6.3 The C/S information system structure model

The original information system uses mostly centralized structure model, all of the
processing and calculating are finished by the center machine room, the client does
not have the ability to dealing with the terminal. With the development of network
technology, people put forward higher request on sharing and making full use of the
information and resources, then there is appeared Two Layer Architecture C/S model.
With the application of the large-scale, Two Layer Architecture C/S model more can't
meet the requirements of the distributed applications, Two Layer Architecture C/S
also gradually make the transition to the Three Layer Architecture C/S.

6.4 Effects of System Software designed for SIIX-Corp

The material supply management system is mainly composed of three subsystems the
purchasing management, price checking management and store management. The
system running effects are introduced separately in these three aspects:

6.4.1 Running effects of the purchasing subsystem

The main operating interface of the purchase management subsystem is shown in the
figure. The application of the purchase management subsystem can help planners
control and complete the purchase of materials, from the purchase plan, purchase
application, purchase orders to receiving arrived goods and putting them into the
storage after examining. It can effectively monitors the implementation of purchase
plans, changes of purchase costs and supplies’ delivery and agreement performance
situations, thus it can help planners choose the best suppliers and purchase strategies
to ensure the high-quality, high-efficient and low-cost process of the purchase, which

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makes enterprises in the best production and supply condition.

The comprehensive tracking and monitoring of the implementation situation of the

purchase contract have been realized, and the contract’s actual delivery quantity,
delivery date and delivery quality have been completely recorded and counted, which
can be used as the main basis for the assessment of suppliers and planners.
Make the file management of suppliers; establish a set of scientific and reasonable
supplier assessment mechanism, which records a wide range of data of suppliers’
contract execution rate, delivery date, product quality, price and service. Moreover,
classify suppliers for management and adopt different purchase policies according to
the assessment results.

Figure 10-Procurement management system

Source：Own presentation

6.4.2 Running effects of the price checking subsystem

The price checking management, although has little functions, has played an
important gatekeeper role in the procurement process. Price auditors examine and
verify unit prices of purchasing materials provided by suppliers according to the

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previous prices information of materials and best prices in the market. Only purchase
applications that pass the audit can generate the purchase contract. Only check
requests that pass the audit can be delivered to the financial department’s payable
system. This greatly eliminates previous behaviors that are not in accordance with the
procedure and effetely control costs. Prices of purchasing materials are closely related
with the market, so the reasonable price supervision mechanism has been established.
Price auditors take charge of collecting the market information, monitoring the market
prices of raw materials, and considering the market factors comprehensively to set the
purchase limited prices. In addition, they establish a complete market price
information banks system to record and update purchase prices of various kinds of
materials, and this system is also used as the basis to supervise planners

Figure 11 -Price checking subsystem

Source：Own presentation

6.4.3 Running effects of the warehouse management subsystem

Warehouse Management System function: warehouse management input various

information, including storage, a library, but also libraries, demand information, enter

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and so on. Warehouse management all kinds of information access, correction and
maintenance. Equipment purchase report generation. Adding the highest in the
inventory management reserves and minimum reserve fields, materials and equipment
in the warehouse implementation monitoring and alarm. Material needs of each
department's management. Operation log management. The use of warehouse
management help

Figure 12- Warehouse management subsystem

Source：Own presentation

Chapter 7 Conclusion
For manufacturing enterprise, such as SIIX Corp., the supply chain management is a
very important part of ERP system. Outstanding supply chain management can
effectively manage the enterprise materials, make full use of enterprise resources, then
reduce the cost of raw materials and the manual operation time etc., .by Applying the
information engineering methodology,

7.1 Summary of Subject research

The major work of this project

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1) Detailed understanding of SIIX Corp management status, more in-depth analysis
the key points of the materials for management decision on the management of
several, complete the analysis of supply chain management system needs, design of
business process and the data flow and the specific functions of the system, and the
design for function of the detailed.
2) The application of Oracle enterprise management tool design the Software of
material supply chain management subsystem of database system, database tables and
views for establishment, establishment and storage process of development, on the
basis of system data flow process of development of the corresponding system
memory process.
3) Application of Delphi platform to design C / S (client / server) pattern material
supply chain management system software, to achieve the corresponding subsystem
specific function, so that the material supply chain management subsystem in ERP
system as the necessary link, to other subsystems and achieve good connection, data
is the main connection.

7.2 Prospect of Subject research

Based on the study of design for the system architecture and material supply chain
management subsystem, relatively successfully realized the construction of C / S
structure system , making full use of the characteristics of software reuse, improve
system maintainability and efficiency of development, but because of personal ability
and energy constraints, the system also has some problems, to be further study.

7.2.1 Problems of Enterprise supply chain management

1）Inaccurate arrival time of data production waiting requisition process, for may also
be on the orders of the state changes, especially when delivery is delayed after. But
for not timely and accurately to postpone the arrival of orders to modify the data
supplied to the production, the results of course leads to discontent of the production.
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The main reason that the state data is not timely and inaccurate is the problems
between information transmission systems.

2) Supply information is not in special ways to being presented to the relevant

departments, resulting in insufficient information sharing. At present only supply
departments has a related query functions, and then allocated to the project
management department, financial department. But these departments is needed to
analysis, statistics data from the sector perspective, so in the next round of
maintenance work, according to the Department's demand to adapt to the
development of the Department of special function module.

3) in the supply chain ,information transmission system is low efficiency, the demand
forecasting between all the enterprises in the supply chain, inventory state, production
planning, and so on these are important data in supply chain management .Which are
distributed in different supply chain organization, to be effective, rapid response to
users' demand, and the data must be passed in real time, however, sometimes certain
responsibility is not in place, such as a Scheduler to generate warehousing declaration
form, due to reasons such as the keeper of the arrival not timely registration, lead
Scheduler cannot review of reservation requisitions, causing material delay.

7.2.2 Countermeasures and suggestions for Enterprise supply chain

management

1) Constructing scientific, reasonable and efficient enterprise supply chain

Enterprise supply chain management must build a penetration of function,
organizational boundaries, efficient operation, integrated supply chain organization
profile, build a scientific , rational and efficient enterprise supply chain. Specific
methods:
Firstly, to construct the manufacturing enterprises as the core, by the desired material
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equipment suppliers, manufacturers, business of transportation and sale and all types
of users. The enterprise supply chain:
Secondly, the analysis of clear their core business and core competition ability, can
choose to make the whole supply chain optimal partner, effectively improve the
overall supply chain competition;
Thirdly, based on supply chain management of business requirements for scientific
analysis and process reengineering, focus and resources for the enterprise can create
special value link;
Fourth are actively building with modern logistics management requirements of the
model management system, implementation of the integration of management to
improve the efficiency of the supply chain.

2) Coordination of supply chain enterprises

Enterprise supply chain management must be avoiding and coordinating the conflict
of interest in supply chain departments that are related to, A ：supply chain members
shall establish a "win-win" cooperation in the supply chain management concept,
through cooperation and common sharing of costs, share technology and market
access, in common interests on the basis of the value chain, the value gross continued
to expand, eventually achieve a win-win or win-win; two is to give full play to
Enterprises Association intermediate liaison role, so that enterprises in the various
departments in the seek common interest activities must cut the throat coordination:
three is the implementation of supply chain management, strengthen and improve
enterprises, suppliers, distributors, users of the trust relationship between supply chain
partners.

3）To improve the level of enterprise informatization

By the implementation of ERP system Software, SIIX Corp integrates the resources
inside and outside effectively that makes the material the schedule, procurement,
distribution, management, acceptance and other sectors of materials more clear and
the process more standardization. The system can not only ensure the normal
72
operation, but also improve the management level of the material.

Each of the department coordinates with others to ensure independent accounting as

well as comprehensive accounting. It ensures clear responsibility and definite data,
guarantees the normal production and operation activities, and also improves the level
of material management. Connecting real conditions and characteristics of the
enterprise, the production management system of SIIX Corporation is developed.
However, with the development of inventory management information system
implementation, there are still some shortcomings and inadequacies. We should have
a full understanding of the defects of original supply chain management technology.
On the other hand, relevant improvement measures should be put forward to
constantly improve supply chain management technology so as to maximize its
effectiveness for the development of the enterprise, which make enterprises more
standardized, scientific in the procurement and inventory management.

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