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1.

Individual information systems for each functional area in a company are known as:
 silos
2. The complex software and hardware required for ERP systems was not available until
the 1990s
3. The observation that the number of transistors built onto a computer chip doubles every
18 months is known as: Moore's Law
4. When a piece of equipment's capacity is exceeded, its capacity can be increased by
adding new hardware. This is commonly known as: scalability
5. In the 1980s, _________, the technology that holds data in an organized fashion,
existed for ERP development. DBMS
6. _______ software allows a plant manager to plan production and raw materials
requirements by working backward from the sales forecast. MRP
7. The direct computer-to-computer exchange of standard business documents is known
as: EDI
8. In a process-oriented company, the flow of information and management activity is
_______________________________, in line with the flow of materials and products.
horizontal across functions
9. Software _______________ are individual programs that can be purchased, installed,
and run separately, but extract data from the common database. modules
10. In ________________________, third-party software companies are encouraged to
develop add-on software products that can be integrated with existing software.
open architecture
11. _________ is SAP's biggest competitor. Oracle
12. Old information and computer systems are known as __________ legacy systems
13. Which ERP package is a popular software choice for managing human resources and
financial activities at universities? PeopleSoft
14. Which R/3 module records sales orders? SD
15. Which of the following modules in SAP ERP maintains production information? PP
16. The ______________________ module helps the company manage fixed-asset
purchases (plant and machinery) and related depreciation. Asset Management
17. Which of the following module in SAP is a set of tools that can automate the activities in
SAP ERP? Workflow
18. When top management is queried on the reasons for implementing ERP systems, the
overriding answer is ______ control
19. Which R/3 module records transactions in the general ledger? FI
20. After a company chooses the modules they want to implement, they must decide on
___________________ options, which allow the customer to customize the modules to
fit their business to some extent. configuration
21. As part of the __________________ process, a company can define any number of
tolerance groups with a range of limits, and can then assign employees to these
tolerance groups. configuration
22. Which of the following is a benefit to running an ERP system?  Global integration,
Elimination of updating and repairing multiple systems, Capability to manage operations,
not just monitor them
23. An ERP system for a large company will cost _______________________, including
software, training, and implementation.  $1oo-500 million
24. SAP's internal programming language is called: ABAP (Advanced Business
Application Programming)
25. One assessment of a project's value is calculated by the: ROI
26. Bumpy rollouts of ERP systems are usually caused by: people problems
27. ___________________ states that the number of transistors on a computer chip
doubles every 24 months.  Moore's Law
28. A central-local computer arrangement is called _______________ architecture. client-
server
29. ________________ means that the capacity of a piece of equipment can be increased
by adding new hardware. Scalability
30. The software that holds that data in an organized fashion, and that allows for the easy
retrieval of data, is the _____________ DBMS (Database Management System)
31. ______________________________________ software allows a plant manager to plan
production and raw materials requirements by working backward from the sales forecast.
 MRP (Material Requirements Planning)
32. The prediction of future sales is the _________________. sales forecast
33. ____________________________________ is the direct computer-to-computer
exchange of standard business documents. EDI (Electronic Data Interchange)
34. Originally, in English, SAP was an acronym for
____________________________________ Systems Analysis and Program
Development
35. In _________________________, third-party software companies are encouraged to
develop add-on software products that can be integrated with existing software. open
architecture
36. Old systems are known as ______________________. legacy systems
37. SAP's biggest competitor is ______ Oracle
38. The ______________________________ records sales orders and scheduled
deliveries. Information about the customer (pricing, address and shipping instructions,
billing details, and so on) is maintained and accessed from this module. SD (Sales
and Distribution)
39. When data are entered into the system, data in all related files in the
_______________________ are automatically updated. central database
40. R/3's design incorporates __________________, which means that R/3 designers
choose the best, most efficient ways in which business processes should be handled.
best practices
41. Sap's internal programming language is ________________ ABAP (Advanced
Business Application Programming)
42. ______________________ help businesses customize the software to fit their unique
needs. Configuration
43. An assessment of an investment's project value that is calculated by dividing the value of
the project's benefits by the value of the project's cost is known as a(n) ROI (Return
on Investment)
44. Individual information systems for each functional area in a company are known as silos.
True
45. Silos of information are also known as stovepipes. True
46. The complex hardware and software that goes into an ERP system was not available
until the 1970s. False
47. The capabilities of computer hardware doubling every 18 months is known as Gates'
Law. False
48. Scalability means that the capacity of a piece of equipment can be increased by adding
new hardware. True
49. The software that holds data in an organized fashion is known as a database
management system, or a DBMS. True
50. Materials requirements prediction (MRP) software allows a plant manager to plan
production and raw materials requirements by guess-timation. False
51. The direct computer-to-computer exchange of standard business documents is known
as EDI, or electronic data interchange. True
52. The functional model of business and management was useful for decades and is still
the current school of thought. False
53. SAP expanded into international markets but kept the software in a single language,
German, and a single currency, the Euro. False
54. SAP's R/3 can only run on mainframe computers. False
55. SAP's goal was to develop a standard software product that could be configured to meet
the needs of each company. True
56. Old systems are known as legacy systems. True
57. Open architecture encourages software companies are encouraged to develop add-on
software products that can be integrated with existing software, such as SAP's R/3.
True
58. In the accompanying figure, data is entered into the system once and then used
throughout the organization.

Figure 2-4 Data flow within an integrated information system True


59. An ERP system allows data to be entered once, and then used throughout the
organization. True
60. An ERP module is a module that automates a specific business function. False
61. A company's level of data integration is highest when the company uses one vendor to
supply allof its ERP modules. True
62. An important consideration in minimizing the risk of fraud and abuse is defining limits on
the dollar value of business transactions that certain employees can process. True
63. A best practice is the best, most efficient was of handling a certain business process.
True
64. One benefit of ERP systems is that ERP integrates people and data while eliminating the
need to update and repair manay separate computer systems. True
65. A large company will likely spent $1 million on ERP implementation, which includes
software and training.  False
66. Not every company is a good match with the constraints inherent in ERP. True
67. SAP's internal programming language is Visual Basic. False
68. A return on investment (ROI) is an assessment of an investment project's value,
calculated by dividing the value of the project's benefits by the project's cost. True
69. The accompanying figure depicts Moore's Law. What significance does this law have
with regard to the development of ERP systems?

Figure 2-1 The actual increase in transistors on a chip approximates Moore's Law
Computers had to be powerful enough to provide integrated, real time data for
decision making
70. Describe how information is exchanged between lower operating levels in the
functional organization shown in the accompanying figure.

Figure 2-2 Information and material flows in the functional business model

 No exchange of information occurs between lower operating groups.


Instead, exchange of information between operating groups is handled by top management
which might not be knowledgeable about the functional area.
71. Describe how information is exchanged between lower operating levels in the business
process model shown in the accompanying figure:

Figure 2-3 Information and material flow in a process business model


Information can flow between operating levels without top management's involvement.

___________ is concerned with matching the demand for materials in the organization with
the supply.
a. Business Planning
b. The Silo Effect
c. Project Management
d. Material Planning
e. None of the above d. Material Planning
_____________ provides tools to manage and store documents securely and to keep track of
the multiple versions of these documents?
a. Document Management
b. Enterprise Management
c. Project Management
d. Material Planning
e. None of the above a. Document Management
_____________enables an organization to optimize its product development process, from
design to market, while ensuring that it complies with industry, quality, and regulatory
standards?
a. Business Planning
b. Lifecycle Data Management
c. Project Management
d. Material Planning
e. None of the above b. Lifecycle Data Management
*MP -*In which components of the asset management process is production involved?
a. Settlement
b. Perform maintenance
c. Authorize maintenance
d. Request maintenance
e. Perform service b. Perform maintenance
c. Authorize maintenance
d. Request maintenance
*MP -*In which elements of the lifecycle data management process does marketing play a role?
a. Design
b. Conceive product ideas
c. Make
d. Marketing & service
e. Discontinue product c. Make
d. Marketing & service
e. Discontinue product
*MP -*Sales are involved in which steps in the customer service process?
a. Perform service
b. Create service request
c. Settlement
d. Authorize service
e. Request maintenance b. Create service request
d. Authorize service
*MP -*The term materials encompasses which of the following?
a. Products
b. Components
c. Parts
d. Anything used in an organization
e. Accounting a. Products
b. Components
c. Parts
d. Anything used in an organization
*MP -*What is true about SAP R/3?
a. Supports a single function or department
b. Executes every process from start to finish
c. Consolidates process data in a single database
d. Enables users to view the status of a process in real time b. Executes every process
from start to finish
c. Consolidates process data in a single database
d. Enables users to view the status of a process in real time
*MP -*What part of the project management process is within the various functional areas?
a. Budgeting
b. Execution
c. Settlement
d. Planning a. Budgeting
b. Execution
c. Settlement
d. Planning
*MP -*Which departments take part in the conception of an idea?
a. Accounting
b. Production
c. Engineering
d. Sales
e. Marketing c. Engineering
e. Marketing
*MP -*Which of the following activities are related to the fulfillment process?
a. Locate Materials
b. Prepare Shipment
c. Prepare for Storage
d. Store Materials
e. Ship to Customer a. Locate Materials
b. Prepare Shipment
e. Ship to Customer
*MP -*Which of the following activities are related to the procurement process?
a. Issue Materials
b. Receive Materials
c. Prepare for Storage
d. Store Materials
e. Locate Materials b. Receive Materials
c. Prepare for Storage
d. Store Materials
*MP -*Which of the following activities are related to the production process?
a. Request materials
b. Store materials
c. Locate Materials
d. Issue Materials
e. Receive Payment a. Request materials
b. Store materials
c. Locate Materials
d. Issue Materials
*MP -*Which of the following are components of the fulfillment (sell) process?
a. Sales
b. Operations
c. Warehouse
d. Accounting
e. Production a. Sales
c. Warehouse
d. Accounting
*MP -*Which of the following are components of the lifecycle data management process?
a. Engineering
b. Marketing
c. Accounting
d. Production
e. Sales a. Engineering
b. Marketing
d. Production
*MP -*Which of the following are components of the procurement process?
a. Warehouse
b. Purchasing
c. Sales
d. Operations
e. Accounting a. Warehouse
b. Purchasing
e. Accounting
*MP -*Which of the following are components of the production (make) process?
a. Sales
b. Operations
c. Warehouse
d. Accounting
e. Production c. Warehouse
e. Production
*MP -*Which of the following are steps within a generic business process of an organization?
a. Payment
b. Trigger
c. Shipment
d. Outcome
e. Confirmation b. Trigger
d. Outcome
*MP -*Which of the following products fall(s) within GBI's line of business?
a. Deluxe and professional touring bikes
b. Men and women's off-road bikes
c. Motor bikes
d. Bike accessories a. Deluxe and professional touring bikes
b. Men and women's off-road bikes
d. Bike accessories
*MP -*Which processes focus primarily on people and projects?
a. Financial accounting processes
b. Procurement process
c. Production process
d. Human capital management processes
e. Project management processes d. Human capital management processes
e. Project management processes
*MP -*Which processes have an impact on an organization's finances?
a. Financial accounting processes
b. Project management processes
c. Management accounting or controlling processes
d. Material planning process
e. Procurement process a. Financial accounting processes
c. Management accounting or controlling processes
*MP -*Within the financial structure, typical functions or departments found in a modern
organization include which of the following?
a. purchasing
b. operations
c. internships
d. finance
e. marketing a. purchasing
b. operations
d. finance
e. marketing
*TF-* The most common organizational structure within modern organizations is the functional
structure. True
*TF-*A project is permanent in nature and is typically associated with smaller, simpler projects.
False
*TF-*Accounts payable is used to track money owed by customers. False
*TF-*Accounts receivable is used to track money that is owed to vendors. False
*TF-*An enterprise system is a set of tasks or activities that produce desired outcomes. False
*TF-*Asset accounting is concerned with tracking financial data related to assets such as
machinery and cars. True
*TF-*Asset management is concerned with both the preventive and the corrective maintenance
of
an organization's equipment. True
*TF-*Common reports of financial accounting include income statement, profit and loss, and
balance sheet.True
*TF-*Document management provides tools to manage and store documents securely and to
keep track of the multiple versions of these documents. True
*TF-*During the planning phase of a project the scope of the project is defined and the
milestones
and deadlines are established. True
*TF-*Excess supply will result in lower inventory costs because the company is eligible for a
bulk
rate. False
*TF-*Forecasts of finished goods are determined by data from material planning. True
*TF-*Insufficient supply results in a situation called "stock out." True
*TF-*Large warehouses do not need to move items as quickly and efficiently as smaller
warehouses. False
*TF-*Lead time is the time between placing the order and receiving confirmation that the item
has been shipped. False
*TF-*Losing sight of the big picture is commonly referred to as the silo effect. True
*TF-*Management accounting helps an organization track costs and revenues to assess its
profitability. True
*TF-*Materials encompass all the products, components, and parts that are used in an
organization. True
*TF-*Projects rely on resources located in and work performed in other processes. True
*TF-*Systems that support end-to-end processes are called business processes. False -
Systems that support end-to-end processes are called *enterprise systems*.
*TF-*The final stage of asset management and customer service is the authorization
maintenance
stage. False
*TF-*The final stage of the customer service process is the settlement stage. True
*TF-*The financial accounting process focuses on internal reporting to manage costs and
revenues. False
*TF-*The fulfillment process (sell) consists of all the steps involved in selling and delivering the
products to the organization's customers. True
*TF-*The lifecycle data management (design) process supports the design and development of
products from the initial product idea stage through the discontinuation of the product. True
*TF-*The material planning process is used to maintain internal assets such as machinery and
to delivery after-sales customer services such as repairs. False
*TF-*The procurement process includes all of the tasks involved in acquiring needed materials.
True
*TF-*The purpose of material planning is to match supply with demand. True
*TF-*Within the production process, the issuing of raw materials takes place in the warehouse.
True
*TF-*Without the various steps of the business process, a company can't successfully bill
customers and ship products.True
How does GBI Global sell its merchandise?
a. Directly to customers
b. Via a network of specialized dealers
c. Via the Internet
d. All of the above
e. None of the above b. Via a network of specialized dealers
What function does the warehouse perform in the fulfillment process?
a. Prepares and sends the shipment to the customer
b. Communicates data related to the order to other parts of the organization
c. Tracks the order
d. Notifies the customer
e. None of the above a. Prepares and sends the shipment to the customer
What is the final step of the procurement process?
a. Invoice
b. Purchase Requisition
c. Purchase Order
d. Payment
e. None of the above d. Payment
What is the first step of the production process?
a. Authorize Production
b. Request Production
c. Create Product
d. Receive Finished Goods
e. Issue Raw Materials b. Request Production
What steps are involved in the accounting portion of the procurement process?
a. Receiving the materials and the invoice
b. Creating the purchase requisition and sending payment
c. Creating and sending the purchase order
d. Creating the purchase requisition and receiving the materials
e. Receiving the invoice and sending payment e. Receiving the invoice and sending
payment
Which of the following is concerned with the storage and movement of materials?
a. Business Planning
b. Silo Effect
c. Project Management
d. Material Planning
e. Inventory and warehouse management (IWM) e. Inventory and warehouse management
(IWM)
Which of the following statements about business processes is true?
a. They are executed across multiple functions.
b. They are initiated by some type of trigger.
c. They involve multiple steps.
d. All of the above
e. None of the above d. All of the above
Which of the following statements about SAP R/3 is true?
a. It supports a single function or department
b. It is an end-to-end enterprise system
c. Sharing data between departments is problematic
d. None of the above b. It is an end-to-end enterprise system
Which process focuses on people within an organization and includes functions such as
recruiting, hiring, training, and benefits management?
a. Human Capital Management (HCM)
b. Project Management
c. Financial Accounting
d. Management Accounting or Controlling (CO)
e. None of the above a. Human Capital Management (HCM)
Which process involves the actual creation of the products?
a. Material Planning
b. Procurement Process
c. Production Process
d. Fulfillment Process
e. Lifecycle Data Management c. Production Process
Which process is used to plan and execute large projects such as the construction of a new
factory or the production of complex products such as airplanes?
a. Human Capital Management (HCM)
b. Project Management
c. Financial Accounting
d. Management Accounting or Controlling (CO)
e. None of the above b. Project Management
Which process supports the design and development of products from the initial product idea
stage through the discontinuation of the product?
a. Material Planning
b. Procurement Process
c. Production Process
d. Fulfillment Process
e. Lifecycle Data Management e. Lifecycle Data Management
Which process tracks the financial impact of process steps with the goal of meeting legal
reporting requirements?
a. Human Capital Management (HCM)
b. Project Management
c. Financial Accounting
d. Management Accounting or Controlling (CO)
e. None of the above c. Financial Accounting
Which process uses historical data and sales forecasts to plan which materials will be
procured and produced?
a. Material Planning
b. Procurement Process
c. Production Process
d. Fulfillment Process
e. Lifecycle Data Management a. Material Planning
Which system supports business processes end to end?
a. Management System
b. Accounting System
c. Enterprise System
d. Functional Structure
e. Document System c. Enterprise System
Which term refers to a system in which workers complete their tasks in separate departments
without regard to the consequences for the other components of the process?
a. ERP Effect
b. Cross-Functional
c. Functional Structure
d. Enterprise Systems
e. Silo Effect e. Silo Effect
Which term refers to all of the activities involved in buying or acquiring the materials used
by the organization, such as raw materials needed to make products?
a. Material Planning
b. Procurement Process
c. Production Process
d. Fulfillment Process
e. Lifecycle Data Management b. Procurement Process
Which term refers to business processes that are not executed by a single group or function?
a. Silo Effect
b. Cross-Functional
c. Functional Structure
d. Enterprise Systems
e. Organizational Structure b. Cross-Functional
Which term represents a set of tasks or activities that produce desired outcomes?
a. Business Process
b. Trigger
c. Outcome
d. Enterprise Resource Planning
e. None of the above a. Business Process

—-----------------------------------------------------------------------------------
1.Name the main functional areas of operation used in business
· Marketing and Sales (M/S): develops products, sets prices, promotes, takes orders,
supports customers, and creates sales forecasts.
· Supply Chain Management (SCM): Develops production plans, orders raw materials,
receives raw materials, manufactures, maintains facilities, and ships products.
· Accounting and Finance (A/F): Provides summaries of operational data in managerial
reports, controlling accounts, planning, and budgeting, and cash-flow management.
· Human Resources (HR): Recruits, hires, trains, and compensates employees, ensures
compliance with gov. regulations, and oversees the evaluation of employees.

2.Understand Enterprise Resource Planning (ERP) programs


Core software used by companies to coordinate information in every area of business
Help manage companywide business processes
Use common database and shared management reporting tools

3.Business process
Collection of activities that takes some input and creates an output that is of value to the
customer
Can relate to internal or internal customers
Thinking in terms of business processes helps managers to look at their organization
from the customer's perspective. Creating the output might involve activities from
different functional areas.

4.Understand and be able to identify the core functional areas of each business and the
role/processes that each functional area is responsible for

Marketing & Sales


Marketing a product
Taking sales orders
Customer support
CRM
Sales forecasting
Advertising

Supply Chain Management


Purchasing goods and raw materials
Receiving goods and raw materials
Transportation & logistics
Scheduling production runs
Manufacturing goods
Plan maintenance

Accounting and Finance


Financial accounting of payments from customers and suppliers
Cost allocation & control
Planning & budgeting
Cash flow management

Human Resources
Recruiting & hiring
Training
Payroll
Benefits
Government compliance

5.Differentiate between a business process and a business function

Business Processes are collections of activities that takes some input and creates an
output that is of value to the customer. Creating the output might involve activities from
different functional areas.
Business Functions are activities specific to a functional area of operation.

6.Identify the kinds of data each main functional area produces

Marketing & Sales


Sales strategies
Product pricing
Employment needs

Supply Chain Management


Raw material orders
Packaging orders

Accounting & Finance


Payments to suppliers
Financial reports
Customer credit data
Human Resources
Regulation compliance
Employee training and certification
Skills database
Employee evaluation & compensation

7.Identify the kinds of data each main functional area needs

Marketing & Sales


Customer data
Order data
Sales trend data
Per-unit cost
Company travel expense policy

Supply Chain Management


Product sales data
Production plans
Inventory levels
Layoff and recall company policy

Accounting & Finance


Payments from customers
A/R data
A/P data
Sales data
Production & inventory data
Payroll & expense data

Human Resources
Personnel forecasts
Skills data

8.Define integrated information systems, and explain why they are essential in today's
globally competitive business environment

Computers, people, procedures, and software that store, organize, and deliver
information.
Functional areas, though often separated, are interdependent; Each requires data from
the others.
Better integration of functional areas leads to improvements in communication,
workflow, and success of company.
With enhanced information flow, communication between parts of the company
improves, productivity increases, and costs decrease.
Information systems capture, process, and store data to provide information needed for
decision making.

9.Accounting and Finance (A/F)


A functional area of business that is responsible for recording data about transactions,
including sales, raw material purchases, payroll, and receipt of cash from customers.

10.Business function
A business activity within a functional area of operation.

11.Enterprise Resource Planning (ERP)


A system that helps a company manage business processes such as marketing,
production, purchasing, and accounting in an integrated way. ERP does this by
recording all transactions in a common database that is used by information systems
throughout the company and by providing shared management-reporting tools.

12.Functional areas of operation


A broad categorization of business activities, including marketing, sales, production, and
accounting.

13.Human Resources (HR)


A functional area of business that manages recruiting, training, evaluating, and
compensating employees.

14.Information system (IS)


The people, procedures, software, and computers that store, organize, and deliver
information

15.Integrated information system


An information system that allows sharing of common data throughout an organization.
ERP systems are integrated systems because all operational data are located in a
central database, where they can be accessed by users throughout an organization

16.Marketing and Sales (M/S)


The functional area of business that is responsible for developing products, determining
pricing, promoting products to customers, taking customers' orders, and creating sales
forecasts

17.Raw data
Data on sales, manufacturing, and other operations that have not been analyzed or
manipulated for presentation.

18.Safety stock
Extra raw material and packaging kept available to help avoid stockouts.
19.Stockout
A manufacturing shortfall that occurs when raw materials or packaging run out.

20.Sales forecast
An estimate of future product demand, which is the amount of a product customers will
want to buy.

21Supply Chain Management (SCM)


A functional area that includes developing production plans, ordering and receiving raw
materials, manufacturing products, maintaining facilities, and shipping products.

22Identify the factors that led to the development of Enterprise Resource Planning
(ERP) systems
Current ERP systems evolved as a result of:
Advancement of hardware and software technology
Development of a vision of integrated information systems
Reengineering of companies to shift from a functional focus to a business process
focus.

23Describe the distinguishing modular characteristics of ERP software - What are


typical modules in a functional area
Sales -Sales Order Processing, Accounts Receivable, CRM
Purchasing -Purchase Order Processing, Inventory, Accounts Payable
Finance - General Ledger, Fixed Assets etc

24Discuss the pros and cons of implementing an ERP system and things to consider.
What are the benefits of a fully integrated ERP system? What are the costs?
Pros:
More efficient business processes that cost less than those in unintegrated systems.
Allows management to manage operations, not just monitor them.
Can dramatically reduce costs and improve operational efficiency.
ERP eliminates redundant efforts and duplicated data; can generate savings in
operations expense
ERP system can help produce goods and services more quickly
Company that doesn't implement an ERP system might be forced out of business by
competitors that have an ERP system
Smoothly running ERP system can save a company's personnel, suppliers, distributors,
and customers much frustration
Cost savings and increased revenues occur over many years (Difficult to put an exact
dollar figure to the amount accrued from the original ERP investment)
Cons:
ERP implementations take time
Other business factors may be affecting the company's costs and profitability
Difficult to isolate the impact of the ERP system alone
ERP systems provide real-time data
Improve external customer communications
ERP software is expensive to purchase and time-consuming to implement, and it
requires significant employee training—but the payoffs can be spectacular.
For some companies, ROI may not be immediate or even calculable
Benefits of Full Integration
Easier global integration.
Integrates people and data while eliminating the need to update and repair many
separate computer systems.
Costs
63 percent of companies that performed the calculation reported a positive ROI for ERP
Most companies felt that nonfinancial goals were the reason behind their ERP
installations
Size of the ERP software - Corresponds to the size of the company it serves
Need for new hardware that is capable of running complex ERP software
Consultants' and analysts' fees
Time for implementation - Causes disruption of business
Training - Costs both time and money

25Summarize ongoing developments in ERP (SAP and Dyn 365)


Experts anticipate that ERP's future focus will be on managing customer relationships,
improving planning and decision making, and linking operations to the Internet and
other applications through service-oriented architecture

26Asset Management (SAP) or Fixed Assets Module (Dyn 365)


A module in SAP and Dyn 365 and most integrated ERP systems that helps a company
manage fixed-asset purchases (plant and machinery) and related depreciation

27Best practice
The best, most efficient way of handling a certain business process.

28Client-server architecture
A central computer-local computer arrangement in which data stored in a central
computer (a server) are downloaded to a local PC (a client of the server) where data are
processed. Historically, client-server architecture replaced many companies' mainframe-
based architecture.

29Database management system (DBMS)


The technology that stores database records in an organized fashion and allows for the
easy retrieval of the data.

30Electronic data interchange (EDI)


A computer-to-computer transfer of standard business documents that allows
companies to handle the purchasing process electronically, avoiding the cost and
delays resulting from paper-based systems.

31Financial Accounting (Financial) module


Accounting processes that deal with documenting the transactions of a company that
have an impact on the financial state of the organization. The documented transactions
form the basis for financial statements for external parties and agencies.
Human Resources (HR) module
A functional area of business that manages recruiting, training, evaluating, and
compensating employees.

32Legacy System
An older and often outdated information system.

33Material requirements planning (MRP)


A production-scheduling methodology that determines the timing and quantity of
production and purchase-order releases to meet a master production schedule. This
process uses the bill of material, lot-size data, and material lead times.

34Materials Management or MRP module


A module in an ERP that manages the acquisition of raw materials from suppliers
(purchasing) and the subsequent handling and storage of raw materials, work in
process, and finished goods.

35Modules
Individual programs that can be purchased, installed, and run separately, but that all
extract data from the common database.

36Open architecture
Software that allows integration with third-party software. SAP ERP is an example of
open-architecture software. The term can also be applied to hardware products.

37Plant Maintenance (PM) module


A module in ERP that allows planning for preventive maintenance of plant machinery
and managing maintenance resources, so equipment breakdowns are minimized.

38Production Planning (PP) module


A module in ERP that maintains production information; production is planned and
scheduled, and actual production activities are recorded.

39Project System or Project Accounting module


A module in ERP that allows for the planning and control of new R&D, construction, and
marketing projects. This module allows for costs to be collected against a project
budget, and it can be used to manage the implementation of ERP itself.

40Quality Management (QM) module


A module ERP that helps companies plan and record quality-control activities, such as
product inspections and material certifications.

41Return on investment (ROI)


An assessment of a project's value calculated by dividing the value of the project's
benefits by the project's cost.

42Sales and Distribution (SD) or Trade and Logistics module


A module in ERP that records sales orders and scheduled

43Scalability
A characteristic of an information system that indicates the system's capacity can be
extended by adding servers to the network, rather than replacing the entire system.
Scalability is a characteristic of client-server networks, but usually not of mainframe-
based systems.

44Silo
An unintegrated information system configuration in which individual business functional
areas each have their own hardware, software, and methods of processing data and
information.

45Tolerance group
A range that defines limits on the transactions that an employee can process.

46Workflow (WF) module


A module in ERP that can be used to automate any of the activities in the ERP system.
It can perform task-flow analysis and then prompt employees (by e-mail) if they need to
take action.

47Describe the unintegrated sales processes of the fictitious Fitter Snacker company
(What are the problems with Fitter because of their unintegrated system)
Many of Fitter Snacker's sales orders have problems, such as:
Incorrect pricing
Excessive calls to the customer for information
Delays in processing orders
Missed delivery dates
Reasons for problems:
FS has separate information systems throughout the company for three functional
areas:
Sales order system
Warehouse system
Accounting system
High number of transactions that are handled manually
Information stored in the three systems is not available in real time
Inefficiencies in the rest of the ordering process
Determining the delivery date
Checking customer's credit status
Entering customer's order into the current order entry system
Sometimes, order corrections are delayed and don't catch up to the invoicing process
Results in late or inaccurate invoices
48Explain why unintegrated Marketing and Sales information systems lead to company-
wide inefficiency, higher costs, lost profits, and customer dissatisfaction (What are the
problems that are resolved or improvements made with a fully integrated system)
Inefficiencies/Costs
Information, such as a customer's credit limit, is not available in real time, detracting
from decision-usefulness of data
Discrepancies between systems occur, causing costly mistakes. Examples include
inventory counts.
Reconciliation of systems adds extra time and costs to reporting processes
Damage to employee morale may occur if frustrations arise from disparate systems
Customer satisfaction may suffer and firm may lose sales if orders are inaccurate,
delayed, or unable to be fulfilled due to stockouts
Resolutions offered by ERP & Integrated Systems
Information that is integrated and cloud-based can be available in real time, contributing
to overall decision usefulness
Information is unified across systems, minimizing errors in data
No reconciliation of systems necessary
Employees are statistically happier when systems are simplified and integrated
Integrated systems give companies opportunities to 'wow' customers with customized
experiences and personalized service
Customers can have greater confidence in the reliability of service

49Discuss sales and distribution in an ERP system (we looked at SAP and Microsoft
Dynamics 365 FO.) Explain how integrated data sharing increases company-wide
efficiency
"Because an ERP system uses a common database, it can minimize data entry errors
and provide accurate information in real time to all users."
"An ERP system can also track all transaction data (such as invoices, packing lists,
RMA numbers, and payments) involved in the sales order process."
Sharing of data from quotation with sales order
Available to promise checks
System can recommend an increase in planned production is a shortfall is expected
Delivery process allows deliveries to be created so that the warehouse and shipping
activities are carried out efficiently
System creates an invoice by copying sales order data into the invoice document

50Describe how a typical ERP system (we looked at SAP and Microsoft Dynamics 365
FO) processes a standard sales order
ERP allows business processes to cut across functional area lines
For most data entry fields, ERP system determines whether an entry is valid
Customer master data is maintained in the central database and available to all ERP
modules
ERP system allows the user to define various ways to group customers and
salespeople
When a sales order is saved, ERP system assigns a document number to the sales
order transaction
ERP system keeps track of the document numbers for the sales order
Employees can track the status of an order while it is in process or research it after
shipping
Document flow in ERP: linked set of document numbers related to an order
When a company installs an ERP system, it can configure it for a number of pricing
strategies
As a safeguard, system can enforce limits on the size of discounts
ERP systems integrate Accounting with all business processes
When a sales order is recorded, related accounting data are updated automatically

51Describe the benefits of customer relationship management (CRM) software


Companies without a good connection between their workers and their customers run
the risk of losing business
Customer relationship management (CRM) software can help companies streamline
their interactions with customers
One-to-one marketing: making it possible to sell to a target market of 1
Sales force automation (SFA): Automating routing of customers to specific
representatives (i.e. regional sales-people)
Sales campaign management: Lets a company organize a marketing campaign and
compile its results automatically
Marketing encyclopedias: Database of promotional literature about products
Call center automation: Integration with knowledge management system to find answers
to customer questions
Lower costs
Higher revenue
Improved strategy and performance measurement

52Audit trail
A linked set of document numbers related to an order.

53Condition technique
An ERP control mechanism that accommodates the various ways that companies offer
price discounts.

54Customer master data


Permanent data about each of a company's customers; customer master data is stored
in central database tables in ERP. Master data are used by many ERP modules.

55Customer relationship management (CRM) software


A collection of software tools that use data from a company's ERP system to enhance
the company's relationships with its customers. CRM software allows for the following
activities: segmenting customers, one-to-one marketing, sales-force automation (SFA),
sales-campaign management, marketing encyclopedias, and call-center automation.
56Data mining
The statistical and logical analysis of large sets of transaction data, looking for patterns
that can aid decision making and improve customer sales and customer service. Data
mining is often done with data in a data warehouse.
57Delivery
In ERP, release of the documents that a warehouse uses to pick, pack, and ship orders.

58Document flow
The linked set of document numbers related to an order; an audit trail.

59Material master data


Relatively permanent data about materials that are stored in central database tables in
ERP

60Organizational structure
In ERP, the method used to define the relationships between organizational groups
such as companies, plants, storage locations, sales divisions, and distribution channels.

61Understand what lead schedules are and what they're used for, but not necessary to
know calculations
Cumulative time required for the supplier to receive and process the order, take the
material out of stock, package it, load it on a truck, and deliver it to the manufacturer

62Describe the steps in the production planning process of a manufacturer such as


Fitter Snacker
Three important principles for production planning:
Work from sales forecast and current inventory levels to create an "aggregate"
("combined") production plan for all products
Break down aggregate plan into more specific production plans for individual products
and smaller time intervals
Use production plan to determine raw material requirements

63Describe Fitter Snacker's production and materials management problems


Communication problems:
FS's marketing and sales personnel do not share information with Production personnel
Production personnel find it hard to deal with sudden increases in demand
Might cause shortages or stockout
Inventory problems
Production manager lacks systematic method for:
Meeting anticipated sales demand
Adjusting production to reflect actual sales
Accounting and purchasing problems
Standards costs: normal costs of manufacturing a product
Production and accounting must periodically compare standard costs with actual costs
and then adjust the accounts for the inevitable differences
64.Describe how a structured process for Supply Chain Management planning
enhances efficiency and decision making
ERP system can improve the efficiency of production and purchasing processes. SAP
and Microsoft Dynamics 365 FO are 2 examples of fully integrated ERP systems that
efficiently automate a company's supply chain management processes.
Efficiency begins with Marketing sharing a sales forecast.
Production plan is created based on sales forecast and shared with Purchasing so raw
materials can be ordered properly
Companies can do production planning without an ERP system, but an ERP system
increases company's efficiency
ERP system that contains materials requirements planning allows Production to be
linked to Purchasing and Accounting
This data sharing increases a company's overall efficiency
Companies are building on their ERP systems and integrated systems philosophy to
practice supply chain management (SCM)
SCM: company looks at itself as part of a larger process that includes customers and
suppliers
Using information more efficiently along the entire chain can result in significant cost
savings
Complexity of the global supply chain
Developing a planning system that effectively coordinates information technology and
people is a considerable challenge

65.Describe how production planning data in an ERP system can be shared with
suppliers to increase supply chain efficiency
Integrated information system allows purchasing to make the best decision on a vendor
based on relevant, up-to-date information
Once purchasing employee decides which vendor to use, the purchase order is
transmitted to the vendor
System can be configured to fax order to vendor, transmit it electronically through EDI
(electronic data interchange), or send it over the Internet

66Understand and explain the terminology and steps in completing the production
planning process in an ERP system
Sales forecasting - the process of predicting future demand for a company's products
Sales and operations planning (SOP) - the process of determining what the company
will produce. In the diagram, the Sales forecasting and starting inventory levels are
inputs into this process. At first glance, it might seem that a company should just make
products to match forecasted sales, but developing the production plan is often more
complicated than that because capacity must be considered. Many products have
seasonal demand, and to meet demand during peak periods, production planners must
decide whether to build inventory levels before the peak demand, increase capacity
during the peak period, subcontract production, or use some combination of these
approaches.
In the Demand Management step, the production plan is broken down into smaller time
units, such as weekly/daily production figures to meet demand for individual products.
The Materials Requirements Planning (MRP) process determines the amount and
timing of raw material orders. This process answers the question: "What raw materials
should we be ordering so we can meet a particular level of production?" And "When
should we order these materials?"
In the Purchasing step, the quantity and timing information from the MRP process is
used to create raw materials purchase orders, which are transmitted to qualified
suppliers.
The Detailed scheduling process uses the production plans developed during the
demand management step as an input for a production schedule. The detailed
scheduling method used depends on the manufacturing environment.
The Production process uses the detailed schedule to manage daily operations,
answering the questions: "What should we be producing?" And "What staffing do we
need to produce those products?"

67Understand and explain the benefits (what does this do for the company) of a
production planning process in an ERP system
An ERP system looks at the sales forecast, determines how many items need to be
manufactured to meet the forecast and takes into account the amount of stock the
company wants to have on hand. Then the system calculates the amount of raw
materials needed to make the product and prepares purchase orders to purchase the
raw materials needed.

In an ERP system, companies can determine different ways to forecast their sales. For
example a company could choose to use: historical sales data from the Sales and
Distribution module (IE what has the company sold in prior years), have sales
forecasted based on parameters set within the system

Providing production data to accounting: Once FS accepts a shipment, Receiving must


notify the ERP system of the arrival and acceptance of the material this is recorded
using a Inventory Receiving Transaction (Goods receipt transaction)
Receiving department must match receiving transaction with the purchase order that
initiated it. Microsoft Dynamics 365 FO allows the receiving transaction and the
purchase order to be electronically matched, avoiding time consuming manual matching
When receipt is successfully matched and recorded, Microsoft Dynamics 365 FO
immediately records the increase in inventory levels for the material

ERP systems can play a key role in collaborative planning

Produces performance measurements (metrics) - shows the effects of better supply


chain management. Ex: cash-to-cash cycle time: time between paying for raw materials
and collecting cash from customer.

Able to measure total cost to produce and provide a product to the customer. Include
cost of buying and handling inventory, processing orders, and information systems
support.
68Bill of material (BOM)
The "recipe" listing the materials (including quantities) needed to make a product.

69Capacity
The amount of an item that can be produced.

70Cash-to-cash cycle time


The time that elapses from when suppliers are paid for raw materials to cash is
collected from the customer (used in supply chain management metrics).

71Initial fill rate


The percentage of an order that the supplier provided in the first shipment.

72Initial order lead time


The time needed for the supplier to fill an order (used in supply- chain management
metrics).

73Lead time
The cumulative time required for a supplier to receive and process an order, take the
material out of stock, package it, load it on a truck, and deliver it to the manufacturer.

74Lot sizing
The process for determining purchase and production order quantities.

75Master production schedule (MPS)


The production plan for finished goods.

76Metrics
Measurements of performance; discussed in this book in relation to the effects of supply
chain management efforts.

77MRP record
The standard way of showing the materials requirements planning (MRP) process on
paper.

78On-time performance
A measure of how often a supplier meets agreed-upon delivery dates (used in supply-
chain management metrics).

79Repetitive manufacturing
A manufacturing environment in which production lines are switched from one product
to another similar product.

80Rough-cut planning
A common term in manufacturing for aggregate planning.
81Standard costs
The expected cost of manufacturing a product during a particular period. Standard costs
for a product are established by (1) studying the historical cost patterns (direct and
indirect) in a company and (2) taking into account the effects of current manufacturing
changes.

82Supply chain
All of the activities that occur between the growing or mining of raw materials and the
appearance of finished products on the store shelf.

83Vertical integration
The extent to which a company produces the components and assemblies used in the
products it manufactures.

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