MGAC70

CLASS 6 - CHAPTER 10 & 11

INFORMATION SYSTEMS
WITHIN THE ORGANIZATION
CUSTOMER RELATIONSHIP
MANAGEMENT AND SUPPLY
CHAIN MANAGEMENT
DOUGLAS KONG
 OVERVIEW

A big organization
• has a large number of employees - Human Resources Department handles hiring, firing, paying,
assigning benefits, and more.
• Need to track and order inventory, maintain inventory at numerous sites, deal with suppliers,
delivery companies, and more.
• Overseeing the manufacture of your own brand of items is another major part of the picture.
• keep track of sales, sustain and expand customer relationships, oversee the maintenance of physical
locations and warehouses, and manage all the managers.
All these areas are interconnected. Using those interconnections wisely is how the business will
continue to grow and succeed.
ERP is used to manage all these activities by linking them together and creating a way to exchange data
between all the areas of an organization.
 WHAT IS AN ENTERPRISE RESOURCE PLANNING (ERP)
SYSTEM?
• Enterprise resource planning (ERP) is software that businesses use to manage activities in both the internal and
external operational environment.
• These activities include accounting, acquisition of materials and services, operation and supply chain
management, and project management.
• These systems link together different organizational processes and create efficient means of data exchange
between various areas of an organization.
• ERP systems are planned and implemented using a single data schema that is linked to a
shared organizational database.
• A data schema is a deconstructed view of a data set and includes a descriptive narrative about the data this
provides for the analysis of the configuration of the data and for the analysis of relationships within the data
• The goals of ERP systems are:
• to eliminate the duplication of data
• to increase data integrity
• to enable more structured and logical decision making
 THE USE OF ERP MODULES IN BUSINESS

• Modules are commonly found in a variety of software environments, including enterprise

resource management platforms.
• A software module is an element of a computer program that is intended for a specific
task.
• Many ERP systems are designed to integrate enterprise software modules from a variety
of operational and process areas of an organization including finance, accounting,
human resources, customer relationship management, transaction processing, and project
management.
• Individual modules are integrated with the ERP system, thus allowing for a single source
for organizational data retrieval and analysis.
• using a module approach has some distinct advantages
• a module approach allows businesses to acquire specific modules that are relevant to its
operations
• it can add or delete modules as market conditions changes
 WHY ERP?
• Integrated Processes: ERPs streamline various business processes like finance, human resources, supply chain,
manufacturing, and more. This integration helps in better coordination and communication across different departments.
• Data Accuracy: With all information centralized, there's less room for errors and data inconsistencies. This promotes
accuracy in reporting and decision-making.
• Efficiency Boost: Automation of repetitive tasks and workflows can significantly improve efficiency. ERPs reduce manual
work, saving time and resources.
• Improved Reporting and Planning: ERPs provide real-time insights into business operations. This helps in better decision-
making, forecasting, and strategic planning.
• Regulatory Compliance: Many ERPs come with built-in features to ensure companies comply with industry regulations and
standards. This is crucial, especially in sectors with strict compliance requirements.
• Customer Service Enhancement: A good ERP system can improve customer service by providing quick access to customer
data, order history, and other relevant information. This leads to better customer satisfaction.
• Scalability: As a company grows, its needs evolve. ERPs are designed to be scalable, adapting to changes in the size and
complexity of the business.
• Cost Savings: While implementing an ERP system can be a significant upfront investment, the long-term benefits often
outweigh the costs. Savings come from improved efficiency, reduced manual labor, and better resource allocation.
 TOP 10 ERP MODULES

Figure 7.15
 ERP MODULES – FINANCIAL MANAGEMENT
• Financial management systems are designed to create, store, and report financial transactions.
• These systems allow organizations the ability to measure cash flows, calculate tax liabilities, maintain
compliance to legal and accounting regulations, and optimize profitability.
• Financial management is all about monitoring, controlling, protecting, and reporting on a company’s financial
resources.
• Companies have accountants or finance teams responsible for managing their finances, including all bank
transactions, loans, debts, investments, and other sources of funding.
• Finance teams are also responsible for ensuring the company follows all regulations, stays solvent, and is as
profitable as possible.
• Automation plays a crucial role. The financial module automates tasks related to billing, vendor payments,
expense management, asset management, and joint venture accounting, among other things. For example,
automated cash management makes it simpler to analyze cash transactions and improve cash flow forecasts.
Your accounting team can close the books faster, sometimes saving a week or more, while complying with
stringent guidelines for revenue recognition. Balance sheet automation supplies near real-time data for the
most accurate snapshot of your company’s financial position.
 ERP MODULES – FINANCIAL MANAGEMENT
Financial management includes business processes that span every team and department in the company. A finance team’s responsibilities include:
• Invoicing and receivables: Money that customers pay or have promised to pay to the business. Finance teams are responsible for sending out invoices and
processing the payments as they come in. Collections teams are responsible for following up on overdue accounts (this process is sometimes outsourced to
third parties).
• Payables: Money that the company owes to its vendors and suppliers. Finance teams are responsible for paying these bills and recording the payments.
• Bank transactions and reconciliations Finance teams work closely with their banks to ensure that every bank transaction is processed correctly. They must
also make sure that the bank’s statements match their own records, which are kept in the company’s general ledger and subledgers. The finance team must
follow up on, and correct, any mismatches between bank statements and ledgers—a process known as account reconciliation.
• Closing the books: On a particular date, the company will tally transactions from a given period so it can reconcile its accounts and report on its financial
position. The close, as this process is known, typically happens at the end of a month, quarter, or year.
• Reporting: Companies must report regularly on their financial performance, whether it’s to the CEO, a board of directors, investors, shareholders, or
government regulators. The finance team is responsible for ensuring that these reports are clear and accurate.
• Scenario modeling, planning, and budgeting: Scenario modeling starts with making certain assumptions about an upcoming period of time. The finance
team will run multiple “what-if” scenarios for the best and worst cases to estimate how much money the company will have if those conditions come to
pass. Based on these models, the finance team will assess how best to respond and develop appropriate plans, forecasts, and budgets. Often, the finance
team will work with other departments—such as sales, HR, project management, or procurement teams—to build models that include data from sales
forecasts, workforce expenses, and inventory costs. This is known as connected planning.
• Payroll and expenses: Individual paychecks to employees are typically the responsibility of the HR department. However, overall workforce costs roll up to
the finance team so they can factor it into their budgets and plans. Finance is also responsible for reimbursing employee expenses, such as work-related
travel and meals.
• Cash management and forecasting: The finance team must ensure that the company has enough cash to stay solvent for the next quarter, next year—
even the next three to five years. In most companies, cash forecasting is typically done once a month.
• Tax strategies: Every company must file. taxes; and, like the rest of us, they want to take advantage of as many deductions as possible to prevent
overpayment. Some finance teams have tax specialists on staff to manage this. Those that don’t will often outsource this task to an accounting firm.
• Risk and compliance Every business has financial risks, from rising interest rates to global pandemics. It’s the finance team’s job to control such risks and
reduce the company’s exposure as much as possible. They must also make sure the company follows the rules and regulations laid out by governments,
regulators, and other jurisdictions to stay in compliance and avoid hefty fines.
 ERP MODULES – PROCUREMENT

• The procurement module improves your ability to purchase the products or

materials you need to make or sell goods. It automates, tracks, and analyzes
quotes while helping to prepare and send purchase orders.
• This module also enforces compliant spending, improves supplier
relationships, and ultimately helps increase profitability.
• With real-time data used in supplier negotiations and contract awards, it can
also identify ways to consolidate your purchasing power so you can secure
the lowest cost while reducing supply disruptions.
 ERP MODULES – PROCUREMENT
The procurement module usually includes:
• Supplier management - Strategic procurement starts by identifying and qualifying suppliers before initiating negotiations.
It involves gathering, assessing, and monitoring of supplier data to ensure that suppliers comply with business policies. With
procurement management software, you can collect important supplier qualification information through internal and
external questionnaires and self-service profiles. Select the best suppliers by assessing supplier qualifications, risk factors, and
policy compliance.
• Sourcing – This module will facilitate smarter document authoring, negotiation engagements, and supplier selection.
Embedded social collaboration makes it easy to combine efforts and create more effective negation documents. The module
also provides analysis tools to allow you to quickly evaluate supplier bids based on predetermined factors—such as price,
quality, and value—allowing you to arrive at the best possible award decision based on your unique business requirements.
• Contract management - Effective procurement contract management is critical. The module comes with a modern
procurement management system. Contract creation can be streamlined with guided authoring that uses preapproved
clause libraries, standardized templates, and embedded social collaboration. Standardizing and automating the contract
management process helps you create quality contracts faster. You can gain complete visibility into your contracts while
controlling costs. Analytics identify proposed contract language deviations from defined standards. Auditable workflows
enforce document approvals. A secure, searchable contract repository with complete tracking and audit history enables users
to quickly locate what they need. Automated renewal management capabilities give procurement teams early notification of
expiring contracts so they can proactively take necessary action and avoid potential risk.
 ERP MODULES – PROCUREMENT
• Requisitioning – This procurement management software ensures that negotiated savings are enforced through business
policies, controls, and approvals. Off-contract spend can be reduced by providing employees with a self-service, consumer-
like buying experience. With a user-friendly experience, employees can browse and shop for products or services easily and
quickly. There’s little or no training required. Robust search capabilities, smart forms, shopping lists, and personalized
buying experiences ensure that negotiated pricing and terms are automatically enforced through supplier catalogs and
configurable approval workflows designed to control spend and reduce costs.
• Purchasing - Automating routine procure-to-pay transactions, such as purchase order creation, frees you up to find new
savings opportunities. With a cloud-based procurement management system, you can streamline the process while
enforcing negotiated pricing and ensuring policy compliance. Create purchase orders from approved requisitions—without
manual intervention. Provide your procurement teams with insight into exceptions, status, and actions required.
Communicate with your suppliers using embedded social tools.
• Accounts payable – Integrated procurement management system enables you to take advantage of early payment
discounts and reduce labor costs. This includes a robust payment management system that provides electronic
transmission of invoices from suppliers and faster processing aided by optical scanning, machine learning, and automated
purchase order matching. Line-level invoice validation is fully automated for faster processing. Exceptions are managed
through alerts and social collaboration with document sharing to speed resolution times.
 ERP MODULES – RISK MANAGEMENT

• A risk management and compliance module uses artificial intelligence (AI)

and machine learning to enhance financial controls, enabling finance teams
to prevent cash leaks, enforce audits, and protect against emerging risks—all
while saving hours of manual work.
• With risk management capabilities, you can stay compliant. Automation also
accelerates audit transactions so you can quickly identify fraud, errors, and
policy violations. You can also streamline workflows for audit and legislative
compliance, risk management, and business continuity planning.
 ERP MODULES – SUPPLY CHAIN MANAGEMENT

• Supply chain management (SCM) modules track how supplies and goods move through your
supply chain: from suppliers and sub-suppliers to manufacturers all the way to distributors and
retailers or consumers. It lets you efficiently plan demand, supply, order fulfillment, and production
across your business to reduce disruptions and minimize costs, ensuring the right inventory is
available at the right time and in the right place.
• Supply chain management systems help determine optimal inventory levels and replenishment for
each item location based on demand forecasts so you can avoid overstocks or stockouts.
Automation saves time and money throughout supply chain processes, such as order
management, which simplifies the order capture, settlement, and post-sales customer care.
• A supply chain module can also help you predict demand with capabilities, such as segmentation
and machine learning that helps you manage variability. Such capabilities build a more resilient
supply chain that can weather market changes and global shocks.
 ERP MODULES – SUPPLY CHAIN MANAGEMENT

• Supply chain is the flow of materials, information, money, and services from raw material suppliers, through factories
and warehouses, to the end customers; it includes the organizations and processes that create and deliver products,
information, and services to end customers.
• Supply chain visibility is the ability for all organizations in a supply chain to access or view relevant data on
purchased materials as these materials move through their suppliers’ production processes and transportation networks
to their receiving docks.
 TECHNOLOGIES REINVENTING THE SUPPLY CHAIN

• The three components of supply chain management

 S U P P LY C H A I N M A N A G E M E N T

• Five basic supply chain activities

 SUPPLY CHAIN MANAGEMENT

Three supply chain optimization models

• Supply chain optimization defines, recommends, and sets flexible supply chain
strategies based on an organization’s operations and resources.
• Inventory optimization provides visibility across inventory levels throughout the
entire supply chain—holistically.
• Transportation and logistics optimization focuses on the efficient movement of
products through effective transportation management by evaluating multiple
transportation modes, carriers, routes, shipping strategies, and support to find the
lowest cost combination.
 BLOCKCHAIN: REVAMPING THE SUPPLY CHAIN

• Blockchain and Supply Chain

• Fraud and Counterfeits
• Immutability and Interoperability
• Provenance
• Recalls
• Scalability and Security
• Smart Contracts
• Traceability
ERP AND SUPPLY CHAIN MANAGEMENT SYSTEM
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SUPPLY CHAIN MANAGEMENT EXAMPLES
FORD (SAP)
H T T P : / / Y O U T U . B E / W Y B 2 J RY W M G W
THE FUTURE OF SCM
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 ERP MODULES – ENTERPRISE PERFORMANCE MANAGEMENT

• Enterprise performance management (EPM) modules enhance the processes

that help your business plan, budget, forecast, and report on performance. They
enable connected planning (versus old-school siloed planning) by giving a unified
view of financial, operational, and line-of-business planning. These modules also
use automation to accelerate the reporting of financial results.
• Through the use of scenario modeling, long-range planning, and other capabilities,
EPM modules give you a deeper understanding of costs and profitability, help you
achieve revenue targets, and streamline account reconciliation, tax reporting. With
EPM, your teams will be equipped to model and plan across key areas, such as
finance, HR, supply chain, and sales.
ERP MODULES – ENTERPRISE PERFORMANCE MANAGEMENT
CASE STUDY – ORACLE EPM
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 E R P M O D U L E S – M A N U FA C T U R I N G P R O C E S S

• With a manufacturing module, it’s easier for your business to plan and manage production
runs. That includes making sure your facility has the raw materials on hand to meet
demand, can efficiently run a shop floor, and keep costs down—all while ensuring the
quality of finished goods.
• This module lets you run mixed-mode manufacturing, so you can use a combination of
manufacturing processes, such as discrete and process manufacturing, instead of only one
type. This helps you diversify your portfolio and attract new customers. For example, you
could use process manufacturing to produce a line of beverages and use discrete
manufacturing, which focuses on parts and assembly, to crank out the bottles and cans. You
can also monitor costs and variances by plant, track output against forecasts, and compare
supply to predicted demand after calculating the average time it takes to produce an item.
 HOW CAD AND MANUFACTURING SOFTWARE
INTERACTS WITH ERP

• Computer-aided design (CAD), also known as computer-aided design and drafting

(CADD), was designed to supplement or replace manual drafting and design.
• CAD is an automated process using software and hardware for the documentation and design of real-
world objects

• The integration of CAD software with ERP systems benefits manufacturers because of
the single source integration and data analysis which results in increased efficiency.
• ERP software takes data from CAD files and decodes the design and manufacture
specifications into usable inf.
• Processes can be tracked through the whole manufacturing progression.
• this allows managers to monitor efficiency and to monitor the use of materials, machines and labor
being employed as well as the level of completion
 ERP MODULES – CUSTOMER RELATIONSHIP MANAGEMENT

• Customer relationship management (CRM) modules help you manage customers by

improving sales and marketing processes, especially those supporting sales leads. These
modules store all information on customers and prospects, including every customer
interaction and purchase history, and offer segmentation data and targeted cross-sell
recommendations.
• Capabilities to look for in CRM modules include contact management, communication
tracking, opportunity or lead tracking, order history, issue ticketing, quote creation, and
sales agent productivity. Most importantly, your module must help track customers from
the initial marketing stage and through a quote or sales process, culminating in a sale
and ongoing customer service.
• Note: not all organizations or ERP vendors consider CRM to be an ERP module. Some
include only modules more closely related to financial management and other back-
office activities, while others take a broader view and include front-office duties, such as
managing customer relationships.
 CUSTOMER RELATIONSHIP MANAGEMENT

• Text message, Instant message

• Voice mail, Voice call
• Email letter
• Web order, Phone order
• Meeting
• Customer service call
• Twitter
• Facebook

• Customers contact organizations multiple times through numerous channels

• Each contact can be stored in a different system or different database. For example, a sales call and a
billing call will be maintained in two different databases
• The CRM system tracks all of the different contacts through the various channels and collates the
information into a central repository
• This gives the organization a complete and total view of its customers, along with their purchases,
questions, issues, and concerns, in one single place
CUSTOMER RELATIONSHIP MANAGEMENT
 MARKETING AND OPERATIONAL CRM

Three marketing operational CRM technologies

1. List generator
2. Campaign management system
3. Cross-selling and up-selling
 SALES AND OPERATIONAL CRM

The sales department was the first to begin developing CRM systems with
sales force automation a system that automatically tracks all of the steps in
the sales process
 SALES AND OPERATIONAL CRM

Sales and operational CRM technologies

1. Sales management CRM system
2. Contact management CRM system
3. Opportunity management CRM system
1. Sales management CRM system – Automates each phase of the sales process,
helping individual sales representatives coordinate and organize all of their
accounts
2. Contact management CRM system – Maintains customer contact information
and identifies prospective customers for future sales
3. Opportunity management CRM system – Targets sales opportunities by finding
new customers or companies for future sales
 CUSTOMER SERVICE AND OPERATIONAL CRM

Three customer service operational CRM technologies

1. Contact center (call center)
2. Web-based self-service system
3. Call scripting system
• Common features included in contact centers
• Automatic call distribution
• Interactive voice response
• Predictive dialing
 ANALYTICAL CRM

Website personalization – Occurs when a website has stored enough data

about a person’s likes and dislikes to fashion offers more likely to appeal to
that person
• Analytical CRM relies heavily on data warehousing technologies and
business intelligence to glean insights into customer behavior
• These systems quickly aggregate, analyze, and disseminate customer
information throughout an organization

Analytical CRM has the ability to provide an organization with information about their
customers that was previously impossible to locate, and the resulting payback can be
tremendous.
MEASURING CRM SUCCESS
 WHAT IS CRM?
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CRM – SALESFORCE DEMO
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 ERP MODULES – HUMAN RESOURCES

• A human capital management (HCM) module—sometimes referred to as

human resources management (HRM)—contains detailed records on all
employees, including performance reviews, job descriptions, benefits
selections, and attendance/time off. Like other ERP modules, it supplants
annual spreadsheets with automation that continuously gathers data
companywide, reducing duplicate data and increasing accuracy, an important
benefit given the sheer amount of HR data most businesses have.
• A human resources module automates tasks, such as employee scheduling,
recruitment, and compensation management. With easy collaboration across
internal workflows, an HR module can connect to CRM data to determine
bonuses for sales reps—much easier and more accurately if this was done
manually.
 ERP MODULES – HUMAN RESOURCES

• Many HR modules are equipped with features that may include a centralized
employee database, performance evaluation design and collection, timesheet features,
and performance tracking.
• One of the key benefits of a HRM module is the ability for management to retrieve
and analyze HR related data in a centralized location.
• This makes the analysis of HR data more efficient and leads to more informed
decision-making.
• Most HRM modules provide a structured dashboard that provides information to
managers and includes employee absences or leaves, task monitoring, compensation,
and performance review status.
 ERP MODULES – PROJECT MANAGEMENT

• This module improves project management with shared visualization tools that help to
track schedules, budgets, and resources. For example, you can see multiple project
plans in a single view, which lets you easily allocate (and reallocate) resources. You
can assemble the right project team by using search filters for roles, skills, and
location. You can also better manage budgets by standardizing how you capture costs
throughout the business. Advanced project management tools also help you maximize
cash flow by automating customer invoices and project billing.
• Predictably, use of a project management module is common in project-intensive
industries, such as construction and manufacturing. Properly deployed, project
management modules can increase on-time project completion, monitor and control
costs, improve the accuracy of service-based estimates and costs, and optimize the use
of staff and equipment.
 ERP MODULES – ERP ANALYTICS

• An ERP analytics module helps finance, procurement, and project management

professionals understand the factors that drive profitability, improve the use of
working capital, and control business expenditures.
• ERP analytics yields general ledger insights on profitability and accelerates the
collections process, improving cash flow. It also enhances payables by helping finance
teams track on-time and overdue vendor payment amounts to determine payment
urgency. This module controls company spending by identifying cost savings and
financial risks. For example, it enables finance teams to monitor employee expenses
more accurately than they can by using traditional manual processes to quickly
pinpoint fraud and ensure adherence to expense policies.
 ERP MODULES – CHOOSING THE RIGHT MODULE?

• Select the ones that best meet your organization’s requirements. One size doesn’t fit all when it comes
to ERP.
• Which ERP modules come standard? Core financial functions will always be part of the package,
while functions, such as sales or HR, may be sold separately.
• Sometimes ERP providers tailor their offerings to industries. For instance,
• a manufacturing package would probably contain a supply chain module, and
• a retail package would normally include ecommerce.
• If your business sells more products than services, you’ll want modules for supply chain and order
management, among other capabilities.
• If you’re in a service industry, you might add a professional services module to offer better customer support.
You’ll also want a system that can adapt to your industry as well as your organization’s challenges and
opportunities.
 IMPLEMENTING ERP SYSTEM

ERP systems are offered as on-premise and Cloud-based options.

• on-premise ERP systems are maintained on-site within the organization
• cloud-based ERP systems are stored and maintained off-site and accessed via the Internet
Cloud-based ERP systems are a form of Software as a Service (SaaS).
• The company rents the software from an ERP vendor that offers the products over the internet
using the SaaS model.
• SaaS permits users to access software that runs on collective resources including storage and
processing
• The ERP cloud vendor manages software updates and is responsible for the system security
and availability.
Cloud-based ERP allows organizations to access data and reports from remote locations at any hour
of the day. They often have a lower price point when compared to on-premise options
 IMPLEMENTING ERP SYSTEM

ON PREMISE CLOUD (SAAS)

• Location: The software and servers are • Location: Everything is hosted in the cloud, like having a virtual
chef who can cook from anywhere. Accessible as long as you have
physically located on the company's an internet connection.
premises. It's like having your own personal • Costs: Usually, there's a subscription-based pricing model, making
chef right in your kitchen. it more cost-effective initially. No need to invest in on-site servers
and hardware.
• Control: You have complete control over • Scalability: Cloud ERP is often more scalable, allowing for easier
the system, which can be great for expansion or contraction based on business needs.
customization and security but might • Updates: The cloud provider takes care of updates and
maintenance, reducing the burden on your IT team.
require more IT resources and expertise. • Accessibility: Can be accessed from anywhere, promoting remote
• Upfront Costs: Typically, on-premise work and collaboration.
solutions involve higher upfront costs for
hardware, software licenses, and
implementation.
• Maintenance: The responsibility for
maintenance and updates lies with the
company, which means more control but
also more workload.
HOW TO CHOOSE THE RIGHT ERP SOFTWARE FOR YOUR BUSINESS
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