FIT3138 W2 - ERP in Business Functions and Processes

How do a functional area, business function and a business process differ?

A functional area is a broad business area such as Marketing and Sales. A business function is an activity within that area. A business process combines activities that transform inputs into an output of value to an internal or external customer

Why is a business process perspective preferable to functional silos?

• Focuses on the whole customer outcome rather than improving one department in isolation

• Supports cross-functional coordination so customers do not need to deal separately with every function

What are integrated information systems and how does ERP support them?

Integrated information systems allow functional areas to share data. ERP uses integrated modules with a common database and shared management reporting tools to coordinate companywide processes

What are the 4 main functional areas and their roles?

• Marketing and Sales — manage products and customers and demand

• Supply Chain Management — purchase and produce and deliver

• Accounting and Finance — record transactions and manage financial information

• Human Resources — recruit and develop and compensate employees

What data does Marketing and Sales need and produce?

Inputs:

• customer data

• order data

• sales trends

• per-unit cost

• travel expense policy.

Outputs:

• sales strategies

• product pricing

• employment needs

Why does Marketing and Sales need information from Accounting and Finance and SCM?

• A/F provides cost and profit analysis for pricing and customer credit data for credit decisions

• SCM provides product availability and order status for customer commitments

How do sales forecasts support SCM and HR?

A sales forecast predicts future product sales. SCM uses it for production planning and material requirements. Forecast demand also helps HR plan personnel needs

What data does Supply Chain Management need and produce?

Inputs:

• product sales data

• production plans

• inventory levels

• layoff and recall policy

Outputs:

• raw-material and packaging orders

• resource expenditure data

• production and inventory reports

• hiring information

How can accurate production information reduce inventory costs?

Actual and projected sales guide production plans. Accurate production requirements allow raw materials and packaging to be ordered as needed so inventory can be kept lower

What is raw data and how does Accounting and Finance use them?

Raw data are numbers collected from operations before manipulation, calculation or presentation. A/F records transactions and summarises them into reports on financial position and profitability

What data does Accounting and Finance need and produce?

Inputs:

• customer payments

• accounts receivable and accounts payable data

• sales data

• production and inventory data

• payroll and expense data

Outputs:

• supplier payments

• financial reports

• customer credit data

How do accounts receivable and accounts payable differ?

Accounts receivable are amounts customers owe the business. Accounts payable are amounts the business owes suppliers.

What information does Human Resources need and provide?

Inputs:

• personnel forecasts

• skills data

Outputs:

• employee training and certification

• skills database

• evaluation and compensation

• support for regulation compliance.

• provides payroll and benefit expense data to A/F

How do logical integration and physical integration differ?

Logical integration enables data sharing with stakeholders according to need and authorisation. Physical integration provides seamless connectivity between heterogeneous application systems

How does ERP support integration at logical and physical levels?

Logical - ERP encourages a business-process focus and built-in best practices
Physical - the organisation may need middleware to connect ERP with existing systems

Why are integrated systems important for business competitiveness?

• They coordinate entire processes and reduce manual rekeying

• Shared information and routine automation reduces delays and excess inventory

• Better visibility reduces uncertainty and enables faster responses to demand

What are the main benefits and limitations of systems integration?

Benefits:

• increased revenue and growth

• levelling the competitive environment

• enhanced visibility

• increased standardisation

Limitations:

• high initial setup costs

• power and interdepartmental conflicts

• long-term and intangible ROI

• creativity limitations

How do fulfilment, production and procurement connect?

A sales order leads to a finished-goods check. If goods are insufficient, production is requested. If raw materials are insufficient, procurement obtains them. Production replenishes finished goods so fulfilment can continue with shipping, customer invoicing and payment

What examples show how enterprise systems automate work and improve visibility?

• Predefined procurement rules can select a supplier and send a purchase order from a requisition.

• Shipment can trigger a customer invoice.

• Users can query order progress or when a purchase order was sent