Chapter9

Chapter 9 Overview

• Title: Supporting the Procurement Process with SAP

• Edition: Third Edition, Processes, Systems, and Information

• Copyright: © 2022, 2019, 2015 Pearson Education, Inc. All Rights Reserved

Learning Objectives

• Q9-1: Fundamentals of a Procurement Process

• Q9-2: CBI's Procurement process without SAP

• Q9-3: CBI's Procurement process with SAP

• Q9-4: Improvements in supply chain processes through SAP

• Q9-5: Changes in employee skills due to SAP

• Q9-6: Impact of new Information Systems on the Procurement process in 2031

Fundamentals of a Procurement Process

Key Activities

• Three Main Activities:

  • Order

  • Receive

  • Pay

• Supporting Inbound Logistics:

  • Procurement of raw materials needed for production.

  • Value Chain:

    • Inbound logistics: Receipt and storage of inputs.

    • Operations: Transforming inputs into products.

    • Outbound logistics: Distribution of products.

    • Sales and marketing: Encouraging purchases.

    • Customer service: Supporting product use to enhance value.

CBI Procurement Process Without SAP

Roles and Applications

• Six Roles Involved:

  • Two performed by personnel: Warehouse Manager, Accountant.

  • Four performed through different applications:

    • Sales Database

    • Purchase Order Database

    • Warehouse Database

    • Accounting Database

• Information Systems Silos:

  • Sales DB monitors demand.

  • Purchase Order DB manages orders.

  • Warehouse DB manages inventory.

  • Accounting DB manages payables.

  • Challenges: Resulted in inefficiencies and information silos.

CBI Procurement Process With SAP

Implementation Strategy

• Commitment to a Differentiation Strategy focusing on high-end bikes.

• Clear approach:

  • Assess position in the industry.

  • Define competitive strategy and objectives.

• Maintain core activities: Order, Receive, Pay.

Team and Process Improvements

• Solutions for prior inefficiencies:

  • Improved purchasing, warehouse, and accounting processes.

• Benefits of SAP:

  • Enhanced efficiency through integration and data management.

Process Integration with SAP

• Goods Receipt Management:

  • Goods receipts entered with POs verified for immediate inventory updates.

• Accounting Improvements:

  • Three-way verification of invoices, POs, and goods receipts.

  • Automatic updates in the accounting system and documentation.

Improving Supply Chain Processes at CBI

Key Areas of Improvement

• Data Sharing and Integration

• Supplier Relationship Management (SRM) and Returns Management

• Focus on continuous improvements beyond the immediate supply chain.

Changes in Employee Skills Due to SAP

• New skill requirements aligned with process focus.

• Importance of data sharing and management.

• Adaptation to outsourcing practices.

Future Outlook (2031)

• Expected introduction of new Information Systems affecting Procurement processes.