Pains and benefits Miki Skorkovský, PhD. for Department of Business Economics ESF MU Reasons for purchasing (buying) nPain nPain and vision distinction (difference) nSearching for the pains depends on : nmarket segment nsize of the company nownership nposition in SCM nposition of the person n Reasons for purchasing (buying) ndormant (latent) pain : it exists, but it is not presumed n stanley3 'Dr. Livingstone, I presume?' nothing_to_see_here Example : collecting money late, paying to early ->crippled cash-flow Reasons for purchasing (buying) nreal pain na real pain (lack, deficiency, shortage), which are wittingly admitted by the customer n Examples : high value of the stock(inventory), due date performance is low, laborious and not exact calculation of production cost… Zobrazit obrázek v plné velikosti wpe22011 Reasons for purchasing (buying) nvision nparticular (tangible) idea of the pain killer n Example : use of a good algorithm for replenishment planning replenishment … Creation of the pain chain nGeneral pain : difficult analysis reports from existing data nCEO view : owners push me hard every week to supply results !!!!! nInventory manager : I cannot optimise manipulation movement !!!! Do it immediately !!!!!! nIT manager : to get right data in right time I must transfer and modified a lot heterogeneous data in takes time and I am overloaded Reasons for purchasing (buying) nwhat is the reason for the change (buying) ? nwhat do you expect for the new solution ? nreason for investment to the solution ? nwhat do you think will be improved the most ? n n n n island_paradise poverty_homeless_french_man_shopping_trolley Creation of the vision Reason diagnosis Leverage extension Creation of the vision Opening What is the reason of redundant stock levels? Who else is influenced by redundant stock level? Do you have any idea how to solve it? Check The reason is, that manufacturing does no generate requirement to purchase raw materials Problems in financial management? What about you of requisition worksheet where all the replenishment is planned automatically? Confirmation Late requirement form production to purchase department So CFO is also not satisfied with redundant stock levels? So the final solution could be a use of netting based on safety levels and production requirements to replenish stock optimally Pains in the information processing nAll what any competitors is doing could be easily copied anywhere all over the world n nYou cannot duplicate culture (organization system, the way you manage people and relationship to information) n nThe unique enterprise is specified first and foremost by access and links the people and information n nWork on computer is not the same as a work with information !! n n n Learning to think (Thinking, Fast and slow- Dan Kahneman) nIndian Institute of Technology (IIT) n300 000 people sit for entrance exams n 5 000 admitted (acceptance rate (AR) of 1,7 % compared to Harward, Yale and Princeton, where they have AR 9-10 % ) n IIT has nmediocre (ordinary) equipment nindifferent teachers nunimaginative class work nthe quality of education remains extremely poor and many students leave the country to get trained abroad nIndia - PhD. in Computer Science per year : 35 – 50 nUSA - PhD. in Computer Science per Year : 1000 n nhttp://www.youtube.com/watch?v=qzJxAmJmj8w – D.K. lesson fro Zurich (2013) n Resource: Fareed Zakaria (The Post American Word) iit-b_bigger_logo Pains in the information processing •manual /batch processing •BAR code reader •heterogeneous databases •Homogeneous databases, XML ports,… •uncertain information •on-line data processing, automatic data integrity checking •errors •Total quality management (to avoid errors in the future) n Pains in the information processing •shaky system •Transaction processing , stable DB , automatic backups •difficult implementation of add-ons, customization and upgrades •Tools for upgrade top object oriented development tools •complicated way of system usage •Standard commands for every application –unique user environment •too much IT managers •Modern ERP requires less of standard IT guys and more IT guys understanding methods used to control enterprise processes •High price/ low system performance •Long term TCO (Total Cost of Ownership) • TCO Pains in the financial management (accountancy) nlate access to information, difficulties in finding the reason why any entry (transaction) was created nNavigation functions,workflow, dimension, Business Analytics, … ncomparing actual and expected is a foolish dream only nBudget functionality, On-line data…. ndifficulties in of applying (invoices<->payments) nFunctionality allowing manual or automatic apply using unique entry numbers and possibility easily un-apply recently wrongly applied entries n Zobrazit obrázek v plné velikosti Pains in the financial management (accountancy) ndifficult analysis of the customer or vendor balances nFlow field (calculated fields) nunconvincing repairs of wrongly posted documents nNecessity to generate corrective documents nfutile / doubled operations nIntegrated database- every record is written only once nunequal load of the users during the period of one month nContinuous accounting – decrease of number of the accountants and less stress during closing at the end of every period n Zobrazit obrázek v plné velikosti Pains in the CRM, workflow and financial management (accounting) nout-of-date information nCRM directly connected of Sales, Purchase and Inventory nprocesses such are Sales, Inventory, Manufacturing, Purchase and Accounting are not connected nAll above mentioned processes are connected nout – of - date or wrong information about customers nQuestioners – evaluation of their profiles, connected to Sales nrigidity of sales processes nTracking of the business opportunities, tasks and activities and follow up procedures ndifficult substitutability of sales people nWork flow and better and flexible access to the information nNon-existent E-Shop nIntegration with Outlook, E-Shop application, B2B, B2C, document management Zobrazit obrázek v plné velikosti Pains in the manufacturing processes nprocesses such as Sales - Inventory-Production- Accounting-Purchase are not connected internally n nFunction Order tracking and Dynamics action tracking – see later nlack of information about Work In Progress nAutomatic posting of 2140 (121|611 in Czech legislation) n nlack of actual cost information nGood calculation setup, tracking of indirect costs – see value entries n n n shop_floor See next slide WIP shop_floor Pains in the manufacturing processes nuseless manual work spent to issue documents nAutomatic Data Capture, XML data ports, PDA, touch screens ndifficult planning/ changes in production nMPS (Master Production Schedule), MRP-II, JIT and direct link to sales and production orders for direct planning from sales orders (netting), manual MRP, automatic suggestion of replenishment and automatic issuing of purchase orders ndifficulties in subcontracting management nSubcontracting worksheet in MS Dynamics nconstrained capacities of resources in production nGraphical planning tools, TOC application n n n Touch Screen application Master Production Schedule Graphical planning Pains in purchasing and inventory nProcesses such as Purchase-Inventory-Production-Accounting are no connected internally nDynamic tracking nA huge volume of stock (value , quantity) nUse of appropriate reordering policies, properly setup of safety stock, netting, prognosis (forecasts) nPurchase is not flexible nEDI, automatic price generation, use of substitutions and cross references nInsufficient information about vendors nCRM nFutile purchases/payments nWorkflow and operation approve, netting, use of modifiers on the Item card nDifficult stock (inventory) management in different places nUse of location, bins and responsibility centers n Pains in Inventory Management and Purchase nNot even workload of purchasers nCRM, activities, tasks, business opportunities, priorities nE-Shop does not work or such a solution does not exist nBiz Talk nDifficulties in item tracking (lots, serial numbers, warranty expiration) nItem tracking functionality of MS Dynamics nVirtual stock (CD catalogues) does not exist nNon-stock Items functionality Modern ERP and IT Implementation cycle Competitive contest (combat) IT needs IT Trends Information Wins forms changes provides Initiate implementation Simplified diagram of ERP usage ERP Transaction = Entries DB ERP Partners Reports Forms sample2002-Graphs Information Information (trends) Knowledge of methods for process management and used metrics Decision Enterprise keys Key knowledge keys Key decision Others nChange log nInter-company posting (More companies) nBusiness Notification nMenu modified by users e nResponsibility centres nUser Portal – Internet / Intranet nCommerce Portal – B2C nCommerce Gateway – B2B nOLAP + Business Analytics n n Thanks a lot for your attention Ing.Jaromir Skorkovský,CSc.; KPH ESF MU Brno Czech Republic