Chapter 5 Limitations of ERP Managers cannot generate custom reports or queries without the help from a programmer and

d this inhibits managers from obtaining information quickly so that they can act on it from competitive advantage. ERP systems provide current status only, such as open orders. Managers often need to look past the current status to finds trends and patterns that aid better decision making. The data in ERP application is not integrated with other enterprises or division systems and does not include external intelligence. Security issues in ERP Are you certain that sensitive information cannot be displayed to unintended users? Can only the right people in your organization perform critical functions? Does your ERP system give your users access to all the relevant information they require in order to make optimum decisions? Do your e-commerce requirements have a security plan developed? Are you confident that you have appropriate security and control over your data? Will you comply with external and internal audit requirements? Will you eliminate the disclosure of confidential information? How reliable is your network and ERP system? ERP related Technologies Business Process Reengineering: It is defined as the functional rethinking and radical design of business processes to achieve dramatic improvements in critical, contemporary measures of performance such as cost, quality, service and speed. BPR provides a disciplined structured approach to organization that need to undergo a massive change for accomplishing the organizations goal and remain competitive. BPR uses information technology. In BPR business process are analyzed properly in order to identify the best way of performing jobs, the processes are then changed accordingly . Depending upon the complexity of the business process; some organization may require only a partial or a complete redesign of business processes. The changes will not only affect the company business procedures but also its organizational structure. The success and failure of BPR decides the success and failure of ERP implementation. BPR and ERP go hand-inhand, BPR improves the business processes and ERP automates those improved business processes to deliver better accuracy and higher efficiency. An ERP system facilitates seamless information flow across departmental boundaries and automates the businesses processes of the organization Objectives of BPR Elimination of Obsolete and inefficient processes Elimination of Obsolete regulation and control Elimination of unnecessary management overhead Elimination of lengthy review and approval cycles Phases of BPR Begin organizational change. Asses the current state of organization. Explain the need for change. Illustrate the desired state. Create the communications campaign for change. Building the reengineering organization Establish a BPR organizational structure Establish the rules for performing BPR Choose the personnel who will reengineer

Identifying BPR opportunities. Identify the core/high level processes. Recognize potential change-enablers Gather performance metrics within the industry. Gather performance metrics outside the industry. Select processes that should be reengineered. Prioritize selected processes. Understanding the existing process. Understand why the current steps are being performed. Model the current process. Understand how technology is currently used. Understand how information is currently used. Understand the current organizational structure Evaluate pre-existing business strategies. Consult with customers to know their desires. Determine customers actual needs. Formulate new process performance objectives. Establish key process characteristics. Identify potential barriers to implementation Reengineering the process. Ensure the diversity of the reengineering team. Question current operating assumptions. Brainstorm using change levers. Brainstorm using BPR principles. Evaluate the impact of new technologies. Consider the perspectives of stakeholders. Use customer value as the focal point. Blueprint the new business system. Define the new flow of work. Model the new process steps. Model the new information requirements. Document the new organizational structure. Describe the new technology specifications. Record the new personnel management systems. Describe the new values and culture required. Perform the transformation. Develop a migration strategy. Create a migration action plan. Develop metrics for measuring performance during implementation. Involve the impacted staff. Implement in an iterative fashion. Establish the new organizational structures Assess current skills and capabilities of workforce. Map new tasks and skill requirements to staff Re-allocate workforce. Develop a training curriculum. Educate the staff about the new process. Educate the staff about the new technology used. Educate the management on facilitation skills. Decide how the new technologies will be introduced. Transition to the new technologies.

Incorporate process improvement mechanisms

Advantages of BPR Improves quality of products, services and operation Increases the efficiency of the organization Performance improvement Increase in profits Increase in productivity Better business practices Enormous cost reduction Speed up business processes Improvement in employee satisfaction Improvement in quality Improvement in customer service Profitability Disadvantages of BPR BPR has bad reputation for major layoffs. It never changes management thinking. Lack of management support for the initiative and thus poor acceptance in organization. Exaggerated expectations regarding the benefits of BPR Underestimation of resistance to change within organization. Implementation of generic best practices that do not fit specific company needs. Over-trust in technology solutions Supply Chain Management The supply chain consists of all the organizations and operations along which products move from the original suppliers of materials through to the final customers. Supply-chain management (SCM) is responsible for all the physical movement through this chain. So, SCM is basically a network of facilities and distribution options that performs the procurement of materials, transformation of these materials into intermediate and finished goods and the distribution of these finished products to customers. The final product of one organization is the raw material of another, so materials are moved through a series of organizations and operations between original suppliers and final customers. These operations form the supply chain, as illustrated in Figure 1 for the supply of paper. Logistics or supply-chain management is responsible for making sure materials are delivered to the place they are needed at the right time. It looks at three types of movement: Movement of raw materials from supplies into the organization including purchasing, inward transport, receiving, storage and retrieval of goods Movement of work-in-progress within the organization including handling, movement and storage of goods during operations Movement of finished goods from the organization out to customers including packaging, storage and retrieval from warehouses, shipping and distribution to customers

Elements of Supply Chain Management There are three key processes in Supply Chain Management Planning systems: The focus of the planning system is to ensure the availability of the right product at the right time and at the right place. Execution Systems: The system enables the efficient movement of products and services through the supply chain. Providing operational efficiency is the main focus of execution systems. Performance Measurement System: The system monitors and ensures the effectiveness of the supply chain. Use of web-based software agents and data warehousing allow the business operations to respond immediately to key business events. Functions in Supply Chain Management The key functions in Supply Chain Management are Customer Asset Management: It deals with collecting and analyzing information about customer demand in order to have a better understanding of the customer needs. Integrated Logistics: it deals with managing the flow of goods from the suppliers. Financial and Accounting Management: It deals with managing the financial flows with suppliers as well as customers. Agile manufacturing: The aspect of supply chain management deals with managing the manufacturing process in a way such that the cost of production is low. Advantages of SCM SCM reduces the uncertainty and risks along the supply chain SCM improves business processes by an effective coordination of information, material and financial flows among all the parties involved in the supply chain SCM helps provide better service to the customers SCM decreases the inventory level and the cycle time. It improves business critical processes such as procurement to pay cycles, order-to-cash cycles and demand forecasting Improve Customer Service and Quality Customer Relationship Management: CRM covers methods and technologies used by companies to manage their relationships with clients. A CRM system is defined as a system which is combination of people, processes and technology that seeks to provide understanding of a companys customer and to support a business strategy to build long-term profitable relationship with customers. CRM systems support tracking past purchases and payments made by customers, updating the electronic customer profile, analyzing behavior of customers and providing updated online- answers to the FAQs about various products and services. A CRM system should identify factors important to clients, promote a customer-oriented philosophy, adopt customer based measures, and develop end-to-end processes to serve customers, provide successful customer support, handle customer complaints, and track all aspects of sales and service information Elements of CRM Operational CRM: Centers on all the activities of the business that are related to sales, marketing and customer service

Analytical CRM: It deals with the collection and analysis of the data collected by the CRM system. Based on the results of the analysis different segments of customers and the relationship between them are identified. Analytical CRM provides support to decision making. Collaborative CRM: It facilitates the interaction with the customers by phone, fax or email. Stakeholders in CRM Customers: They are most important in the CRM design for whose delight the whole exercise is delights. Employee: They are the set of people who execute the CRM design. They include those from the frontline staff who actually executes to the top management who designs the CRM Suppliers: They are the part of system who provide input to companys value chain Partners: They are the creators of additional value for the customers. Significance of CRM Perpetual stream of revenue: A better served and delighted customer gradually becomes loyal. Once customer loyalty is built, the customer remains with the company and proves to be a perpetual source of revenue and profit Positive referral creation: A satisfied customer often spreads positive things about the company. Such positive opinion proves to be more reliable and authentic than companies propaganda including advertisements and in turn brings more customers Provides premium: A customer satisfied with the service of a particular company is ready to pay a little premium on the products/services and does not want to take risk with the new company Helps customer retention: Through personal and effective customer care and service, it helps the company keep customers for life. Retaining customers helps and contributes in company success. Lowers cost of sale: A satisfied customer does not require to be lured every time by the company and hence his acquisition cost to the company decreases which helps the company lower cost of sales. Help understanding customer behavior: By providing personal service to its customers, the company understands the customers and can adapt itself to their changing requirement. This helps companies offer a complete set of personalized solutions to customers. Provides opportunities to cross-sell and up-sell: A satisfied customer is expected to come back to the same company for repeat purchases. Reduces marketing time: Through positive referrals and opportunities to cross-sell and up-sell, the customer acquisition becomes easier and leads to reduced marketing time. Channel Cost rationalization: As effective CRM provides an opportunity to the companies to value the cost of various channels with respect to its profitability and the customer may be served via a channel that is cost effective for the company and suitable to customer. Enables business process re-engineering: CRM programmers enable a company to have an insight of individual customer and helps in assessing its profitability for the company. The company may subsequently redesign its offer to various customers as per their profitability. CRM Cycle The cycle is as follows: Obtaining information from customers Creating superior customer value Building loyal customer Acquisition of new customers Working towards increased profitability Customer acquisition starts either through the traditional advertising or through referrals. The next stage is customer development through personalization of communication and customization of products and services by way of mutual learning process. As a result, leveraging of customer equity occurs through cross selling and up-selling. Then retention of existing customer takes place. The organization also benefits from the new customers that it acquire through positive referrals