Enterprise Resource Systems the Company Term Paper

Excerpt from Term Paper :

Some manufacturers have sought to improve their profitability by becoming more horizontally integrated in their supply chain management operations, but it does not appear feasible for the company to acquire the vendors that supply its component parts so viable alternatives must be identified that can facilitate the supply chain management process vertically. As Choy, Lee and Lo (2003) point out, "Very few manufactures now own all the activities along the chain but integrate the supply network from various supplier networks and the ability to make fast and accurate decision often constitute a competitive advantage compared with the competitors or other networks" (87). It is clear that the company could benefit from an information technology solution to its current paper-driven approach to managing its supply chain operations. In this regard, Choy and his associates also note that, "The rapid advance in information technology is now deployed not only to improve existing operational effectiveness of a business, but also to build the new capability to meet today's business environment and complexity" (87).

Business intelligence applications are well suited to helping the company improve its ability to respond to customer orders and better manage its inventory needs as these goals are congruent with the goals of business intelligence systems. For example, according to Imhoff (2006) "The goal of business intelligence (BI) is to provide the enterprise with a repository of 'trusted' data -- data that can be used in a multitude of applications to answer the questions about customers, products, supply and demand chains, production inefficiencies, financial trends, fraud, and even employees" (2). The event-driven features that BI applications provide are precisely what the company needs to help it become more responsive and flexible to its customers' needs, the very qualities that have fueled its success to date. In this regard, Imhoff notes that business intelligence "can be used to flag anomalies via alerts, provide visualization and statistical models, and understand the cause and effects of decisions upon the enterprise. Just about every aspect of an enterprise's business can benefit from the insights garnered from BI" (2).

It is reasonable to posit that because some of the 3,000 different can types that the company assembles share the same type of parts, the demand for these parts would be greater than those that use components that are unique to their design. It should be possible to forecast with some degree of accuracy the on-going demand for those can configurations that require these sets of shared components and event-driven applications can trigger their reorder automatically. As Srinivasa and Saurabh (2001) point out, "Some products move much faster off the shelf than others. on-time replenishment orders are very critical for these products. Analyzing the movement of specific products - using business information tools - can help in predicting when there will be need for re-order" (5).

This type of forecasting and event-driven triggers can be achieved using enterprise resource planning tools such as Systems, Applications and Products (SAP) programs that use data warehouses to fully integrate the extended enterprise. According to Zeng, Chiang and Yen (2003), these tools deliver such benefits in several ways. For instance, "Data warehouses shrink the length of time between a business event's occurrence and an executive alert with the summarized data or information obtained from online analytical processing (OLAP) and data-mining tools. Given this information delivery time shrinkage, business decision makers can make use of opportunities that otherwise they would miss" (115). Likewise, data warehouses can integrate information that is generated from within the company (i.e., inventory levels, leftover completed cans, status of unfilled orders etc.), it can also integrate data that is maintained by external sources such as its vendors and customers as well. In this regard, Zeng and his colleagues advise, "The data not only are integrated across different functional units of the organization (data from internal sources), but also include the external entities of the organization such as customers and suppliers (data from external sources)" (115). In addition, such business intelligence applications can help with the aforementioned forecasting needs of the company: "A data warehouse integrates data across time to provide views obtained from the trend analysis of its data" (115).

Likewise, one vendor of SAP application suites emphasizes that, "The amount of data flowing through an organization is growing exponentially. To take advantage of it, many companies have turned to data warehousing. The data warehousing approach pulls together data from disparate systems, giving companies a unified, consistent view of customers, operations, and other aspects of the business" ("Data Warehousing with mySAP" 2002, 5). Based on the needs of the company to improve its record-keeping and inventory management techniques, SAP appears to be the right tool for achieving these goals. For example, this vendor emphasizes that, "The SAP BW delivers an information model that forms the foundation for answering all relevant business questions. This ability is based largely on providing data that has the appropriate structure, degree of detail, and timeliness for a given analysis. The weight of these factors varies by situation and user base in a company" ("Data Warehousing with mySAP," 10).

An SAP program would provide access to virtually real-time information as it was needed, as well as providing the ability for customers and suppliers to contribute and extract data as it was needed in ways that would improve the company's supply chain management operations. Suppliers for example could monitor the company's inventory levels for critical components matched against its pending orders and initiate shipments of these components without waiting for the company to place an order in the first place. As Smaros, Lehtonen, Appelqvist and Holmstrom (2003) point out, "One of the most common types of automatic replenishment programs is vendor-managed inventory or VMI. In VMI, the vendor is given access to its customer's inventory and demand information. The vendor monitors the customer's inventory level and has the authority and the responsibility to replenish the customer's stock according to jointly agreed inventory control principles and objectives" (337).

In the SAP operating environment, this is termed an "operational data store." The vendor of the SAP BW program states that unlike a strict data warehouse approach, "An operational data store is designed to enable numerous queries on small amounts of granular data that is updated frequently. It stores detailed data, and supports tactical, day-to-day decision making. . . . SAP views it as an almost real-time informational environment that supports operational reporting by interacting with existing transactional systems, data warehouses, or analytical applications" (17).

Figure 2. Operational Data Store and Data Warehouse.

Source: "Data Warehousing with mySAP," 18.

As can be seen in Figure 2 above, SAP BW provides all users with flexible access to the data that is stored in the data warehouse, the operational data store, and the multidimensional model.

Design of Solution(s).

The company needs to completely overhaul its current business processes with an integrated approach that is capable of providing improved communications between all partners in the supply chain. In this regard, Boyson, Corsi and Verbraeck (2003) suggest that a portal, also termed a "gateway," can provide part of the solution to the problems being experienced by the company in terms of its communications with its suppliers and customers. For instance, these authors point out that, "Information technology can help to overcome the uncertainties of the modern business environment. Electronic exchange of information leads to a reduction of errors and increased efficiency of the work processes" (176). According to Akram, Chohan, Wang, Yang and Allan (2005), "A portal is a Web-based application that acts as a gateway between users and a range of different high-level services. It provides personalisation, single sign-on (SSO), aggregation and customisation features. A so-called 2nd generation portal normally consists of different portlets to process consumer requests to these services and generate dynamic content from the responses" (1).

Because the company relies to some extent on vendors which are located overseas for some of its components, a portal can provide the means by which information can be shared in real time concerning order fulfillment and status. In this regard, Boyson et al. note that, "When one company can use the information of other companies in the supply chain, the negative effects of uncertainty (i.e., higher inventory levels, inaccurate forecasts, and unfulfilled orders) can be mitigated" (176). The company's customers would also benefit from the use of a portal. For example, one authority advises that, "Accessing Web services from suppliers for product pricing, availability, and order management as well as exposing these same functions to customers can greatly increase the visibility and efficiency of an organization's supply chain" ("Reduce Complexity and Costs of Web Services Integration" 2003, 2).

There are a number of constraints to an across-the-board approach that attempts to achieve such integrated levels, though, including incompatible information technology systems and a reluctance on the part of many companies to openly share information with others. The use of a portal, though, can help overcome these and other problems associated with the sharing of information between partners in…

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