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  1. Its all about Integration Paul Hawking

  2. SAP University Alliance Program (UAP) Background University SAP SAP User Group • SAP Academic Program Director • Research • Industry Reports • Best selling author • ERP Systems and Business Intelligence • Visiting Professor • SAP Mentor • 22 SAP million users • 2.5 million SAP Community Network members • 6,000 active contributors • 100 SAP Mentors • 1 academic • Teach Academics • Develop curriculum • 2009 + 2010 Top 10 Most Influential SAP People • Presenter • Design Events • Advisor • Past Chairperson

  3. Who? What? Why? Tim Berners Lee INTEGRATION

  4. Journey

  5. Strategy and Business Processes

  6. Business Process Examples Sales Procurement

  7. Business Process Elements • Organisational Units • Sales Area • Distribution Channel • Transactions • Sales Order Creation • Goods Issue • Data • Master Data • Customer • Material • Transactional Data • Sales Quantity • Sales Price Process Indicator

  8. Journey

  9. Sales & Distribution Human Resources Production Finance Traditional Business Landscape Executive Management Middle Management Operational Management Operations

  10. Sales & Distribution Human Resources Production Finance Traditional Business Landscape Executive Management Middle Management Operational Management Operations

  11. INFRASTRUCTURE Intel (1995) SECURITY ELECTRONIC TRANSFER DAISY PRICE BOOK HELP RCC WMS Configurator CUSTOMER EUC EXTRACTS SARP PNA PRICE NOVA AGREEMENTS MDS JAPAN FORECAST CWS JAPAN DAISY EDI DARE STAR ESTAR JASTAR OEM QUOTE PRICE BOOK EUC EXTRACTS PGS DPA JAPAN PRICE BOOK A / P A / R G / L PRODUCT CODE MAX RST EDI PMS COMPONENTS COST EUC EXTRACTS CLS DEMAND FORECAST NIMS AMAPS EUC EXTRACTS DPA AVAILABILITY GPS II DATA WAREHOUSE ISET GIMS MPS

  12. Sales & Distribution Human Resources Production Finance Traditional Business Landscape Executive Management Middle Management Operational Management Operations

  13. Integration Problems

  14. Sales & Distribution Human Resources Production Finance Traditional Business Landscape Executive Management Middle Management Operational Management Operations

  15. Public Sector Procurement Process? - Complexity

  16. Journey

  17. Why ERP? Note: Based on multiple answers per respondent Source: Deloitte Consulting and Benchmarking Partners (Based on a study of 62 companies that have gone live with an ERP system)

  18. ERP Evolution e-Commerce e-business ERP11 EDI SFA CRM Planning SCM Scheduling Distribution MRP11 ERP MRP Human Resources Payroll General Ledger Financial Management Information System Accounts Payable Accounts Receivable 1990s 1980s 2000s 1970s

  19. What is an Enterprise Resource Planning System? • An ERP System can be defined as a “modularised, integrated, real time information system with broad functional scope responsible for the processing and management of business transactions” • (Hawking 2005)

  20. ERP System Executive Management Enterprise Resource Planning System Human Resources Finance Middle Management Operational Management Sales & Distribution Production Operations

  21. ERP Characteristics • Links all business processes automatically • Reduce inter-processing time (transactions occur one time at the source) • Maintain an audit trail of all transactions • Utilises a common database • Perform internal conversions automatically (tax, foreign currency, legal rules for payroll) • Empowers employees by putting data at the fingertips of employees • Involve employees in the entire functional cycle

  22. Raytheon’s Goals • Replace thirty year old non-integrated legacy systems • Obtain benefits of business process re-engineering • Use ERP to drive integration • One time entry and access to information • Facilitate achievement of Raytheon Aircraft Company five year plan • $19.8 billion in revenues • More than 100,000 employees worldwide

  23. ERP Example • 5,500 SAP users • 6 countries • 8 major business units • Over 40 key systems replaced, including primary manufacturing support system, corporate and field financial and purchasing systems, marketing expense control systems, and project management systems • 7,500+ SAP transactions, 100+ reports, 150+ forms, 50+ interfaces to existing systems

  24. Benefits Achieved Davenport 2003

  25. SAP Performance 01/20/95 9/1/93 Reengineered Focus Area Cycle Time Target 10/1/93 • Enter pricing data into system 5 - 80 Days 5 Minutes 5 Minutes • Check customer credit upon order 15 - 20 Minutes Automatic Automatic • Enter customer order in system 30 Minutes 5 Minutes 15 Minutes • % Manual order/ship to total # of orders/ships 75% 0% 0% • Generate customer invoice after ship 2 - 23 Days 1 Day 8 Hours • Respond to customer billing inquiry 15 - 20 Minutes Real Time Real Time • Ship evaluation unit from customer request 3 - 30 Days 2 Days 2 Days • Ship repair/replacement part 3 - 44 Days 2 Days 3 Days • Credit returned drive 1 - 5 Months 5 Days 10 Days 2 Hrs - 3 Weeks • Obtain commit date for customer order Real Time Real Time Unconstrained SJ manufactured drives 2 Hrs- 3 Weeks Allocated; non-SJ manufactured drives SAP R/3 Order Entry IBM Storage Benchmarks - 110 days after production

  26. Toyota’s Benefits CreateSales/Prod’nPlan FinalProd'nSchedule CreateSalesOrder CompleteFinishedVehicle Enquiry onVehicleStatus CompleteDelivery toDealer CreateInvoice toFinanceCompany PaymentFromFinanceCompany CreateRetailDeliveryRecord Systems Current TOPSPOSTEXCEL POSTBSS VTSVOS BSSALCVTS BSSVTS VTS VTSMSA MSA VTS Future ERPPOST ERP POST ERP ERPALC ERP ERP ERP ERP ERP Benefits Lead-time O D D D D D D D D O Flexi-bility O O O D O D O O D Cost D D D D D D D D O LeanOrg. D D O O O D O O O O = No Change D = Improvement X = Detriment

  27. ERP Systems and Value Creation

  28. ERP Evolution

  29. Journey

  30. Supply Chain

  31. Supply Chain Challenges

  32. Cost Leadership Cost targets and industry consolidation Globalization Worldwide reach is not a competitive advantage but a necessity Innovation Suppliers need to be involved earlier in product development Outsourcing Focus on core activities, trusted partnership Forces Driving the Evolution of the SCM Forces of Change

  33. Forces Driving the Evolution of the SCM • Retailer Time to Market • TraditionalClothingRetailer 36 weeks • Zara 4 weeks

  34. Forces Driving the Evolution of the SCM • North American Glass Suppliers • 2001 • Owens-Illinois • Corning • Consumers • Anchor Hocking • 2006 • Owens-Illinois

  35. Software Company Consolidation

  36. Forces Driving the Evolution of the SCM • Date Entry Price • May 2002 Coca Cola $2.87/6-pack ‘Vanilla Cola’ • May 2003 Sam’sChoice $1.00/6-pack • ‘Vanilla Cola’ • August 2003 Pepsi $1.99/6-pack • ‘Vanilla Cola’

  37. Quick CopyingErodes Price and MarketShare ProductDatePrice Proctor &GambleintroducesSwiffer 1999 $9.62 Pledge 1999 $7.32 Grabber Magic 2001 $7.09 Sweeper kit Clorox 2002 $6.69 ReadyMop Key Industry Trends 37% Price Decline

  38. Forces Driving the Evolution of the SCM • Focusing on Core (Moore) • Core: • Processes that create unique competitive differentiation • Source of growth in revenues and profits • Context: • All other processes • No prize for doing these well • But there are penalties for doing them poorly • This is not the same as your core competence • This is not the same as your core business

  39. Journey

  40. Business Network (Moore) • Business networks are core/context ecosystems • Each member contributes a unique core—their “claim to fame” • Every other member supplies the context to support that core • Business network create higher returns • Differentiating spend is greater, duplicated spend is less • Higher differentiation creates higher returns on capital for all • Business networks are competitive weapons • Silicon Valley, New York, Milan, Bangalore, Shanghai • The Internet has made this a “virtual” phenomenon

  41. Dell Business Network

  42. Business Networks: A Dell Laptop for Thomas Friedman • Total order lead time was 13 days. • The order was delayed 9 days because of a Wireless card “control issue”. • Total supply chain estimated at 400 companies in North America, Europe, & Asia. 17 21 5 10 20 19 1 12 16 13 7 9 1 2 6 4 18 8 14 3 11 15 • Laptop was designed • Order was taken by phone • Order hit the Dell factory • Intel microprocessor* • Memory * • Graphics card* • Cooling Fan* • Motherboard* • Keyboard* • LCD* • Wireless card* • Modem* • Battery* • Hard Drive* • CD/DVD drive* • Notebook bag* • Power adapter* • Power Cord* • Memory stick* • Repackaged • Sent to Tom Friedman

  43. Dell Laptop Story • Laptop was designed jointly in Austin, TX and Taiwan • Order was taken by MutjebaNaqvi over Dell’s 800 number • Order hit the Dell Factory in Penang, Malaysia • Intel microprocessor came from either Phillipines, Costa Rica, Malaysia, or China • Memory from either Samsung in Korea, Nanya in Taiwan, Infineon in Germany, or Elpida in Japan • Graphics card from MSI or Foxcom both in China • Cooling Fan from CCI or Auras both in Taiwan • Motherboard from Samsung or Quanta, both in Shanghai, or Compal or Wistron in Taiwan • Keyboard from Alps, Sunrex, or Darfon, all in China • LCD from Korea, Japan, or Taiwan • Wireless card from Malaysia, Taiwan or China • Modem from China • Battery from Mexico, Maylasia, China, Taiwan, or Korea • Hard Drive from Singapore, Thailand, or Phillipines • CD/DVD drive from Indonesia, Philippines, China, or Malaysia • Notebook bag from China • Power adapter from Thailand, Taiwan, Korea, or China • Power Cord from India, China, or Malaysia • Memory stick from Israel or Malaysia • Repackaged w/ external options in Nashville, TN • Sent to Tom Friedman in Maryland

  44. Apple

  45. And companies must employ new strategies to survive in the new SCM reality Cost Focus Outsource everything Cut Spending Squeeze Suppliers Sell to “best” customers Eliminate headcount Value Focus Partner Strategically Spend Wisely Collaborative/Win-win Acquire “non” customers Increase productivity It is all about INTEGRATION

  46. ERP Systems and Business Network

  47. Journey

  48. SAP