Term Paper on "Enterprise Resource Systems"

Term Paper 13 pages (4679 words) Sources: 1+

[EXCERPT] . . . .

Enterprise Resource Systems

The company in question (hereinafter "the company") is a medium-sized value-added manufacturer that assembles and fills more than 3,000 different sizes and types of aerosol cans. Flexibility and responsiveness have been the keys to the company's success to date by concentrating on small production runs that do not require lengthy lead times in order to complete. The company purchases all of the aerosol can components from suppliers and the can ingredients are supplied by the customers. Some of the can components are fungible and can be obtained from more than one supplier, but while some of its product line share some components, others are unique to a specific aerosol can type. Following receipt of an order from a customer for a given due date, the company begins the manufacturing process based on a typical 6-week lead time. Because the company orders components in batch sizes in some cases, it can have some excess unfilled cans or part thereof left over in inventory from previous production runs, the first step in the business process is to determine if there are any of the required components already in stock. All other remaining components (which would be all of them if the requisite parts are not on hand) are then ordered from the company's suppliers, some of which are located overseas and can-fill ingredients are received from the customer. The lead-time for this portion of the manufacturing represents fully two-thirds of the company's lead-time for the entire production process. Only when all of the required components and ingredients are on hand is the company able to actually complete the entire assembly process, but it does not wait for everything that is needed because individual components are received on a daily basis and therefore batch assembles what is capable of being assembled on a day-to-day basis using what components and ingredients are available. Taken together, this approach introduces a number of opportunities for mistakes to be made, and the individual activities of order processing, production scheduling, stock control and purchasing are labor intensive. Moreover, the company maintains all of its ordering, production and processing data on paper only, and the aggregated information is only updated weekly. The constraints to efficient production results in a number of inefficiencies, including inordinately high levels of inventory for some can components, ineffective coordination between component/ingredient supply and ultimate production. The company's business processes are clearly antiquated and are vulnerable to a number of disruptions in the supply chain that can adversely affect its ability to satisfy customer orders in a timely fashion. Not surprisingly, the company is seeking a superior alternative to its existing business model that eliminates the bottlenecks and provides more efficient ways of monitoring the flow of information and work. To this end, this study provides an analysis and design solutions for integration of enterprises information systems with an extended enterprise or supply chain context based on the business case. A description of the key functions as a part of the enterprise system for the given business case are followed by a summary of the research and salient findings in the conclusion.

Review and Analysis

Background and Overview.

By streamlining the disparate processes involved in its can assembly regimen using business process management techniques, the company can realize a number of benefits that will directly affect its profitability. In this regard, one authority emphasizes that, "Many organizations have never critically analyzed or mapped their business processes and do not fully understand them. Creating this efficiency reduces response time -- an immediate gain. But this also enables quicker decision-making which results in infinite long-term benefits. Additionally, as processes are automated, quality and consistency typically improve" ("Language for Change," 4).

Replacing the paper records and manual methods used by the company for inventory management and production tracking purposes with an automated approach just makes good sense. This approach is also congruent with the observation that, "Technology has long been used to improve organizational efficiency and to provide better ways to solve common business problems" ("Planning and Building an Architecture that Lasts" 2003, 3). By developing and using event-driven applications, the company could streamline its inventory management and ordering function and replace the current mistake-prone approach with one that provides users with the information they need when they need it (Quinn 2003). In this regard, one company that specializes in providing such it solutions notes that, "Vendors and enterprises alike are still utilizing applications that enable historical data analysis while becoming increasingly interested in tools that offer real-time data modeling and forecasting in order to 'close the loop between analysis and action'" ("Business Intelligence & Enterprise Content Management" 2003, 4). The fuzzy logic that is built in to many applications today can provide organizations of all types with the ability to integrate automation with its core business functions.

Business intelligence applications can go a long way in helping the company integrate its information flow with the needs of its customers and the abilities of its suppliers, but it is not an end-all solution by any measure. As Vokura, Lummus and Krumwiede (2007) emphasize, "Manufacturing firms may undertake numerous improvement initiatives, both to gain flexibility and improve overall performance. Many possible initiatives can be implemented, and these change over time as new initiatives are found to be effective" (15). This observation suggests that what works best today may well be obsolete tomorrow but it is important for the company to achieve optimization of its business process now using the best tools available for the purpose. The fact that some of the company's suppliers are located overseas means that there will be an inevitable delay in receiving parts ordered today, and that any optimum decision concerning the best approach to achieving improved production capabilities must take these factors into account. This point is also made by Davis (2006) who emphasizes, "In the BI arena, optimizing the decision cycle typically means shortening it, or compressing it. It doesn't necessarily mean minimizing the time lag, or automatically assuming that every decision process must be completed in 'realtime.' The key is to define the 'right' time for each decision cycle, one that reflects business realities and the trade-offs between risk and cost" (3).

Given the razor-thin profit margins involved in the production of aerosol cans, it is unreasonable to expect the company to operate in a real-time fashion across the board because such an approach would likely bankrupt the company. Certainly, it would be possible for the company to spot-order just enough can components from its overseas suppliers to satisfy a special order, for example, and have the partial shipment sent by Federal Express at rush order rates; however, this approach would simply not be cost effective and batch orders that require a month for delivery provide the company with the ability to purchase its supplies in bulk, thereby minimizing the cost per unit involved. As Davis also points out, "It is extraordinarily expensive to create a completely real-time organization. Even if an organization can afford real-time decision-making, it may not be necessary or worth the cost" (3). To help the company better visualize its business process, the company needs to develop a graphic model of what takes place from start-to-finish as customer order are received, parts are ordered and received, and the production process is accomplished. In this regard, Hall (2002) recommends that organizations that are in the predicament that this company is facing should, "Assemble an overall view of how processes and systems are operating clear across the entire supply chain -- from supplier, manufacturing and production to delivery and customer satisfaction" (7). Such an overall view that is comparable to the company's operations is illustrated in Figure 1 below.

Figure 1. Comprehensive View of Supply Chain Management Factors.

Source: Carr 2000, 9.

According to Thierauf and Hoctor (2003), a number of software application have emerged in recent years that can help companies of all types enhance the performance of their operational systems that may rely on CRM (customer relationship management), SCM (supply chain management), and/or ERP (enterprise resource planning). These authors report that, "It extends the reach of these systems by adding analytics into the fabric of corporate operations. SAP has updated its business intelligence offerings, which include six new analytic applications for CRM, SCM, E-commerce, human resources, financials, and product life cycle" (114). Taken together, it is clear that the company needs such an enterprise resource planning solution for its antiquated business processes, and the relevant issues involved in this approach are discussed further below.

Analysis of the Relevant Issues.

The company is manufacturing a valuable 21st century product but it is using 19th century business process management techniques to do so. The recordation of inventory and production information on paper only introduces a number of constraints to the company's ability to keep track of what products it has already assembled, what components and ingredients are on hand, which components have been ordered and which ingredients have been provided, and where production stands in relationship to… READ MORE

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