Day 2 – Module 5
Decision Support
Text Materials
Chapter 4 – Decision Support
Chapter 7 – Enterprise Infrastructure
Decision Support
• Decision Making and Information Systems
-Types of decisions, examples
- TPS, MIS, DSS
- Executive Support Systems
• Supply Chain Management
• Customer Relationship Management
• Enterprise Resource Planning
Types of Decisions
TPS – Transaction Processing Systems
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Basic business systems that serve the organization’s
operational level
Input: Transactions, events
Processing: Sorting, listing, merging, updating
Output: Detailed reports, lists, summaries
Users: Operations personnel, supervisors
TPS
Data
MIS – Management Information Systems
•Serve management level; provide reports and access to
company data
•Input: Summary transaction data, high-volume data, simple
models
•Processing: Routine reports, simple models, low-level
analysis
•Output: Summary and exception reports
•Users: Middle managers
TPS
Data
MIS – Management Information Systems
DSS – Decision Support Systems
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TPS
Data
Serve management level with data analysis for making
decisions
Input: Low-volume data or massive databases, analytic
models, and data analysis tools
Processing: Interactive, simulations, analysis
Output: Special reports, decision analyses, responses to
queries
Users: Professionals, staff managers
Other
Data
Other
Data
DSS – Voyage Estimating System
Executive Support Systems
TPS
Data
Other
Data
Other
Data
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Provide communications and computing environment
that serves the organization’s strategic level
Input: External and internal aggregate data
Processing: Graphics, simulations, interactive
Output: Projections, responses to queries
Users: Senior Managers
Executive Support Systems
Executive Support Systems
Putting Decision Support All Together
The 4 Major Types of Information Systems
Putting Decision Support All Together
The 4 Major Types of Information Systems
System
Description
Machine control Control the actions
of machines and
equipment
Production
Decide when and
planning
how many products
should be produced
Facilities
Decide where to
location
locate new facilities
Organizational
Level
Supply Chain Management Systems
Supply Chain Management Systems – Nike Example
Supply Chain Management Systems
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Supply Chain Management Systems (SCM): Automate flow of
information between firm and suppliers to optimize production
and delivery
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Supply Chain Management: Close linkage of activities
involved in buying, making, moving a product
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Supply Chain: Network of organizations and business
processes for production and distribution of products
Supply Chain Management Systems
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Information Systems Can Help Supply Chain Participants:
Decide when and what to produce, store, and move
Rapidly communicate orders
Track status of orders
Check and monitor inventory
Reduce inventory, transportation, warehousing costs
Track shipments
Plan production based on actual customer demand
Rapidly communicate changes in product design
Supply Chain Management
Inbound
logistics
Production
processes
Outbound
logistics
Sales and
marketing
Customer
service
Information Technology
Upstream
Upstream
Downstream
Downstream
Supply Chain Management
Yes
No
Federal Express
Supply Chain Management - Logistics
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Most supply chains use inter-modal transportation,
multiple transportation channels (railway, truck, etc) to move
products from origin destination
This creates supply chain complexities
Supply Chain Management - Goals
• Fulfillment
• Logistics
• Production
• Revenue and profit
• Cost and price
• Cooperation among SC partners
A Good SCM System will help a firm
• Decide when and what to produce, store, and move
• Rapidly communicate orders
• Track the status of orders
• Check inventory availability and monitor inventory levels
• Reduce inventory, transportation, and warehousing costs
• Track shipments
• Plan production based on actual customer demand
• Rapidly communicate changes in product design
Supply Chain Management – Haworth Case
Identify the problem Haworth was facing.
What alternative solutions were available to management?
How well did the chosen solution work?
What people, organization, and technology issues need to be addressed?
Additional SCM Resources
• i2 Technologies – www.i2.com
• Manugistics
• Supply Chain Knowledge Base – supplychain.ittoolbox.com
• Supply Chain Management Review – www.scmr.com
• CIO Magazine – www.cio.com
• About Inc. (Logistics/Supply Chain) – logistics.about.com
• IBM - http://www-03.ibm.com/solutions/businesssolutions/scm/index.jsp
• Oracle/PeopleSoft Supply Chain – www.oracle.com/applications/scm
• Institute for Supply Chain Management – www.ism.ws
Customer Relationship Management - CRM
Sample CRM System Infrastructure
A Good CRM System will help a firm
• More precise and targeted marketing campaigns.
• Effective management of the sales process.
• Providing superior service and support.
• Better understanding of customer needs.
• Tailoring offerings.
• Integration of pertinent customer information.
Additional CRM Resources
• Siebel Systems – www.oracle.com/siebel
• Salesforce.com
• cio.com
• MyCustomer.com
• IBM -http://www-03.ibm.com/solutions/businesssolutions/crm/index.jsp?re=boost
• CRM Today – www.crm2day.com
• Business2.0
• CRM Knowledge Base – crm.ittoolbox.com
• destinationCRM.com
Enterprise Resource Planning
• Enterprise Resource Planning Systems is a computer
system that integrates application programs in
accounting, sales, manufacturing, and other functions
in the firm
• This integration is accomplished through a database
shared by all the application programs
ERP can be considered an initiative launched to better manage business
processes across the organization using a common, integrated database,
shared data management applications and reporting tools.
Enterprise Resource Planning - Background
An organization’s critical business processes often cut across many of its functional
units.
In most organizations, each process has its own data needs and applications that
operate as distinct systems.
The results of this approach:
- Function-Centric view in the business units
- Operational Inefficiencies
Logistics
Production
Purchasing
Accounting
Sales
Example: A customer order
Enterprise Resource Planning - Background
ERP evolved from MRP (Material Requirements Planning) and MRP II.
Customer orders
Forecasts
Master production schedule
Bills of materials
Routings
Time standards
MRP
explosion
Inventory records
Inventory transactions
Material requirements plan
Manufacturing resource plan
Cost and
financial data
Enterprise Resource Planning - Background
“Instead of having one set of numbers for the operating system in manufacturing and
one set kept by the financial people – once the manufacturing people have numbers
that are valid, the financial people can use these to get their numbers. Of course,
whenever there are two systems – the numbers are bound to be different. With MRP
II, everybody can be working with the same set of numbers, but that’s only the
technical difference. The big difference comes in the way management uses these
tools…MRP II becomes a company game plan for manufacturing, marketing,
engineering, and finance.”
Oliver Wright, The Executives Guide to Successful MRP II, 1982.
Enterprise Resource Planning – Background Timeline
SAP AG
• A German firm, is a world leader in ERP software.
-Designed to
operate in a threetier client/server
configuration
-Applications are
fully integrated so
that data are
shared between all
applications
R/3 System Functional Components
Financial
Accounting
Customer Management
Order Management
Configuration Management
Billing
Rebate Processing
Sales & Distribution
Largest and most complex
Materials Management
Plant Maintenance
Quality Management
Production Planning and Control
Project Management
Budgeting
R/3 System
Functional
Components
Accounts Payable
Accounts Receivable
General Ledger
Capital Investments
Open Item Management
ABC (costing approaches)
Asset Management
Human Resources
Payroll
Benefits
Scheduling
Personnel Development
Workforce Planning
Travel Expense Accounting
Manufacturing
& Logistics
London Health Sciences Centre
http://www.lhsc.on.ca/casecost/drilldwn.htm
London Health Sciences Centre
London Health Sciences Centre
London Health Sciences Centre
London Health Sciences Centre
Reasons for implementing ERP
• Desire to standardize and improve processes
• To improve the level of systems integration
• To improve information quality
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Integrate Financial Information
Integrate Customer Order Information
Standardize and Speed Up Manufacturing Processes
Reduce Inventory
Standardize Human Resources Information
• Global Outreach
• Avoid Redundancies
ERP Disadvantages
• Time-consuming
• Expensive
• Fit
• Vendor Dependence
• Too many features, too much complexity
• Process Rigor (Standardized)
The General ERP Process
1. Product Analysis
2. Module Selection
3. Process Analysis
4. Data Analysis
5. Applications Integration
6. Testing and Installation
7. Employee Training
Average Implantation Time
24+ Months
Meta Group Study
How Much Does an ERP Implementation Cost?
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The size and geographic distribution of the company.
The size of the ERP package.
Hardware
Software
Consultants and Analysts Fees
Time
Training
A large company may spend from $ 50 to $ 100 M or more USD for an
integrated ERP implementation.
Meta group survey; 63 companies (large and small) in a range of industries.
Average cost $ 15,000,000.
High $300 M, $300,000,000 USD
Low $ 400 K,
$400,000 USD
Example: Allied Signal, Inc.
www.honeywell.com
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$14.5 B Manufacturer
World-Wide Operations
11 countries, 18 sites, 9 languages
Large and complex database
Estimated Costs
1. $30 million in software licensing
2. $200 million in consulting fees
3. Hardware integration
4. Software integration
5. Training
Time to Implement System: 4 to 6 years
ERP Integration
Successful ERP Implementation Criteria
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Top Management Support
Good Cost Estimation
Realistic Expectations
ERP Implementation
Cultural Impact
Training
Customization and Integration
Two More Examples
Pitney Bowes
Cut overall operations costs by 28%.
Sales reps can quote in < 15 minutes versus hours
4% increase in sales - $160 M / year
FoxMeyer
Bankrupt
Sued SAP AG
Hillerich & Bradsby
About Hillerich & Bradsby
Additional ERP Resources
• SSA Global Technologies – www.ssaglobal.com
• SAP – www.sap.com
• Oracle/PeopleSoft – www.oracle.com
• IBM -http://www-03.ibm.com/solutions/businesssolutions/erp
• Microsoft (Great Plains) – www.microsoft.com
• Also, American Software, i2, Manugistics
Additional ERP Resources
Additional ERP Resources
Managing the Change
Managing the Change - Successfully
1. Economic Feasibility
Tangible Benefits
Intangible Benefits
Implementation Costs
Operational Costs
Managing the Change - Successfully
2. Address the Organizational Change Involved!
Managing the Change - Successfully
3. User Involvement & Influence
Managing the Change - Successfully
3. User Involvement & Influence
Bridge the User / Designer Communications Gap
User Concerns
Designer Concerns
Will the system deliver the
information I need for my work?
How much disk storage space
will the master file consume?
How quickly can I access the
data?
How many lines of code will it
take to perform this function?
How easily can I retrieve the
data?
How can we cut down CPU time
when we run this program?
How much clerical support will I
need to enter the data into the
system?
What is the most efficient way of
storing the data?
How will the operation of the
system fit into my daily business
schedule?
What database management
system should we use?
Managing the Change - Successfully
4. Management Support
Managing the Change - Successfully
5. Project Management
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