Matakuliah
Tahun
: M0594 / Enterprise System
: 2007
The Supply Chain of ERP Programming
Products
Pertemuan 11-12
The Supply Chain of ERP Programming
Products
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Bina Nusantara
Value Added Solutions
Implementing the concept of an Open Vendor Policy
with CRM
Request for Information and Request for Offers
Costs Matter
Vendor Credit Risk
Value Added Solutions
• ERP software comes from such vendors as SAP, Oracle,
JD Edwards, PeopleSoft, and BAAN
• Companies go for ERP programming products because
it has been found that they are instrumental in tying
factory operations to other corporate functions such as
purchasing and inventory management
• As with most computer operations, the goal is better
coordination of internal functions
• Whether or not htis is being achieved, however, it is a
different matter
Bina Nusantara
Value Added Solutions
• The good news first, starting with statement that ERP’s
Supply Chain applications have enlarged the concept of
off-the-shelf routines to include both internal and external
functions.
• For example, having parts ordered for just-in-time
delivery, which is not necessary part of most ERP
routines, bridges the gap between ordering, production
scheduling, and inventory control.
• The ideal would have been a manufacturing execution
system that reaches the vendor’s ERP online,
coordinating shop-floor operations between vendor and
client, and providing a real-time picture of how the plants
are running on both sides of the partnership
Bina Nusantara
Value Added Solutions
• Another improvement to current packages would be the
incorporation of autonomous knowledge artifacts. If a
problem arises, agents under a knowledge-enriched
planning system would analyzed its impact.
• Then they would modify production schedules to make
the best use of whatever resources are available at that
very moment to meet established plans
Bina Nusantara
Implementing the concept of an Open
Vendor Policy with CRM
• For starters, an open vendor policy implies that the company
is not tied up to any vendor.
• It deals with all of them on its own term – not the vendor’s
terms; and it knows how to coordinate and manage a multisupplier relationshi[
• It is not easy, but it is doable and practical – provided that the
company has developed and uses an open business
architecture and that it builds intelligent interfaces between
wares.
• Developmentt characterizing procurement strategies can be
essentially grouped into four epochs:
– Single vendor, single machine (1960s)
– Single vendor, multiple computers (1970s)
– Multiple vendors, multiple computers (1980s)
– Open vendor policy for all wares (1990s)
Bina Nusantara
Implementing the concept of an Open
Vendor Policy with CRM
Bina Nusantara
Implementing the concept of an Open
Vendor Policy with CRM
Bina Nusantara
Implementing the concept of an Open
Vendor Policy with CRM
• Some of the reasons for diversity originate in the
vendor’s own design culture, but the product’s specific
orientation weighs on the nature of building blocks.
• In CRM’s case, for example, a critical factor is the
primary method of communication among devices of
choice: WAP phones, other phones, PDAs, Web
browsers, fax, email, etc., and also the type of link
primarily addressed. For example:
– Business-to-consumer
– Customer-to-business
– Business partner-to-business partner
– Sales force reference level
Bina Nusantara
Implementing the concept of an Open
Vendor Policy with CRM
• Any complex off-the-shelf programming product can be
divided into a number of modules or subsystems (see
exhibit 6.7)
• Here is a quick reference to the diversity of CRM
vendors: Portal Market-place, MySAP.com, Oracle Portal
Framework, IBM Enterprise Information Portal,
OpenText, Viador E-portal Suite, Sterling My Eureka,
Busines Objects InfoView, 2Bridge 2Share, DataChannel
RIO, Intraspect, Plumbtree, and Autonomy.
Bina Nusantara
Request for Information and Request for
Offers
• The selection of a vendor of commodity programming
products should be done in a most careful manner. This
is a long-term commitment – not an overnight
association. The best methodology for supplier selection
is the one done step-by-step.
• The major steps characterizing the screening and
commitment process are the following:
– Concept of projected implementation
– Request for information (to vendors)
– Study of proposals and preselection
– Prototype of projected implementation
– Request for offers (to selected vendors)
– Selection of two vendors for pilot project
– Final commitment to one of the vendors
Bina Nusantara
Request for Information and Request for
Offers
Bina Nusantara
Request for Information and Request for
Offers
• Benchmarking can be done both for software and
hardware, but under no condition should hardware
selection precede that of the targetted programming
product.
• Software sells hardware; therefore it should be given
preference in the evaluation process and also in
investment decisions.
• In addition, it is wise to keep in mind other crucial criteria
that influence a rational selection process, including:
– Conformance to the company’s internal standard
– Survivability of vendor to be selected
– Diagnostics tools and maintenance tools
– Quality of online and on-site support
– Costs, which always matter
Bina Nusantara
Request for Information and Request for
Offers
• Both at the level of Request for Information and Request
for Offers, there are some sound criteria for evaluating
proposals that the reader will be well advised to follow.
• First and foremost is the ability to tear to pieces the
vendor’s report as soon as it is received:
– Carefully look for consistency as well as for
discontinuities and unsound statements
– Examine the documentation of the statements being
made as well as associated commitments
– Analyze the statistics supporting the proposal by the
vendor, particularly reliability, blocking factor, and
other constraints
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Costs Matter – and so does ROI
• There are two ways of looking at cost: absolute and
relative.
• The absolute cost consists of quoted prices and
estimates for implementation expenses.
• The relative cost is a function of the time it takes to
complete each of the steps discussed in previous page
and to implement them.
• How long should the selection procedure take?
• Less than six months from concept definition to parallel
testing. Half that time is selection proper; the other half is
implementation.
Bina Nusantara
Costs Matter – and so does ROI
• The successful implementation of ERP and CRM depends
significantly on how well the following were performed:
– Prerequisite study of the implementation area
– Reengineering of the company’s information technology
– Training of system specialists and the users on ERP
functionality
• The activities identified by these three bullets should be done
in parallel with the search procedure discussed in previous
topic
• At the same time, the existance of these functions documents
that the cost of the ERP software will only be a fraction of the
total cost of its implementation
Bina Nusantara
Costs Matter – and so does ROI
• One of the better examples of
the cost-effectiveness of
technology in the longer term
is shown in graphic form in
Exhibit 6.9
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Vendor Credit Risk
• Vendor relationships can turn disastrous. Several
reasons might lie behind unfavourable developments in
vendor-client relationships, including:
– The platform or its software may underperform
– Joint efforts promised by the vendor are understaffed in skills
– Timetables are repeatedly extended, increasing costs and
generating friction
Bina Nusantara
Vendor Credit Risk
• Among the steps in calculating vendor’s risk are a:
– Worst-case scenario for each vendor, within the
hardware/software capitalization perspective
– Decision on the sum to be assured through reinsurance by
balancing premium versus risk
– Polyvalent reinsurance plan, which is often done by buying
options
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