Sachin K Patil
210-Advanced Software Paradigm
Dept. Of Computer Science,
The George Washington University
Term Paper
An Integrated Approach of Software Design
Enterprise Resource Planning Systems
Abstract: The whole topic is divided in three different sections.

The first section gives general idea about ERP and its overall architecture.

The second section discusses Finance Module and Inventory Control Module in
details from its design point of view. Please note discussion skips of HRMS
Module.

The third section discusses PeopleSoft ERP.

The Fourth section discusses some of the current trends in Management
Information Science like SCM, CRP and Data Warehousing.
Table of Content
Section I
Introduction

History

Necessity

Benefits
Architectural Overview

Design Strategy

ERP and WEB Services
Section II
Finance Module

Domain Dictionary

Features
Inventory Control Module

Data Flow Diagram

Dictionary Elements

MIS
Section III
Peoplesoft: A Commercial Product

Introduction

Architecture

Success Stories
Section IV
Advanced Methodologies
References

SCM: Supply Chain Management

CRM: Customer Relationship Management

Data Warehousing
Introduction
ERP(Enterprise Resource Planning)
Enterprise Resource Planning software is a set of independent and interconnected
applications that automate finances and humane resource departments and help
manufacturers handle jobs such as order processing and production scheduling. In simple
words, it is high end sophisticated software solution that reduces pressure and work load
of manager and provides accurate, timely information for taking appropriate business
decisions. ERP facilitates company wide integrated information system covering all
functions like manufacturing, selling, payables, receivables, HR, Inventory, Accounts,
etc.
In the era of globalization, business requires multidimensional integrated software to
manage today’s information needs. Many companies around the world are looking at ERP
solutions to satisfy this requirement.At present software market is full of highly
innovative products that have been developed with technological foresight to provide
quality business solutions which enhance the financial operations and management
capabilities. Giants like SAP, BAAN, PeopleSoft and Oracle Financial along with some
local and medium sized ERP products have captured most of the market.
A sophisticated ERP solution can only add value to a company, if the people who use it
can do so efficiently and intuitively. Here the Implementation comes in picture. This is
why these two words “ERP” and “Implementation” go hand in hand.With Business
Integration and Performance Management solutions it is possible to align strategic goals
rapidly to gain better control of your daily operations while reducing your total cost of
application ownership.
History
Evolution of ERP
In the ever growing business environment the following demands are placed on the
industry:

Aggressive Cost Control Initiatives

Need to analyze costs / revenues on a product or customer basis

Flexibility to respond to changing business requirements

More informed management decision making

Changes in ways of doing business
Difficulty in getting accurate data, timely information and improper interface of the
complex natured business functions have been identified as the hurdles in the growth of
any business. In the past, frequently, organizations faced dilemma while dealing with
complex situation due to lack of correct and useful information.
Time and again depending upon the velocity of the growing business needs, one or the
other applications and planning systems have been introduced into the business world for
crossing these hurdles and for achieving the required growth. They are as following:

Management Information Systems (MIS)

Integrated Information Systems (IIS)

Executive Information Systems (EIS)

Corporate Information Systems (CIS)

Material Resource Planning (MRP I)

Manufacturing Resource Planning (MRP II)

Money Resource Planning (MRP III)
In the 1990s, the need to develop a system with tightly integrated programs that would
use a unified database and would be used across the enterprise gained prominence. This
common-database, company-wide integrated system was named Enterprise Resource
Planning (ERP).
Features
What ERP can do for the businesses?

ERP facilitates company-wide Integrated Information System covering all
functional areas like Manufacturing, Selling and distribution, Payables,
Receivables, Inventory, Accounts, Human resources, Purchases etc.,

ERP performs core corporate activities and increases customer service and
thereby augmenting the Corporate Image.

ERP bridges the information gap across the organization.

ERP provides for complete integration of Systems not only across the
departments in a company but also across the companies under the same
management.

ERP is the only solution for better Project Management.

ERP allows automatic introduction of latest technologies like Electronic
Fund Transfer(EFT), Electronic Data Interchange(EDI), Internet, Intranet,
Video conferencing, E-Commerce etc.

ERP eliminates the most of the business problems like Material shortages,
Productivity enhancements, Customer service, Cash Management,
Inventory problems, Quality problems, Prompt delivery etc.,

ERP not only addresses the current requirements of the company but also
provides the opportunity of continually improving and refining business
processes.

ERP provides business intelligence tools like Decision Support Systems
(DSS), Executive Information System (EIS), Reporting, Data Mining and
Early Warning Systems (Robots) for enabling people to make better
decisions and thus improve their business processes
Benefits
The benefits accruing to any business enterprise on account of implementing are
unlimited. According to the companies like NIKE, DHL, Tektronix, Fujitsu, Millipore,
Sun Microsystems, following are some of the benefits they achieved by implementing
ERP packages:

Gives Accounts Payable personnel increased control of invoicing and
payment processing and thereby boosting their productivity and
eliminating their reliance on computer personnel for these operations.

Reduce paper documents by providing on-line formats for quickly entering
and retrieving information.

Improves timeliness of information by permitting, posting daily instead of
monthly.

Greater accuracy of information with detailed content, better presentation,
fully satisfactory for the Auditors.

Improved Cost Control

Faster response and follow up on customers

More efficient cash collection, say, material reduction in delay in
payments by customers.

Better monitoring and quicker resolution of queries.

Enables quick response to change in business operations and market
conditions.

Helps to achieve competitive advantage by improving its business process.

Improves supply-demand linkage with remote locations and branches in
different countries.

Provides a unified customer database usable by all applications.

Improves International operations by supporting a variety of tax structures,
invoicing schemes, multiple currencies, multiple period accounting and
languages.

Improves information access and management throughout the enterprise.
Architectural Overview
ERP
System
Financial
Accounting
Inventory
Control
Human
Resource
FINANCIAL ACCOUNTING
Modules for bookkeeping and making sure the bills are paid on time.
General ledger -- Keeps centralized charts of accounts and corporate financial balances.
Accounts receivable -- Tracks payments due to a company from its customers.
Accounts payable -- Schedules bill payments to suppliers and distributors.
Fixed assets -- Manages depreciation and other costs associated with tangible assets such
as buildings, property and equipment.
Treasury management -- Monitors and analyzes cash holdings, financial deals and
investment risks.
Cost control -- Analyzes corporate costs related to overhead, products and manufacturing
orders.
HUMAN RESOURCES MANAGEMENT
Software for handling personnel-related tasks for corporate managers and individual
employees.
Human resources administration -- Automates personnel management processes
including recruitment, business travel and vacations allotments.
Payroll -- Handles accounting and preparation of checks related to employee salaries,
wages and bonuses.
Self-service HR -- Lets workers change their personal information and benefit allocations
online without having to send forms to human resources.
INVENTORY CONTROL
A group of applications for planning production, taking orders and delivering products to
the customer
Production planning -- Performs capacity planning and creates a daily production
schedule for a company’s manufacturing plants.
Materials management -- Controls purchasing of raw materials needed to build
products, manages inventory stocks.
Order entry and processing -- Automates the data entry process of customer orders and
keeps track of the status of orders.
Warehouse management -- Maintains records of warehoused goods and processes
movement of products through warehouses.
Transportation management -- Arranges, schedules and monitors delivery of products
to customers via trucks, trains and other vehicles.
Project management -- Monitors costs and work schedules on a project-by-project basis.
Plant maintenance -- Sets plans and oversees upkeep of internal facilities.
Customer service management -- Administers installed-base service agreements and
checks contracts and warranties when customers call for help.
Diagrammatic Presentation
Sales Order
Processing
Invoicing
Voucher
Printing
Budget/
Cash flow
Checks
Printing
Multi
Currency
General Ledger, AR/AP
BOM
Inventory
Enterprise
Resource
Planning
System
Fixed
Deposit
Fixed Asset
Purchase Order
Processing
Integrated System
Design Strategy
Every industry has its own requirements. Whether they are regulatory, industry-specific
products or complete solutions, ERP system delivers with industry solutions that leverage
best practices and industry domain expertise. It tries to accommodate more specific
requirements in separate components along with standardized common set of rules and
functionalities. This design approach makes it more generalized product.
Horizontal Framework
In ERP, the entire design structure is based on concept of Horizontal framework, where
predefined generic structures are already established. Implementer has to customize these
standardized rules according to organization needs with set boundaries.
All modern ERP systems adopted Multi-Tier client server model over traditional Two tier
architecture. Moreover, effective use of high speed networks like ISDN, VPN made the
system accessible across wide region. Now, with widespread use of internet, most of the
ERP systems accommodated web services in order to bring its cross-platform and
distanced users’ closure to each other.
ERP and WEB Services
Architecture
ERP is complex and not intended for public consumption. Now, however, clients and
outsourcing vendors are demanding access to the same information employees get
through the ERP system - things like order status, inventory levels, and invoice
reconciliation - except they want to get all this information simply, without all the ERP
software. This is where Web Services come to the rescue, wherein seamless URL calls
make it possible to expose just the appropriate amount of material to the authenticated
users at the right time.
With the availability of Web Services we can achieve integration with a superior quality
of service for reliability, security, manageability, routing, discovery, testing, and
effectiveness. Web Services basically use object-oriented technology to "wrap" data and
programming elements in Web Service methods to be accessed by different applications.
A software bridge of sorts may exist to connect a PeopleSoft human resources package to
SAP's R/3 system, but that same bridge won't work for other human-resources packages
trying to connect to SAP.
Section II
 Finance Module
 Domain Dictionary
 Features
 Inventory Control Module
 Data Flow Diagram
 Dictionary Elements
 MIS
Finance Module
Finance
System
Financial
Accounting
Fixed
Asset
Block Diagram
Fixed
Deposit
Domain Dictionary
Financial Accounting:
The general ledger is the core of accounting system, where all accounting transactions are
posted, summarized, processed and reported. This is the place all the financial of an
organization are reflected. It is basically comprises of G/L, AR, AP module that provides
solid foundation for accounting system and provides complete range of financial reports
for management decisions.

Flexible but structured accounting with sub codes.
Any organization should follow structured accounting. General ledger and sub-ledger
accounts has to be codified using 10(min) or more characters long alphanumeric codes.
This generates ledgers, trial balance, outstanding statements and other reports in
systematic sorted order. This avoids skipping through pages to search required
information. Furthermore system offers sub dividing of accounts using sub-code
facility.e.g. Telephone Expense accounts can use sub code to track individual telephone
expenses.

Multiple financial years.
It allows switching between multiple years of accounts before finalization. The closing
balance can be transferred to next financial year at any time.

Provides multiple periods for current accounting year.
It provides 12 fiscal periods for 12 month, an additional period for adjustments at year
end or for extended financial year. It allows consolidation of transactions for quarterly,
half-yearly or annual reporting.

Backward and forward period posting.
It allows posting into previous fiscal period. System manager can lock specific period.
Once locked, no new posting or modifications are allowed.

P&L and Balance Sheet schedules.
It provides flexible groupings for schedules. This allows generation of totals at 3 levels.

Budget
The Budgeting is very important function in any organization. It is a yardstick against
which the actual performance is compared. The budgets can be for expenses, sales,
project expenses or can be for production targets.. System offers setting up of very
complex multidimensional budgeting system and gives reports on it.

Costing System
It has all the necessary stubs to customize complex costing system. It captures the
necessary parameters in the form of cost centers. It tracks the inventory job wise or batch
wise. It can be customized to apportion labor, m/c time, overheads and depreciation to
workout the actual cost of product.

Cost centers for analysis and MIS reporting.
Apart from statutory bookkeeping, financial analysis is necessity of any Organization.
Depending on the core business of the organization, analysis of department wise
expenses, salesman/ region/ industry segment wise Performance or projectwise revenue/
expense is required. It usually has provision of definition of multiple cost centers for this
purpose. Each ledger account can be flagged with applicable cost center. The cost centers
are captured with the transaction entry. This facilitates analysis and MIS reporting
immediately.

Transaction analysis code.
In some organization, debit notes, credit notes needs to be tracked on the reason code.
The analysis code associated with the transaction can facilitate this.

Subledgers
Subledgers like Debtors and Creditors can be defined with control accounts in general
ledger. Control account reflects the net balance of a sub ledger at any given time. This can
be very effectively used for cross tally of Outstanding statement with debtors ledger.

Subtotals in Trial Balance.
In Trial Balance, subtotals on accounts can be generated for quick information
requirement. e.g. Accountant can get total of administration expenses and manufacturing
expenses from subtotal in Trial Balance.

Accounts Receivable and Payable
All Payments made to parties and received are against pending invoice. There can also be
cases of advance payments. These entries are matched on-line, and the pending tracked
from to time to time to manage better cashflow.
1. Partywise accounts receivable.
2. Credit check of party
3. Salesman/ Regionwise accounts receivable.
4. Aging analysis of outstanding.
5. Printing of confirmation letters
Fixed Deposits
 FD Application Processing
The system keeps information of the depositors, joint holders along with their address.
The amount along with period of FD and the interest rate applicable is stored for all
future references. FD receipts can be printed online on verification of application. For
payment of interest through the electronic clearance system, depositors bank account
details along with account no. is kept in database.
 Interest Calculation on FD.
System calculates the interest payable for future period based on the duration of deposit,
deposit type (cumulative or normal), the interest rate applicable and periodicity of interest
payment (Monthly, Quarterly, Half Yearly).
Fixed Assets Accounting
The pace of current technological change may help today’s business enterprise improved
production processes and machinery. However it also creates demands on managing these
new assets. Fixed assets module of manages this task with its associated complexity.
Ensuring effective control of the enterprises assets requires software with capability of
keeping track of all the original cost and details of the assets along with the insurance and
annual maintenance contracts.
1. Original purchase details.
2. Depreciation Rate.
3. WDV of assets.
4. Addition to assets.
5. Insurance payment schedule.
6. AMC Details.
7. Aging of Assets.
8. Purging of assets sold.
9. Asset block statement
Feature List
1. Parameterized Voucher definitions like Cash, Bank, Sales, Sales Return,
2. Purchase, Purchase Returns, JV.
3. Automatic definitions of daybooks and registers for each voucher/document type.
4. Multiple financial years.
5. Provides 13 periods for current accounting year with provision of Consolidation of
the periods.
6. Backward and forward period posting.
7. Auto-generation of voucher numbers.
8. Sales Tax summary and forms tracking.
9. Tax Auditing.
10. Income Tax Calculations.
11. Multi currency accounting.
12. Multiple Cost Centers for analysis and MIS reporting.
13. One transaction analysis code.
14. Multidimensional Budgets.
15. Cashflow groupings.
16. Actual versus Budget comparisons.
17. Voucher and cheque printing.
18. Post dated cheques.
19. Voucher posting only after authorization.
20. Security and Access control. User ID and passwords for access control and tracking.
21. On-line auditing of accounts. Audited vouchers cannot be modified or
deleted.
22. Bank Reconciliation.
23. Provision of Memorandum entries for any type of voucher.
24. Party address and account details
25. Exception reports for MIS, IncomeTax purpose.
26. Graphical reports for trend analysis.
27. Customization of report formats.
Inventory Control Module
The inherent cost of holding inventory adds substantially to the cost of end product.
Enterprises without proper inventory control system may means overstocking of some
and understocking of others. This leads to the problem of high cost and poor customer
service.
Industry now needs to maintain stock to minimum level to meet current and expected
orders to remain competitive. More and more organizations are depending on the system
that enables them to minimize these inventory investments without affecting customer
service level.
From reducing transaction costs to streamlining engineering and manufacturing, ERP
solution allows to quickly identify where costs are being incurred and reduce them across
the enterprise.
Data Flow Diagram: Scenario: Typical Manufacturing Company
Sales Projection
Production Planning
Purchase Order
Supplier
Receipt
Quality Check
Good Receipt
Note
Shop Floor / QA
Waste/Scrap
Storage
Finished Goods
Warehouse
Sales Order
Processing
Distribution
Points
Dictionary Elements
BOM(Bill of Material)
Customers
Stock items are often held in inventory records individually although they part of some
assembly and are issued as part of the kit. BOM module is integrated with inventory and
allows issue to manufacturing in the form of kits, thus optimizing the inventory
operations. BOM module allows multiple level definition and explosion without any
limitation of levels and number of components.
Multiple Units per Item
This gives the flexibility of having one unit for purchase and another for inventory
accounting. e.g. Metric Ton for Production and Boxes for sales and dispatch.
Material Movement & Costing
Comprehensive production costing system can be implemented based on weighted
average costing of issued material. Department wise, job wise or batch wise material
issued can be tracked and valued to workout accurate direct material cost.
Analysis
Ensuring inventory is kept at optimized levels, requires exception reporting of minimum
and maximum level along with ABC and XYZ analysis capability. System should also
report dead stock or non-moving items in the inventory.
Sales Order Processing
Sales Order Processing is often the primary point of entry into your enterprise for
financial information and sales projections. SOP cycle comprises of Quotation, Order and
Invoice entry.
Monthly Requirement Projection
The module generates future monthly Product wise requirement based on backlog and
delivery schedule. Based on Sales Turnover projection, we can set Monthly Production
Plan.
Purchase Order Monitoring
It tracks the requisition, availability, past purchase rates and delivery of the product.POM
module helps tracking order at every stage in the cycle from entry of requisition, printing
order, goods receipt, and final billing. Linked with the inventory module , PO data can be
effectively used for matching delivery against orders.
Bill passing
It is connection point to accounts. From here billing details get transferred from inventory
control module to finance module.
MIS
1. Exception Reports based on
a. Min/Max Level of Stock.
b. Reorder Level.
c. Non-Moving Items/Dead Items
2. Stock Analysis
a. ABC analysis
b. XYZ Analysis
3. Vendor Rating
4. SOP- Pending Order Analysis
a. Party/Product wise Pending Order report
b. Pending order report with delivery backlog
5. POP- Item wise pending order and backlog report.
6. Product/Item wise OR Customer/Supplier wise summary reports.
Section III
PeopleSoft
 Introduction
 Architecture
 Success Stories
Introduction
PeopleSoft's History of Innovation
Dave Duffield and Ken Morris founded PeopleSoft in 1987, when they engineered the
company's first human resources application. Built on client-server architecture, their
solution offered flexibility and ease-of-use to a class of users previously barred from
simplified access to the information and capabilities centralized in mainframes. By
putting ease of functionality directly in the hands of users, PeopleSoft quickly assumed
industry leadership status in human resources solutions.
PeopleSoft is the second largest enterprise application software company in the world and
the single largest vendor of mid-market solutions, with $2.8 billion in annual revenues,
$1.6 billion in investments and cash, 12,000 employees, and more than 11,000 customers
in 150 countries. With the much-publicized acquisition of J.D. Edwards complete, the
new PeopleSoft is concentrating on market and product expansion, giving customers
more choice.
It maintains and supports its three product families—

PeopleSoft® Enterprise:It is a family of best-in-class applications based on our
Pure Internet Architecture® designed for flexible configuration and open, multivendor integration. It is ideally suited for financial, government, education,
healthcare and other services industries. It is also ideally suited for large,
company-wide functions such as human resources, finance, IT, procurement,
marketing, services and sales across all industries.

PeopleSoft® EnterpriseOne: It is a complete suite of modular, pre-integrated
industry-specific business applications designed for rapid deployment and ease of
administration on a pure internet architecture. It is ideally suited for organizations
that manufacture, construct, distribute, service, or manage products or physical
assets.

PeopleSoft® World: (also known as WorldSoftware)It is a host-centric product
line and the leading solution for the IBM iSeries platform.
Industry Centric Solutions
Every industry has its own requirements different from others, so solution developed for
one kind of industry may not be suitable or incomplete for another industry. Based on this
hypothesis, Peoplesoft has classified its software architecture among the following major
industries
a. Automative
b. Chemicals
c. Communications
d. Construction
e. Consumer Product
f. Energy
g. Health Care
h. Govt. Services
i. Non Govt. Organizations
j. Industrial Manufacturing
k. Life Science
l. Higher Education
m. Banking and Capital Market
n. Insurance
o. Retail
p. Paper and Packaging
q. Real Estate
PeopelSoft Internet Architecture
PeopleSoft Internet Architecture is a completely server-based architecture, divided among
three main layers as stated below.
1. Clients to this architecture can be nearly any kind of internet access device:

Web browser running on a PC, Macintosh, or Linux machine

Wireless device or cell phone

External or third-party system with XML/HTTP protocols
2. Internet Application Server tier is the heart of PeopleSoft Internet Architecture,
which accommodate and support vast majority of components to access internet. It
gives access to server information via HTML/Java script to client computer or WML /
WMLScript in case of wireless access. This browser server approach results in zero
installation at client machine that further simplifies application deployment and its
maintenance.
The Web browser’s request invokes Presentation Relay servlet, which further maps
browser’s request data to and from the core application Components Processor and
User Interface Device generator services.
3. Database server is the repository for all PeopleSoft managed information.It supports
all industry leading databases like Oracle, IBM DB2, SQL server, Informix. Other
than main data, it stores Metadata (which is explained in subsequent section).
MetaData Driven-Architecture
PeopleSoft architectures have always been very driven by metadata. This is a key reason
why it has been able to make the leap from client/server to pure internet based
applications without a complete rewrite of our existing applications.
PeopleTools Application Designer is a tool set used by PeopleTools Application
Development and customers to define PeopleSoft applications. Dozens of different types
of application objects are designed and defined using the Application Designer. Examples
of common application objects are Fields, Records, Pages, Components, Application
Messages, and Business Interlinks. When an application developer saves an application
object, the Application Designer saves this definition to the PeopleTools Metadata
Repository. At execution time, the Internet Application Server fetches the most recent
application object definitions from the Metadata Repository. It then compiles and caches
in memory the application object definition and then executes the business rules based on
the definition.
A good example of this is a Page definition. In the Application Designer, the developer
specifies the layout of a Page and the coordinates of the various widgets on the Page. This
definition is stored in the Metadata Repository. When that Page is executed by the
Internet Application Server, the metadata definition is fetched, compiled, and cached. The
Page layout is generated based on this definition.
Internet Integration
In order to address the numerous integration scenarios in today’s enterprise, PeopleSoft
Internet Architecture delivers four integration technologies that support the full spectrum
of integration both within and external to the organization:
1. Application Messaging—
Publish/subscribe messaging architecture for asynchronous integration into and
out of PeopleSoft applications. It allows PeopleSoft applications to publish
messages in response to the invocation of business events within the Component
Processor. These messages are published in XML format and delivered to
subscribing systems over a secure HTTP connection.
The system at the top of the diagram represents the publisher; the system at the
bottom is the subscriber.
2. Component Interfaces— Object-oriented, request/reply, component architecture
that allows third-party applications to synchronously invoke PeopleSoft business
logic.
Using this third party systems can synchronously invoke PeopleSoft’s business
logic
using
COM/DCOM,
CORBA(Common
Object
Broker
Request
Architecture) , EJB(Enterprise Java Beans) bindings.
The Component Client is a multithreaded client that interacts with the Component
Processor to execute PeopleSoft business logic and invoke the Application
Messaging Processor and Business Interlink Processor services if needed. The
Component Client also interacts with the Query service to execute queries against
system data, as well as with the Security Manager for LDAP authentication
services.
LDAP: LightWeight Directory Access Protocol.
JOLT: BEA Systems Tuxedo is the leading transaction processing monitor.
3. Business Interlinks—Plug-in framework that enables PeopleSoft applications to
easily invoke third party Application Program Interfaces over the internet.
When a business event triggers the execution of a Business Interlink, the Component
Processor synchronously calls the Business Interlink Processor, which in turn invokes
the appropriate Business Interlink plug-in. The plug-in provides a wrapper around the
third-party API and is designed to support any type of interface binding (COM,
CORBA, EJB, XML) exposed by the third-party interface.
4. Application Engine—Robust file processing capabilities easily enable file-based
integration, which is still a common method for addressing integration
requirements.
Success Stories
http://www.peoplesoft.com/media/en/pdf/success/baucsh_ss_0602.pdf
BAUSCH & LOMB
Business Challenge
Bausch & Lomb realized that without a single view of its customers, its goal to drive
customer satisfaction and loyalty would be difficult to attain. It also needed a way to
effectively manage and understand the effect marketing promotions were having on
customers and prospects.
PeopleSoft Solution
Bausch & Lomb has added PeopleSoft CRM to its PeopleSoft Supply Chain Management
and Financial Management Solutions systems to gain a comprehensive view of customers
across its enterprise to build stronger, more profitable customer relationships
Business Benefits
PeopleSoft CRM will enable Bausch & Lomb to:
• Gain significant long-term efficiencies by implementing a single CRM solution.
• Integrate its supply chain and financials management systems for a
comprehensive view of customers across business units.
• Leverage a stronger identity with its customers in the marketplace.
• Receive real-time feedback and analysis on marketing promotions.
• Plan and manage marketing campaigns more effectively.
Several Others:
http://www.peoplesoft.com/media/en/pdf/success
Section IV
Advanced Methodologies
 SCM: Supply Chain Management
 CRM: Customer Relationship Management
 Data Warehousing
Supply Chain Management
In the past, companies focused primarily on manufacturing and quality improvements
within their four walls; but in an increasingly global environment it’s absolutely
mandatory for all companies to extend their efforts beyond those walls to encompass the
entire supply chain. The term supply chain refers to the entire network of companies that
work together to design, produce, deliver, and service products.
Supplier
Manufacturer
Distributor
Data Flow Diagram
Customer
Supply Chain
Management
(SCM)
Plan
Source
Make
Deliver
Return
Components of SCM

Plan: Involves strategic planning to manage all resources that go meeting towards
customer demands.

Source: Encompasses all activities like pricing, goods inward and payments
related to suppliers.

Make: More like Inventory control of ERP.

Deliver: From receiving orders to delivering orders to customers, mainly deals
with managing distribution networks.

Return: Mainly involves customer support activities. Receiving defective or
excess material from customers and providing support services.
Each of the five major supply chain steps previously outlined composes dozens of
specific tasks, many of which have their own specific software. It is nightmare to
integrate all these software together. Perhaps the best way to think about supply chain
software is to separate it into software that helps to plan the supply chain and software
that helps to execute the supply chain steps themselves.
The major hurdle in SCM: Bullwhip Effect
The Bullwhip Effect is a major cause of higher costs and inefficiencies in supply chains.
It describes how small fluctuations in demand at the customer level are amplified as
orders pass up the supply chain through distributors, manufacturers, and suppliers.
Consider disposable diapers. Babies generally consume diapers at a more or less consistent rate
when aggregated over a large group of customers. Nevertheless, order fluctuations invariably
become considerably larger as one moves upstream in this supply chain.
_______ Babies
Diaper demand is constant when aggregated across a community.
Retailers
However, a local grocery store batches order depending on how often they get
deliveries from their warehouses.
Distributor
The grocery stores distributor compensates for those demand spikes by stocking
additional quantities of diapers just before they anticipate a large store order.
P& G
Proctor and Gamble, the diaper manufacturer sees the wider swing in factory
orders.
3M
3M,the tape manufacturer and supplier of PG see even wider swing in orders from
P&G factory.
Consequences
of
the
Bullwhip
Effect
include
excess/fluctuating
inventories,
shortages/stockouts, longer lead times, higher transportation and manufacturing costs, and
mistrust between supply chain partners
ERP and SCM
SCM applications are reliant upon the kind of information that is stored in the most
quantity inside ERP software. ERP integrates all that information together in a single
application, and SCP applications benefit from having a single major source to go to for
up-to-date information.
Internet ..The Lifeline of SCM
The cheap, ubiquitous nature of the Internet, along with its simple, universally accepted
communication standards have thrown things wide open. Now, theoretically anyway, one
can connect its supply chain with the supply chains of its suppliers and customers
together in a single vast network that optimizes costs and opportunities for everyone
involved.
Customer Relationship Management
Now days in the customer centric economies maintaining good customer relationships are
at the heart of business success. CRM is a strategy used to learn more about customers'
needs and behaviors in order to develop stronger relationships with them. The basic idea
of CRM is that it helps businesses use technology and human resources to gain insight
into the behavior of customers and the value of those customers.
There are many ways to trace out this strategy. The more useful way to think about CRM
is as a process that will help bring together lots of pieces of information about customers,
sales, marketing effectiveness, responsiveness and market trends.
Businesses benefited in following way,
provide better customer service
make call centers more efficient
cross sell products more effectively
help sales staff close deals faster
simplify marketing and sales processes
discover new customers
increase customer revenues
List of some of the data components CRM package collects
Responses to campaigns
Shipping and fulfillment dates
Sales and purchase data
Account information
Web registration data
Service and support records
Demographic data
Web sales data
Industries leading in CRM Implementation

Financial Services

Sales

Marketing

Call Center & Service

Customer Order Management

Partner Relation Management
Leader of Technology:
Siebel Industry Solutions deliver comprehensive, out-of-the-box eBusiness
functionality that is uniquely tailored to specific business practices across a broad
range of industries. Developed in close collaboration with customers and partners;
Seibel Industry Solutions enable organization to manage, coordinate and synchronize
all customer touch points, including the Web, call centers, field, retail and distribution
channel.
Data Warehousing
With the advent of ERP organizations begin to capture, store and manipulate every single
element of data flowing from one end to another end. This has led to an explosion in
source data capture, and the existence of a central ERP database has created the
opportunity to develop enterprise data warehouses for manipulating that data for analysis
and reporting.
ERP software attempts to link all internal company processes into a common set of
applications that share a common database. It is the common database that allows an ERP
system to serve as a source for a robust data warehouse that can support sophisticated
decision support and analysis.
Large ERP systems like PeopleSoft, Oracle, SAP AG have very standard structure with
maximum generality and maintaining consistency across multiple business platforms.
That is why it is often difficult to comprehend for the people who spend long time
working on some in house system. Here there is a need of Data Warehousing for
structured analysis and reporting.
There are two basic flavors to a data warehouse.
1. Enterprise Data Warehouse (EDW): A data repository built around the data for the
purposes of analysis and reporting.
2. Data Mart (DM): A data repository built around application needs for the purpose of
analysis and reporting.
ENTERPRISE DATA MODEL
To create consistency in the EDW, it is a good idea to design an Enterprise Data Model
(EDM). This model is nothing more than a piece of metadata that describes entities and
attributes about your corporation. This process is a very valuable exercise
for many reasons, but specifically for the purpose of defining a context for everything. It
is no more than corporate entities and the attributes that best describe those entities.
Troubling Issues:
When extracting data from ERP systems, there are a couple of things to keep in mind.
While ERP systems are designed to integrate transaction systems, they are not designed
as Data Warehousing systems. Therefore, it will be important to extract this data and
transform it.
However, the transformation stage is shortened, and wherever possible we use structures
from the ERP system. We designed the EDW around the entities in the EDM, but those
entities in the EDM can reflect the ERP representation of data. This helps to maintain an
understandable flow for the users of the data warehouse. Therefore, if company uses SAP
R/3, then it would probably be better to use the name Material than to use Product. If we
are integrating multiple systems, and would like to maintain different names for different
data marts, then it is recommended using a generic column name, and then labeling it
with more ERP specific names.
In data warehouse development, data is usually targeted from the most reliable or stable
source system and moved into the data warehouse database as needed. Identification of
the correct source system is essential for any data warehouse development, and is even
more critical in a data warehouse that includes an ERP along with more traditional
transaction systems.
Another troubling issue with ERP data is the need for historical data within the
enterprise’s data warehouse. ERP technology does not store historical data, at least not to
the extent that is needed in the enterprise data warehouse. When a large amount of
historical data starts to stack up in the ERP environment, the ERP environment is usually
purged, or the data is archived to a remote storage facility. But when the enterprise data
warehouse needs to go back in time and bring in historical data that has not been
previously collected and saved by the ERP, then using the ERP environment as a primary
source for the data warehouse is not a viable option
Metadata in the ERP is another consideration when building a data warehouse is in the
ERP environment. As the metadata passes from the ERP to the data warehouse
environment, the metadata must be moved and transformed into the format and structure
required by the data warehouse infrastructure. There is a significant difference between
operational metadata and DSS/DW metadata. Operational metadata is primarily for the
developer and programmer. DSS metadata is primarily for the end user. The metadata that
exists in the ERP application’s database must be converted, and such a conversion is not
always easy or uncomplicated, and requires experienced data administrators and users
to collaborate in the effort.
References:
Books:

ERP: making it happen: the implementers' guide to success with enterprise resource planning /
Thomas F. Wallace, Michael H. Kremzar.

ERP : the implementation cycle / Stephen Harwood

Enterprise resources planning and beyond: integrating your entire organization / by Gary A.
Langenwalter

Enterprise Resource Planning: Indian Experiences- Milind Oak
Websites:

http://erp.ittoolbox.com/ ( News Letters)

http://www.osc.state.nc.us/sigdocs/sig_docs/documentation/policies_procedures/sigInventory_
Integration_wi00003186.html

http://www.emaginativetechnologies.com/casestudy/client_server.htm

http://www.webservicesarchitect.com/content/articles/apshankar01.asp

http://www.peoplesoft.com/corp/en/about/overview/corp_back.jsp

http://www.peoplesoft.com/media/en/pdf/pia.pdf

http://www.cio.com/research/scm/edit/012202_scm.html#scm_abc

http://www.supplychainonline.com/overview.html

http://www.stanford.edu/group/scforum/

http://www.cio.com/research/crm/edit/crmabc.html#what