Chapter 6: Integrated Processes
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Outline
 Integrated Processes
 Fulfillment + procurement + production
 Only process supported by ES; no manual process
 Additional Intra-Company Processes
 Extended (Inter-Company) Processes
 Exercise Using Simulated SAP ERP
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Magal and Word ! Essentials of Business Processes and Information Systems | © 2009
Integrated Processes
 Key Concepts and Assumptions
 Regarding fulfillment, procurement, production
 Conceptual Framework
 Physical Flow
 Document and Data Flow
 Information Flow
 NO Financial Impact
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Magal and Word ! Essentials of Business Processes and Information Systems | © 2009
Assumptions regarding processes
 Fulfillment
 Sell from stock
 Materials are available to fill customer orders
 Procurement
 Procure to stock
 Production
 Make to stock
 Necessary raw materials are available
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New assumptions
 Fulfillment
 Sell from stock -> sell to order
 Materials are available to fill customer orders -> materials may
not be available
 Procurement
 Procure to stock -> procure to order
 Production
 Make to stock -> make to order
 Necessary raw materials are available -> may not be available
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Physical Flow
 What is the trigger?
 What are the steps?
 What is the purpose of each step?
 Who is involved in each step?
 How is communication and coordination accomplished
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Physical flow
1.
The Fulfillment Process: initial Steps
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2.
Review Inventory of Finished Goods
The Production Process: initial Steps
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Review Inventory of Raw Materials
The Procurement Process
4. The Production Process resumed and completed
5. The Fulfillment Process resumed and completed
3.
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Integrated Process
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Customer Purchase Order
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Magal and Word ! Essentials of Business Processes and Information Systems | © 2009
Step 1: Fulfillment process
 Assume inquiry and quotation
 Receive PO
 100 standard skateboards (STSB2000)
 Create Sales Order in the ES
 Prepare shipment
 Do we have enough in inventory?
 Check stock status
 Previous assumption: stock is available
 Inventory report
 Stock requirements list (SRL)
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Inventory Report – STSB200
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SRL STSB2000 – with Sales Order
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Magal and Word ! Essentials of Business Processes and Information Systems | © 2009
Step 1: Fulfillment process
 Assume inquiry and quotation
 Receive PO
 100 standard skateboards (STSB2000)
 Create Sales Order in the ES
 Prepare shipment
 Do we have enough in inventory?
 Check stock status
 Not enough material - what next?
 Can’t continue with fulfillment (prepare shipment, etc.)
 Need to acquire material STSB 2000
 How does SSB acquire STSB 2000 (Buy or make?)
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Step 2: Production Process
 Create planned order
 How many to request? (100)
 Convert to production order
 How many to produce?
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SRL STSB2000– with Planned Order
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SRL STSB2000– with Production Order
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Magal and Word ! Essentials of Business Processes and Information Systems | © 2009
Step 2: Production Process
 Create planned order
 Convert to production order
 Issue raw material to production
 Do we have enough?
 Check stock status
 Inventory reports
 Stock requirements list for each material
 Use truck assembly (STTA 2100) as an example
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Inventory Report - Raw Materials
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Magal and Word ! Essentials of Business Processes and Information Systems | © 2009
Step 2: Production Process
 Create planned order
 Convert to production order
 Issue raw material to production
 Do we have enough?
 Check stock status
 Inventory reports
 Stock requirements list for each material
 Not enough material - what next?
 Can’t continue with production
 Need to acquire raw material
 How does SSB acquire these?
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Magal and Word ! Essentials of Business Processes and Information Systems | © 2009
Step 3: Procurement
 Create requisition
 For how many?
 Create purchase order
 For how many?
 Goods receipt
 Example: Track progress of truck assembly
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SRL STTA2100 – after P Req
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SRL STTA2100 - after PO
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SRL STTA2100 - after production
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Magal and Word ! Essentials of Business Processes and Information Systems | © 2009
Step 3: Procurement
 Create requisition
 Create purchase order
 Goods receipt
 Now we have material to produce STSB2000
 Return to production process
 Continue with the rest of the procurement process
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Step 4: Production Process resumed
 Create planned order
 Convert to production order
 Issue raw material to production
 Do we have enough? Yes, we just completed procuring them
 Produce product
 Move to finished goods
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SRL STSB2000 – After Production
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Step 4: Production Process completed
 Create planned order
 Convert to production order
 Issue raw material to production
 Do we have enough? Yes, we just completed procuring them
 Produce product
 Move to finished goods
 Done with production
 Now back to fulfillment
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Magal and Word ! Essentials of Business Processes and Information Systems | © 2009
Step 5: Fulfillment process resumed
 Assume inquiry and quotation
 Receive PO
 100 standard skateboards (STSB2000)
 Create Sales Order in the ES
 Prepare shipment
 Do we have enough in inventory? Yes, we just completed
producing them
 Pick and pack
 Send shipment
 Send invoice
 Receive payment
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SRL STSB2000 – During Delivery
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SRL STSB2000 - After Delivery
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Magal and Word ! Essentials of Business Processes and Information Systems | © 2009
Outline
 Integrated Processes
 Fulfillment + procurement + production
 Only process supported by ES; no manual process
 Additional Intra-Company Processes
 Extended (Inter-Company) Processes
 Exercise Using Simulated SAP ERP
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Magal and Word ! Essentials of Business Processes and Information Systems | © 2009
Additional Intra-Company Processes
 Human Capital Management
 Asset Management
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Human Capital Management Process
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Asset Management Process
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Magal and Word ! Essentials of Business Processes and Information Systems | © 2009
Extended (Inter-Company) Processes
 Supply Chain Management (SCM)
 Supplier Relationship Management (SRM)
 Product Lifecycle Management (PLM)
 Customer Relationship Management (CRM)
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Plan-to-Produce Process in SCM
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Source-to-Settle Process in SRM
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Idea-to-Market Process in PLM
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Demand-to-Order Process in CRM
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Magal and Word ! Essentials of Business Processes and Information Systems | © 2009
Exercise Using Simulated SAP
 The exercises will take you through the following steps that have
been discussed in this chapter:
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receive a customer inquiry
create a quotation
receive a customer purchase order
create a sales order
review the inventory of finished goods
create a planned order
convert the planned order to a production order
review the inventory of raw materials
create a purchase requisition for a number of raw materials
convert the requisition to a purchase order
receive goods from the vendor
Magal and Word ! Essentials of Business Processes and Information Systems | © 2009