Decision Support

1. Day 2 – Module 5 Decision Support Text Materials Chapter 4 – Decision Support Chapter 7 – Enterprise Infrastructure

2. 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

3. Types of Decisions

4. TPS – Transaction Processing Systems • 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

5. 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

6. MIS – Management Information Systems

7. DSS – Decision Support Systems • 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 TPS Data Other Data Other Data

8. DSS – Voyage Estimating System

9. Executive Support Systems Other Data TPS Data Other Data • 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

10. Executive Support Systems

11. Executive Support Systems

12. Putting Decision Support All Together The 4 Major Types of Information Systems

13. Putting Decision Support All Together The 4 Major Types of Information Systems

14. Supply Chain Management Systems

15. Supply Chain Management Systems – Nike Example

16. Supply Chain Management Systems • Supply Chain Management Systems (SCM): Automate flow of information between firm and suppliers to optimize production and delivery • Supply Chain Management: Close linkage of activities involved in buying, making, moving a product • Supply Chain: Network of organizations and business processes for production and distribution of products

17. Supply Chain Management Systems • 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

18. Supply Chain Management Inbound Production Outbound Sales and Customer logistics processes logistics marketing service Information Technology Upstream Downstream

19. Supply Chain Management No Yes

20. Federal Express

21. Supply Chain Management - Logistics • Most supply chains use inter-modal transportation, multiple transportation channels (railway, truck, etc) to move products from origin destination • This creates supply chain complexities

22. Supply Chain Management - Goals • Fulfillment • Logistics • Production • Revenue and profit • Cost and price • Cooperation among SC partners

23. 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

24. 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?

25. 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

26. Customer Relationship Management - CRM

27. Sample CRM System Infrastructure

28. 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.

29. 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

30. 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.

31. 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 Example: A customer order Logistics Accounting Purchasing Sales Production

32. Customer orders Forecasts Master production schedule Bills of materials Routings Time standards Inventory records Inventory transactions MRP explosion Material requirements plan Cost and financial data Manufacturing resource plan Enterprise Resource Planning - Background The Idea of MRP ERP evolved from MRP (Material Requirements Planning) and MRP II.

33. Enterprise Resource Planning - Background The Idea of MRP II “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.

34. Enterprise Resource Planning – Background Timeline

35. SAP AG The Idea of ERP • A German firm, is a world leader in ERP software. • -Designed to operate in a three-tier client/server configuration • -Applications are fully integrated so that data are shared between all applications

36. Financial Accounting Sales & Distribution Human Resources Manufacturing & Logistics R/3 System Functional Components Accounts Payable Accounts Receivable General Ledger Capital Investments Open Item Management ABC (costing approaches) Asset Management Customer Management Order Management Configuration Management Billing Rebate Processing R/3 System Functional Components Payroll Benefits Scheduling Personnel Development Workforce Planning Travel Expense Accounting Largest and most complex Materials Management Plant Maintenance Quality Management Production Planning and Control Project Management Budgeting

37. London Health Sciences Centre http://www.lhsc.on.ca/casecost/drilldwn.htm

38. London Health Sciences Centre

39. London Health Sciences Centre

40. London Health Sciences Centre

41. London Health Sciences Centre

42. Reasons for implementing ERP • Desire to standardize and improve processes • To improve the level of systems integration • To improve information quality • Integrate Financial Information • Integrate Customer Order Information • Standardize and Speed Up Manufacturing Processes • Reduce Inventory • Standardize Human Resources Information • Global Outreach • Avoid Redundancies

43. ERP Disadvantages • Time-consuming • Expensive • Fit • Vendor Dependence • Too many features, too much complexity • Process Rigor (Standardized)

44. The General ERP Process • Product Analysis • Module Selection • Process Analysis • Data Analysis • Applications Integration • Testing and Installation • Employee Training Average Implantation Time 24+ Months Meta Group Study

45. How Much Does an ERP Implementation Cost? • 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

46. Example: Allied Signal, Inc. • www.honeywell.com • $14.5 B Manufacturer • World-Wide Operations • 11 countries, 18 sites, 9 languages • Large and complex database • Estimated Costs • $30 million in software licensing • $200 million in consulting fees • Hardware integration • Software integration • Training • Time to Implement System: 4 to 6 years

47. ERP Integration

48. Successful ERP Implementation Criteria • Top Management Support • Good Cost Estimation • Realistic Expectations • ERP Implementation • Cultural Impact • Training • Customization and Integration

49. 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

50. Hillerich & Bradsby About Hillerich & Bradsby