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Decision Support

Topic 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

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Decision Support

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  1. Topic 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. Global Supply Chain Management

  15. Global Supply Chain Management • Supply Chain Management • Some Lingo • Some Global Issues • The Bullwhip Effect in Supply Chains • Information Technology • Improvement Ideas • Cases

  16. Global Supply Chain Management

  17. Global Supply Chain Management Factors to be considered when moving from (mostly) domestic chains to global ones

  18. Supplier IC Mfg US DC Customer Supplier PCAT FAT European DC Customer Supplier Print Mech Mfg Far East DC Customer 1 week 1 day (US) - 5 weeks Global Supply Chain Management HP DeskJet Printer (Vancouver) PCAT = Printed Circuit Assembly and Testing FAT = Final Assembly and Testing Print Mech. Mfg. = Print Mechanism Manufacturing DC = Distribution Center

  19. Global Supply Chain Management HP and DeskJet Background. Problems and Goals. Potential Solutions. HP Solution.

  20. Global Supply Chain Management

  21. 800 600 400 200 Bullwhip Effect due to Seasonal Sales of Campbell Soup 0 Shipments from Manufacturer to Distributors Order Quantity Retailers’ Sales 1 Weeks 52 Global Supply Chain Management The Bullwhip Effect Recurring Theme: • Orders to upstream members exhibit greater variance than actual orders at PoS (demand distortion) • The variance of orders increases as one moves upstream (variance propagation)

  22. Global Supply Chain Management

  23. 800 600 400 200 Bullwhip Effect due to Seasonal Sales of Campbell Soup 0 Shipments from Manufacturer to Distributors Order Quantity Retailers’ Sales 1 Weeks 52 Global Supply Chain Management Results:

  24. Global Supply Chain Management

  25. Global Supply Chain Management • Supply Chain Management Systems: • Supply Chain Management: • Supply Chain:

  26. Global Supply Chain Management • Information Systems Can Help Supply Chain Participants:

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

  28. Global Supply Chain Management No Yes

  29. Global 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

  30. Global Supply Chain Management GOALS

  31. Global Supply Chain Management A Good SCM System will help a firm

  32. Global Supply Chain Management Identify the problem(s) 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?

  33. Global Supply Chain Management 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

  34. Customer Relationship Management - CRM

  35. Sample CRM System Infrastructure

  36. 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.

  37. 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

  38. Enterprise Resource Planning

  39. 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.

  40. 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

  41. 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.

  42. 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.

  43. Enterprise Resource Planning – Background Timeline

  44. 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

  45. 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

  46. 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

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

  48. 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

  49. 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

  50. 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

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