You may recall that in Technology Insight 3.2 we discussed enterprise systems and their focus on integrating corporate-wide information. The challenges facing manufacturing organizations are the driving forces behind numerous large-scale implementations of enterprise systems—and, in particular, ERPs—by such large manufacturers as General Motors and General Mills.
We will use the broad overview of SAP/R3 (of Technology Insight 3.2) as adapted for Original Equipment Manufacturers (OEM) in the automotive industry—a tailored software package labeled as mySAP.com for Automotive. We consider an automotive industry solution for our discussion because this market for ERP systems already faces the global challenges discussed in the prior section of this chapter and because of the manufacturing-intensive nature of the industry.
Most ERP systems are available in modular form. By modular, we are referring to the concept of breaking the entire integrated system into several parts. Each part provides Information Systems solutions for segments of the business processes while also providing communication capabilities with legacy systems that may remain in place. Each added module becomes integrated with other modules that have already been implemented. More advantages of modular design were discussed in Systems Design and Implementation .
Among the many SAP Automotive modules, a few are of particular interest to our discussion 1. These include:
- mySAPTMBusiness Intelligence: Provides access to sales, service, and manufacturing data to assist in planning for demand and for evaluating product and process costs.
- mySAPTMCustomer Relationship Management: Provides access to ERP data and a Web interface to customers to effectively manage customer interaction. Allows dealers to configure, price, and locate products online.
- mySAPTMProduct Lifecycle Management: Integrates product and process engineering and production and connects to leading computer-aided design (CAD) systems. Follows products from design through customer service.
- mySAPTME-procurement: Supports online bidding, negotiation, and procurement of parts and components.
While the details of each module are not critical here, the understanding you should get from this discussion is three-fold. First, the processes discussed in THE “ORDER-TO-CASH” PROCESS: PART I, MARKETING AND SALES (M/S); THE “ORDER-TO-CASH” PROCESS: PART II, REVENUE COLLECTION (RC) and are increasingly integrated to facilitate the flow between each of the process activities. If you reflect back on data flow diagrams for each of these previous chapters, there are links from these processes to the inventory activities that are integral parts of the production process. The second key concept to recognize is the intermediary position that an integrated production process takes between expenditures (Purchase-to-Pay) for materials and labor and the sale and delivery of goods to customers (Order-to-Cash). Third, you should observe the complexity of the processes required to maintain inventory, labor resources, and production schedules in manufacturing environments that thrive on just-in-time purchases and just-in-time delivery of finished goods.
In the following sections, we explore the more complex and challenging components of this integrated production environment—including production scheduling and monitoring cost management, human resources, and inventory control. While the integrated nature of ERP systems dominates major manufacturing environments and is the emerging direction of future systems for small- and medium sized enterprises, the bulk of existing integrated production processes still leave a massive trail of paper-based documentation and production tracing. We will focus our discussion on many of these components of business processes to illustrate the role that enterprise systems have in streamlining and improving the efficiency and effectiveness of contemporary business and manufacturing processes.
What is the role of enterprise resource planning systems in helping manufacturing companies improve effectiveness and efficiency?