Enterprise Resource Planning
What are business processes?
➔ To organize & streamline activities
o Take necessary decisions
o Communicate with customers & suppliers & internally
➔ These only make sense when they add value
➔ Have these activities streamlined
➔ Process needs to be repeatable & must be robust
Process innovation & process improvement
= 2 separate dimensions in the change of your process from its current to its new state.
Innovation: structural change in the way in which you work.
Improvement: efficiency & effectiveness -> a positive effect with at least one of them
- Efficiency = use the means to a good end.
- Effectivity = improve the result as such to better fit your customer’s expectations.
Processes (= tailor made for your company)
Materials Management
= purchase department
Sales & Distribution
= sales department
Production Planning
= production department
➔ For every company a specific variant of a process
o Common denominator/generic variant
Most widely used processes
Sales process: wants to structure the interaction with the customer
, - Objective: dissipate orders from customers & deliver & invoice them, to earn money
- Starts with a market study or request for quotation by a potential customer
Purchase process: focusses on set of actors that the company works with
- Determine what you need & select the right supplier -> necessary before contract, order,
receipt & payment of invoice take place
Planning department: will determine what, how much & when goods need to be bought & produced
- Main focus: Having sufficient inventory to supply customers in time
- Goods = warehouses: in - & outbound, receiving & delivering are important operational
activities (external & internal customers).
Production process: transforms raw materials into semi-finished/finished products
- Production department delivers what the production planning has determined to produce.
o Planning calculates this based on the estimated demand
o Transaction occurs between 2 dep: production & sales
▪ Different when both belong to same legal entity
- Starts with a released production order
➔ Processes only work well when people are correctly involved, having the right people at the
right place (HR dep.).
➔ Services used by a company need to be bought & maintained.
➔ Management follows its own process
Transaction follows selection
Almost all processes consist of 2 parts: selection process followed by the transaction process.
- Selection process: select counter party, product, location, price… with which we will execute
the transaction.
o preparation for the transaction: certainly in markets with few suppliers/customers
- Transaction processes -> we refer to transactions that occur in real life
, o = exchange between 2 parties, each has its own legal entity
Every transaction is registered in ERP that serves as an OLTP tool.
Company wants to analyse data & find new opportunities via an OLAP tool.
Right depth of process analysis will reveal improvements/innovations.
Dividing into 3 sub-processes is not common when you draw a BPMN-diagram.
Sales department:
PRE-SALES= salesperson talks to customer “what do you want”, vb. Bike.
= selection process
Front office: people in this department have direct contact with the customers.
Back office: people we don’t see.
➔ Parties agree: make SALES ORDER
= transaction process
➔ Check availability
o 2 options:
▪ Bike is available
▪ Bike is not available
➔ Available?
➔ Pick & pack (shipping)
➔ Post goods issue -> change of ownership, customer is now the owner
➔ Send invoice & receive payment
➔ Not available?
➔ Need to construct a new bicycle -> do we have all the parts?
o Yes? Start production
o No? Buy parts/raw material
, SALES ORDER:
- Sales order processing can originate from a variety of documents and activities
• Customer contacts us for order: phone, internet, email
• Existing Contract
• Quotations
- The electronic document that is created should contain the following basic information:
• Customer Information
• Material/service and quantity
• Pricing (conditions)
• Specific delivery dates and quantities
• Shipping information
• Billing Information
▪ The sales order contains all of the information needed to process your customers request,
the following information is determined for each sales order:
• Delivering Schedule
• Shipping point and route determination
• Availability Check
• Transfer of requirements to MRP
• Pricing
• Credit limit check
▪ The sales document is made up of three primary areas:
• Header
− Data relevant for the entire sales order: Ex: customer data, total cost of the
order
• Line Item(s)
− Information about the specific product: Ex: material and quantity, cost of an
individual line
• Schedule Line(s)
− Uniquely belongs to a Line Item, contains delivery quantities and dates for
partial deliveries
What are business processes?
➔ To organize & streamline activities
o Take necessary decisions
o Communicate with customers & suppliers & internally
➔ These only make sense when they add value
➔ Have these activities streamlined
➔ Process needs to be repeatable & must be robust
Process innovation & process improvement
= 2 separate dimensions in the change of your process from its current to its new state.
Innovation: structural change in the way in which you work.
Improvement: efficiency & effectiveness -> a positive effect with at least one of them
- Efficiency = use the means to a good end.
- Effectivity = improve the result as such to better fit your customer’s expectations.
Processes (= tailor made for your company)
Materials Management
= purchase department
Sales & Distribution
= sales department
Production Planning
= production department
➔ For every company a specific variant of a process
o Common denominator/generic variant
Most widely used processes
Sales process: wants to structure the interaction with the customer
, - Objective: dissipate orders from customers & deliver & invoice them, to earn money
- Starts with a market study or request for quotation by a potential customer
Purchase process: focusses on set of actors that the company works with
- Determine what you need & select the right supplier -> necessary before contract, order,
receipt & payment of invoice take place
Planning department: will determine what, how much & when goods need to be bought & produced
- Main focus: Having sufficient inventory to supply customers in time
- Goods = warehouses: in - & outbound, receiving & delivering are important operational
activities (external & internal customers).
Production process: transforms raw materials into semi-finished/finished products
- Production department delivers what the production planning has determined to produce.
o Planning calculates this based on the estimated demand
o Transaction occurs between 2 dep: production & sales
▪ Different when both belong to same legal entity
- Starts with a released production order
➔ Processes only work well when people are correctly involved, having the right people at the
right place (HR dep.).
➔ Services used by a company need to be bought & maintained.
➔ Management follows its own process
Transaction follows selection
Almost all processes consist of 2 parts: selection process followed by the transaction process.
- Selection process: select counter party, product, location, price… with which we will execute
the transaction.
o preparation for the transaction: certainly in markets with few suppliers/customers
- Transaction processes -> we refer to transactions that occur in real life
, o = exchange between 2 parties, each has its own legal entity
Every transaction is registered in ERP that serves as an OLTP tool.
Company wants to analyse data & find new opportunities via an OLAP tool.
Right depth of process analysis will reveal improvements/innovations.
Dividing into 3 sub-processes is not common when you draw a BPMN-diagram.
Sales department:
PRE-SALES= salesperson talks to customer “what do you want”, vb. Bike.
= selection process
Front office: people in this department have direct contact with the customers.
Back office: people we don’t see.
➔ Parties agree: make SALES ORDER
= transaction process
➔ Check availability
o 2 options:
▪ Bike is available
▪ Bike is not available
➔ Available?
➔ Pick & pack (shipping)
➔ Post goods issue -> change of ownership, customer is now the owner
➔ Send invoice & receive payment
➔ Not available?
➔ Need to construct a new bicycle -> do we have all the parts?
o Yes? Start production
o No? Buy parts/raw material
, SALES ORDER:
- Sales order processing can originate from a variety of documents and activities
• Customer contacts us for order: phone, internet, email
• Existing Contract
• Quotations
- The electronic document that is created should contain the following basic information:
• Customer Information
• Material/service and quantity
• Pricing (conditions)
• Specific delivery dates and quantities
• Shipping information
• Billing Information
▪ The sales order contains all of the information needed to process your customers request,
the following information is determined for each sales order:
• Delivering Schedule
• Shipping point and route determination
• Availability Check
• Transfer of requirements to MRP
• Pricing
• Credit limit check
▪ The sales document is made up of three primary areas:
• Header
− Data relevant for the entire sales order: Ex: customer data, total cost of the
order
• Line Item(s)
− Information about the specific product: Ex: material and quantity, cost of an
individual line
• Schedule Line(s)
− Uniquely belongs to a Line Item, contains delivery quantities and dates for
partial deliveries
