Author: rayanrao

In 2000, Nike lost an estimated $100 million due to issues with its ERP implementation. Nike had spent $400 million to upgrade its ERP system for fulfillment of its warehouse orders, but there were issues with the newly installed I2 supply and demand software planning system. This resulted in the output and production of “Air Garnett” sneakers, than were needed. Rather than help increase the efficiency of matching the supply of sneakers with its demand, the new software glitch ended up producing more of the lower demand “Air Garnett” sneakers instead of the incredibly popular and in demand Air Jordan sneakers. The issue was as a result of tying to implement the new I2 software with existing legacy software. This also resulted in a 20% dip in their stock price of Nike at the time.

This failure of Nike in 2000 is key in expressing the importance of properly planning and understanding the business processes for which an ERP system is implanted in. In this case,  it applies for companies, like Nike that have very unique supply chain processes, and also need to thoroughly plan these strategies, as being able to predict and properly understand supply and demand planning is crucial because the demand for different shoes and products can shift dramatically based on market requirements and demands.

Sources:

http://www.cio.com/article/2439601/supply-chain-management/nike-rebounds–how–and-why–nike-recovered-from-its-supply-chain-disaster.html?page=2

http://www.forbes.com/sites/moneywisewomen/2012/10/04/real-costs-of-choosing-the-wrong-software-vendor/#11b26bbe5914

The integration of the various business processes enables people and their departments to work effectively in their silos. To further enhance integration of business processes, the integration of on premise and cloud based systems are becoming more important as well. For example, the integration of cloud based CRM systems like Salesforce and on premise legacy ERP systems, can help increase the efficiency of a sales or marketing user. The ERP system integration market is expected to grow at a CAGR of 9% from now until 2019.

Having to deal with working with existing legacy ERP systems can also create problems for companies by limiting them from being able to adopt new modern capabilities that could help enterprise organizations. As a result, integration tools offered from companies like Adeptia, Atos, Coupa, and Mulesoft that make it easy to integrate on premise applications with cloud applications, have become popular. One new technology, that falls into this example and that can impact the effectiveness of ERP systems is machine learning. For example, machine learning can be applied to different departments and can use historical data to make predictions about future needs. It could make, for example, use historical data to make periodic sales predictions, which in one way as a result, could help in the material planning process. Machine Learning could also collect data points and give feedback on how effectively users are following custom workflows, allowing for custom workflows to become more efficient.

Sources:

http://it.toolbox.com/blogs/inside-erp/3-ways-machine-learning-improves-erp-71051

http://www.supplychaindive.com/news/erp-tech-dependence-innovation/430482/

http://www.openpr.com/news/382632/Global-ERP-System-Integration-and-Consulting-Market-to-grow-at-a-CAGR-of-9-over-Forecast-period-2015-2019.html

The material planning process is the process of appropriately planning the demand versus the supply of materials, to ensure that the business can optimize the availability of materials when they are needed. It is important to have efficient material planning processes to ensure that materials are available when they are needed. For example, in the case of properly estimating the demand of a good, if the respective raw materials are not available when a customer places an order, then the production of the good will be delayed, which could potentially cause the customer to stop doing the business with the company. On the flip side, it is important that the purchase/production of materials is properly planned so that there isn’t an excess of inventory. Having an excess of inventory can be harmful because the material can decrease in value over time or even become obsolete. This is also harmful because the company could have instead spent the same money on other materials that were in demand. There are also additional storage that will incur as a result of excess inventory.

In the text book, there is an example of how in 2001, Cisco placed large orders of networking equipment and materials to keep up with the high demand for its products during the dot-com boom. However, when the dot com boom later crashed, demand for its products decreased, and Cisco was stuck with an excess of raw materials, leading to a loss of 2.5 billion dollars.

Source: Integrated Business Processes with ERP Systems  – Ch.8 Page 270

The inventory management and warehouse management processes deal with how materials are stored and moved within and out of an organization. The inventory and management processes are important efficiently moving goods in and out of warehouses on time, and transferring them appropriately through warehouses based on business needs. By efficiently, organizing the inward and outward flows of goods, warehouses can improve the amount of storage space available.

The Internet of Things has been having an impact on the inventory and warehouse processes. An IoT warehouse would enable smarter and more efficient processes by making warehouse processes more efficient by for example, integrating warehouse processes with fully independent and automated robots, to pick up products, and perform their respective processes. An effective IoT solution would need to integrate with existing systems, as well as support these newer devices and technology. An IoT solution could consolidate data from a variety of sources, and enable the most efficient business decision to be made. With this accumulation of data, existing and older data from these variety of sources, can be than used to also make business decisions in the future.

Source: http://www.inboundlogistics.com/cms/article/how-the-internet-of-things-impacts-supply-chains/

The production process is the process of assembling items into finished products. There are two main types of production approaches: make to stock and make to order. In the make to order approach, the production of a good is the result of a customer placing the order. In the make to stock approach, the production process occurs when inventory levels fall below a certain threshold, even if there is no customer order.

A make to stock approach can enable cost efficiencies by allowing companies to buy materials in bulk, but it also requires careful demand planning for a product. If demands for a product are over-estimated, there will be a lot of finished goods inventory sitting on the shelf, and if the demand for a product is underestimated, then customers will be unable to buy the product at that given time.

With the make to order approach, a company doesn’t have to carefully plan the demand for a finished good, but needs to plan out the purchasing or raw materials. The make to order approach enables the personalization of goods, whereas the make to stock approach doesn’t.

I attended a wedding this past weekend, which got me thinking about how the processes in organizing a wedding are similar to the business processes we’ve been learning in class. Wedding Planning and ERP planning both require detailed planning to the meet the needs of the stakeholders ( bride/groom, family and friends). The bride/groom procure the services of external vendors (wedding hall rental, food and bar, entertainment), and are impacted financially through the purchase of these services. The procurement of these services are then used to produce the wedding event.

The fulfillment process includes the following processes: responding to a customer inquiry, creating a quote, processing a sales order, shipping the goods, and billing the customer and receiving payment.

On a side note, I attended the SAP Haus Party this past Thursday, where I met and talked with SAP employees, and learned about products and projects they were working on, like their CRM and 3D printing products.

A friend of mine started using this Food delivery service called Blue Apron, a startup that delivers food ingredients to you on a weekly basis. Once the food ingredients are delivered to you, you can cook meals from recipes that they provide. The fulfillment process for a startup like this is pretty important, as it is important that the ingredients reach the customer in a timely manner, and effective fulfillment processes can help ensure quality of the food once it reaches the customer.

It is interesting to see how Blue Apron will continue to grow and expand its customer base. Currently, Blue Apron has “4,000 employees distributing 8 million meals a month”. As the startup continues to expand, I’m interested to see how to make its fulfillment and distribution process more efficiently, while continuing to make more money.

Source:

https://www.bloomberg.com/view/articles/2016-10-07/meal-delivery-startups-show-tech-disrupted

The general processes involved in the Procurement process follow the general steps: Creating a Requisition on Business Requirements, converting the Requirement into a Purchase Order and sending it to a Vendor. The Vendor then receives the PO and ships the necessary materials, and when the warehouse receives the materials, they then receive an invoice from the vendor. The company then sends the payment to the vendor. The procurement process can be optimized to reduce costs, and effectively planned to increase return on investment.

I also saw that about a month ago, a company called Coupa Software, filed for an IPO. Coupa Software is a cloud based spend management that helps customers optimize their procurement processes.

“The company connects nearly 500 companies with some 2 million suppliers. Businesses can hereby see and measure value which can be obtained from making the best procurement decisions. Coupa’s customers have already used the platform to decide on a cumulative $250 billion worth of spending, resulting in estimated savings of $8 billion.” E

The above excerpt was quoted from the website: http://seekingalpha.com/article/4010834-coupa-software-strong-ipo-market-leaves-high-flier-relatively-expensive

http://www.coupa.com/software/procurement/

http://www.businessinsider.com/coupa-startup-worth-1-billion-files-to-go-public-2016-9

Accounting concepts and applications are new to me, so it was interesting to formally learn how accounting is applied in an ERP system. It was also month end at work this past week, so I was also able to get a bit of a better understanding of some of the Accounting closing processes that were performed.

There are 2 main different types of accounting processes: financial and management accounting. Management accounting is mainly used for internal needs, for management to examine costs and revenue of the business, while financial accounting is for external legal reasons, and the main processes in financial accounting are general ledger, accounts receivable, accounts payable, asset, and bank ledger accounting. These accounting processes are tightly associated with other processes in an ERP system

I also read about an Accounting Software Company called BlackLine that recently filed for an IPO. The company is supposed to help handle and integrate accounting processes that are “handled outside of an organization’s general ledger, an area in which ERP systems generally are unable to provide solutions to. “

http://fortune.com/2016/09/30/accounting-software-maker-blackline-files-for-ipo/

http://247wallst.com/investing/2016/10/01/blackline-gears-up-for-ipo/

My company uses Oracle ERP, and one of the main reasons I decided to take this course was so that I could better understand the activities/roles of different departments and how they’re able to efficiently work with each other, through an ERP system.

At my job, I am involved in Salesforce development/support, so just as discussed in class, I have an understanding of how Marketing works on developing leads and eventually hands them over them over to Sales, and how Sales works with Operations. At work, I’ve also seen how the Silo effect allows end users/departments to effectively do their respective jobs without having to worry too much about working with other interfaces/forms.  However, I’m not too familiar with the general business processes other departments like Operations/Warehouse/Accounting encounter on a regular basis, and would like to learn more about how they work together. I would like to get a better understanding of the general different business processes that different departments are involved in, so I can be effective if I am ever involved in an ERP implementation in the future.