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    Enterprise Resource Planning, 3 edition

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    内容提示: mis titlesLook for these other popular course technologyManagement Information Systems, Sixth Edition by Effy OzISBN 13: 978-1-4239-0178-5 ISBN 10: 1-4239-0178-9 Information Technology Project Management, Fifth Editionby Kathy Schwalbe ISBN 13: 978-1-4239-0145-7 ISBN 10: 1-4239-0145-2View our entire collection of products online at www.course.com/mis.Introduction to Project Management, Second Editionby Kathy SchwalbeISBN 13: 978-1-4239-0220-1 ISBN 10: 1-4239-0220-3 Information Technology in Theoryby Pel...

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    mis titlesLook for these other popular course technologyManagement Information Systems, Sixth Edition by Effy OzISBN 13: 978-1-4239-0178-5 ISBN 10: 1-4239-0178-9 Information Technology Project Management, Fifth Editionby Kathy Schwalbe ISBN 13: 978-1-4239-0145-7 ISBN 10: 1-4239-0145-2View our entire collection of products online at www.course.com/mis.Introduction to Project Management, Second Editionby Kathy SchwalbeISBN 13: 978-1-4239-0220-1 ISBN 10: 1-4239-0220-3 Information Technology in Theoryby Pelin Aksoy and Laura DeNardisISBN 13: 978-1-4239-0140-2 ISBN 10: 1-4239-0140-1 Problem-Solving Cases with Microsoft Access and Excel, Sixth Editionby Joseph Brady and Ellen MonkISBN 13: 978-1-4239-0213-3 ISBN 10: 1-4239-0213-0Database Systems: Design, Implementation, and Management, Eighth Edition by Peter Rob and Carlos CoronelISBN 13: 978-1-4239-0201-0 ISBN 10: 1-4239-0201-7 C O N C E P T SI N E N T E R P R I S ER E S O U R C E P L A N N I N GThird Edition This page intentionally left blank C O N C E P T SI N E N T E R P R I S ER E S O U R C E P L A N N I N GThird EditionEllen F. MonkUniversity of DelawareBret J. WagnerWestern Michigan UniversityAustralia • Brazil • Japan • Korea • Mexico • Singapore • Spain • United Kingdom • United States Concepts in Enterprise Resource Planning,Third Editionby Ellen F. Monk and Bret J. WagnerVP/Editorial Director: Jack W. CalhounEditor-in-Chief: Alex von RosenbergSenior Acquisitions Editor: CharlesMcCormick, Jr.Product Manager: Tricia Coia, Kate HennessyDevelopment Editor: Amanda BrodkinContent Project Manager: Aimee PoirierManufacturing Coordinator: Justin PalmeiroMarketing Manager: Bryant ChrzanEditorial Assistant: Bryn LathropCover Designer: Laura RickenbachCover Photo® 2007 JupiterimagesCorporationCompositor: GEX Publishing Services® 2009 Course Technology Cengage LearningALL RIGHTS RESERVED. No part of this work covered by the copyrighthereon may be reproduced, transmitted, stored, or used in any form or byany means graphic, electronic, or mechanical, including but not limited tophotocopying, recording, scanning, digitizing, taping, Web distribution,information networks, or information storage and retrieval systems, exceptas permitted under Section 107 or 108 of the 1976 United States CopyrightAct, without the prior written permission of the publisher.For product information and technology assistance, contact us atCengage Learning Academic Resource Center, 1-800-423-0563For permission to use material from this text or product,submit all requests online at www.cengage.com/permissionsFurther permission questions can be emailed topermissionrequest@cengage.comISBN-13: 978-1-4239-0179-2ISBN-10: 1-4239-0179-7CourseTechnology Cengage Learning25 Thomson PlaceBoston, Massachusetts, 02210USACengage Learning products are represented in Canada by NelsonEducation, Ltd.For your lifelong learning solutions, visit course.cengage.comVisit our corporate website at www.cengage.comSAP is a registered trademark.Printed in the United States of America1 2 3 4 5 6 7 8 9 TW 12 11 10 09 08 In memory of our colleague Majdi Najm. His support and friendship are sorely missed. This page intentionally left blank BRIEF CONTENTSzzzPrefacexiiiChapter 1Business Functions and Business Processes1Chapter 2The Development of Enterprise Resource Planning Systems17Chapter 3Marketing Information Systems and the Sales Order Process47Chapter 4Production and Supply Chain Management Information Systems77Chapter 5Accounting in ERP Systems117Chapter 6Human Resources Processes with ERP157Chapter 7Process Modeling, Process Improvement, and ERP Implementation179Chapter 8ERP and Electronic Commerce211Glossary237Index245 This page intentionally left blank TABLE OF CONTENTSPrefacexiiiChapter 1Functional Areas and Business ProcessesFunctional Areas of OperationBusiness ProcessesFunctional Areas and Business Processes of a Very Small BusinessMarketing and SalesSupply Chain ManagementAccounting and FinanceHuman ResourcesFunctional Area Information SystemsMarketing and SalesSupply Chain ManagementAccounting and FinanceHuman ResourcesChapter SummaryKey TermsExercisesFor Further Study and ResearchBusiness Functions and Business Processes122366778889111315151516Chapter 2The Evolution of Information SystemsComputer Hardware and Software DevelopmentEarly Attempts to Share ResourcesThe Manufacturing Roots of ERPManagement’s Impetus to Adopt ERPERP Software Emerges: SAP and R/3SAP Begins Developing Software ModulesSAP R/3New Directions in ERPSAP ERP Software ImplementationERP for Midsized CompaniesResponses of the Software to the Changing MarketChoosing Consultants and VendorsThe Significance and Benefits of ERP Software and SystemsQuestions About ERPHow Much Does an ERP System Cost?Should Every Business Buy an ERP Package?Is ERP Software Inflexible?What Return Can a Company Expect from Its ERP Investment?How Long Does It Take to See a Return on an ERP Investment?Why Do Some Companies Have More Success with ERP Than Others?The Continuing Evolution of ERPAdditional Capabilities Within ERPThe InternetThe Development of Enterprise Resource Planning Systems17181920202123242425293232333334343435353637394141 Chapter SummaryKey TermsExercisesFor Further Study and Research43434444Chapter 3Overview of Fitter SnackerProblems with Fitter Snacker’s Sales ProcessSales Quotations and OrdersOrder FillingAccounting and InvoicingPayment and ReturnsSales and Distribution in ERPPre-Sales ActivitiesSales Order ProcessingInventory SourcingDeliveryBillingPaymentA Standard Order in SAP ERPTaking an Order in SAP ERPDiscount Pricing in SAP ERPIntegration of Sales and AccountingCustomer Relationship ManagementCore CRM ActivitiesSAP’s CRM SoftwareThe Benefits of CRMChapter SummaryKey TermsExercisesFor Further Study and ResearchMarketing Information Systems and the Sales Order Process4748495051535354545455555555565662646566667173737475Chapter 4Production OverviewFitter Snacker’s Manufacturing ProcessFitter Snacker’s Production ProblemsThe Production Planning ProcessThe SAP ERP Approach to Production PlanningSales ForecastingSales and Operations PlanningDemand ManagementMaterials Requirements Planning (MRP)Materials Requirements Planning in SAP ERPDetailed SchedulingProviding Production Data to AccountingERP and SuppliersThe Traditional Supply ChainThe Measures of SuccessChapter SummaryKey TermsExercisesFor Further Study and ResearchProduction and Supply Chain Management Information Systems77787980828384859596100104105107108110114114114115xConcepts in Enterprise Resource Planning, Third Edition Chapter 5Accounting ActivitiesUsing ERP for Accounting InformationOperational Decision-Making Problem: Credit ManagementIndustrial Credit ManagementFitter Snacker’s Credit Management ProceduresCredit Management in SAP ERPProduct Profitability AnalysisInconsistent RecordkeepingInaccurate Inventory Costing SystemsCompanies with SubsidiariesManagement Reporting with ERP SystemsDocument Flow for Customer ServiceBuilt-In Management-Reporting and Analysis ToolsThe Enron CollapseOutcome of the Enron ScandalKey Features of the Sarbanes-Oxley ActImplications of the Sarbanes-Oxley Act for ERP SystemsArchivingUser AuthorizationsTolerance GroupsFinancial TransparencyChapter SummaryKey TermsExercisesFor Further Study and ResearchAccounting in ERP Systems117118121122122124124127127128133136136137138140140141142144145146149149150154Chapter 6Problems with Fitter Snacker’s Human Resources ProcessesRecruiting ProcessThe Interviewing and Hiring ProcessHuman Resources Duties After HiringHuman Resources with ERP SoftwareAdvanced SAP ERP Human Resources FeaturesTime ManagementPayrollTravel ManagementTraining and DevelopmentAdditional Human Resources Features of SAP ERPMobile Time ManagementManagement of Family and Medical LeaveDomestic Partner HandlingAdministration of Long-Term IncentivesPersonnel Cost PlanningManagement and Payroll for Global EmployeesManagement by ObjectivesChapter SummaryKey TermsExercisesFor Further Study and ResearchHuman Resources Processes with ERP157159159160162165170170170171172174174174174175175175175176176176177Table of Contentsxi Chapter 7Process ModelingFlowcharting Process ModelsFitter Snacker Expense Report ProcessExtensions of Process MappingEvent Process Chain (EPC) DiagramsProcess ImprovementEvaluating Process ImprovementERP Workflow ToolsImplementing ERP SystemsERP System Costs and BenefitsImplementation and Change ManagementImplementation ToolsSystem Landscape ConceptChapter SummaryKey TermsExercisesFor Further Study and ResearchProcess Modeling, Process Improvement, and ERP Implementation179180180181183184192193195198200201201204206206206210Chapter 8Electronic Commerce BackgroundBusiness-to-Business E-CommerceE-Commerce and ERPFitter Snacker and E-CommerceUsing ERP Through an Application Service ProviderApplication Service ProvidersNetWeaverNetWeaver Tools and CapabilitiesNetWeaver at Work for Fitter SnackerDuetAccessing ERP Systems Over the InternetXMLRadio Frequency Identification TechnologyChapter SummaryKey TermsExercisesFor Further Study and ResearchERP and Electronic Commerce211212212215216217217224224227228228228230233233234234Glossary237Index245xiiConcepts in Enterprise Resource Planning, Third Edition PREFACEThis is a book about Enterprise Resource Planning (ERP) systems; it’s also about how a businessworks and how information systems fit into business operations. More specifically, it’s about look-ing at the processes that make up a business enterprise and seeing how ERP software can improvethe performance of these business processes. ERP software is complicated and expensive. Unless acompany uses it to become more efficient and effective in delivering goods and services to its cus-tomers, the ERP system will only be a drain on company resources.Prior to writing this book, our experience revealed that undergraduate business students don’talways understand how businesses operate, and advanced undergraduate students and even manyMBA students do not truly grasp the problems inherent in unintegrated systems. These studentsalso do not comprehend business processes and how different functional areas must worktogether to achieve company goals. As a result, students do not understand how an informationsystem should help business managers make decisions.Consequently, we set out to write a book that does the following:●Describes basic business functional areas and explains how they are related.●Illustrates how unintegrated information systems fail to support business functionsand business processes that cut across functional area boundaries.●Demonstrates how integrated information systems can help a company prosper byimproving business processes and by providing business managers with accurate,consistent, and current data.We have found that our focus on business processes has been well received.The Approach of This BookA key feature of our book is the use of the fictitious Fitter Snacker Company, a manufacturer ofnutritious snack bars, as an illustrative example throughout the book. We show how Fitter Snack-er’s somewhat primitive and unintegrated information systems cause operational problems. Weintentionally made the systems’ problems easy to understand, so the student could readily com-prehend them. Potential solutions for solving integration problems are illustrated using SAP’s ERPsoftware.The third edition of Concepts in Enterprise Resource Management reflects the current stateof the ERP software market, while adding updated examples of how companies are using inte-grated systems to solve business problems and achieve greater success. The book has eightchapters:●Chapter 1 explains the purposes for, and information systems requirements of, mainbusiness functional areas—Marketing and Sales, Supply Chain Management, Account-ing and Finance, and Human Resources. This chapter also describes how a businessprocess cuts across the activities within business functional areas and why managersneed to think about making business processes work. ●Chapter 2 provides a short history of business computing and thedevelopments that led to today’s ERP systems. Chapter 2 concludes with anoverview of ERP issues and an introduction to the SAP ERP software.●Chapter 3 describes the Marketing and Sales functional area, and it highlightsthe problems that arise with unintegrated information systems. To make con-cepts easy to understand, the Fitter Snacker running example is introduced.After explaining FS’s problems with its unintegrated systems, we show howERP can avoid these problems. SAP ERP screens are used to illustrate theconcepts. Because using ERP can naturally lead a company into ever-broadening integration, a discussion of customer-relationship management(CRM) concludes the chapter.●Chapter 4 describes how ERP systems support Supply ChainManagement—the coordinated activities of all the organizations involved inconverting raw materials into consumer products on the retail shelf. As inChapter 3, the problems caused by Fitter Snacker’s unintegrated informationsystem are explored, followed by a discussion of how ERP software could helpsolve these problems.●Chapter 5 describes Accounting and ERP systems. This chapter clearly distin-guishes between financial accounting (FI) and managerial accounting (CO)issues. Included is an overview of the Enron collapse and the resultingSarbanes-Oxley act along with the act’s impact on information systems, spe-cifically management controls and audit capabilities.●Chapter 6 covers Human Resource Management. While the Human Resourcesoftware is the least integrated component of all ERP systems, it includesnumerous processes that are critical to a company’s success, including strate-gic issues like succession planning.●Chapter 7 covers Process Modeling, Process Improvement, and ERPImplementation. The chapter first presents flowcharting basics using a mini-mum number of symbols, followed by the highly structured EPC processmodel. Implementation issues conclude the chapter. We believe that processimprovement, not large-scale implementation, should be the focus in an intro-ductory ERP course.●Chapter 8 covers ERP and electronic commerce. Because this is a broad andrapidly changing area, we have chosen to provide this chapter as an introduc-tion, rather than an exhaustive treatment of the subjects. This chapter pro-vides an overview of topics such as electronic commerce and applicationservice providers, SAP NetWeaver, and the emerging technology of RFIDs.xivConcepts in Enterprise Resource Planning, Third Edition How CanYou Use This Book?This third edition continues our goal of keeping the text at an introductory level. The bookcan be used in a number of ways:●The book, or selected chapters, could be used for a three-week ERP treatmentin undergraduate Management Information Systems, Accounting InformationSystems, or Operations Management courses.●Similarly, the book or selected chapters could be used in MBA courses, such asfoundation Information Systems or Operations Management courses. Althoughthe concepts presented here are basic, the astute instructor can build on themwith more sophisticated material to challenge the advanced MBA student.Many of the exercises in the book require research for their solution, and theMBA student could do these in some depth.●The book could serve as an introductory text in a course devoted wholly toERP. It would provide the student with a basis in how ERP systems help com-panies to integrate different business functions. The instructor might useChapter 8 as the starting point for teaching the higher-level strategic implica-tions of ERP and related topics. The instructor can pursue these and relatedtopics using his or her own resources, such as case studies and currentarticles.●Because of the focus on fundamental business issues and business processes,the book can also be used in a sophomore-level Introduction to Businesscourse.Except for a computer literacy course, we assume no particular educational or busi-ness background. Chapters 1 and 2 lay out most of the needed business and computinggroundwork, and the rest of the chapters build on that base.Features of This TextTo bring ERP concepts to life (and down to earth!) this book uses sales, manufacturing,purchasing, human resources, and accounting examples for the Fitter Snacker company.Thus, the student can see problems, not just at an abstract level, but within the context ofa company’s operations. We believe that this approach makes business problems and therole ERP can play in solving them easier to understand.The book’s exercises have the student analyze aspects of Fitter Snacker’s informationsystems in various ways. The exercises vary in their difficulty; some can be solved in astraightforward way, and others require some research. Not all exercises need to beassigned. This gives the instructor flexibility in choosing which concepts to emphasize andhow to assess students’ knowledge. Some exercises explore FS’s problems, and some askthe student to go beyond what is taught in the book and to research a subject. A solutionmight require the student to generate a spreadsheet, perform calculations, documenthigher-level reasoning, present the results of research in writing, or participate in a debate.The book includes an additional element designed to bring ERP concepts to life:Another Look features, which are short, detailed case studies that focus on problems facedby real-world companies. Some of these cases include interviews with information systemsmanagers who share their experiences with ERP.Prefacexv We have illustrated ERP concepts and applications by showing how SAP ERP wouldhandle the problems discussed in the book. Screen shots of key SAP ERP tools are shownthroughout to illustrate ERP concepts. Many of the book’s exercises ask the student tothink about how a problem would be addressed using ERP software.Instructor MaterialsThe following supplemental materials are available when this book is used in a classroomsetting. All of the teaching tools available with this book are provided to the instructor on asingle CD-ROM. Most can also be found online at www.course.com. Instructor materials arepassword-protected.●Electronic Instructor’s Manual—The Instructor’s Manual assists in class prepa-ration by providing suggestions and strategies for teaching the text, chapteroutlines, technical notes, quick quizzes, discussion topics, and key terms.●Solutions—Answers to end-of-chapter questions and exercises are provided.●Sample syllabi—The sample syllabi and course outlines are provided as a foun-dation to begin planning and organizing your course.●ExamView Test Bank—ExamView allows instructors to create and administerprinted, computer (LAN-based), and Internet exams. The Test Bank includeshundreds of questions that correspond to the topics covered in this text,enabling students to generate detailed study guides that include page refer-ences for further review. The computer-based and Internet testing componentsallow students to take exams at their computers, and also save the instructortime by grading each exam automatically. The Test Bank is also available inBlackboard and WebCT versions posted online at www.course.com.●PowerPoint Presentations—Microsoft PowerPoint slides for each chapter areincluded as a teaching aid for classroom presentation, to make available to stu-dents on the network for chapter review, or to be printed for classroomdistribution. Instructors can add their own slides for additional topics theyintroduce to the class.●Distance learning—Course Technology is proud to present online test banks inWebCT and Blackboard to provide the most complete and dynamic learningexperience possible. Instructors are encouraged to make the most of thecourse, both online and offline. For more information on how to access theonline test bank, contact your local Course Technology sales representative.●Figure Files—Figure and table files from each chapter are provided for youruse in the classroom.●Hands-on SAP exercises—Exercises are available for member institutionsthrough the SAP University Alliance. These exercises use a database that wasbuilt for the fictitious Fitter Snacker company.xviConcepts in Enterprise Resource Planning, Third Edition A C K N O W L E D G M E N T SOur thanks go out to our development editor, Amanda Brodkin, who learned how to work withauthors who occasionally use too much jargon and have trouble meeting deadlines, and pro-vided the critical eye that we needed to make our writing into what we imagined it was. Weare grateful for the support and guidance of the entire MIS team at Course Technology, par-ticularly managing editor Tricia Coia and production editor Aimee Poirier. We would not havebeen able to continue on our journey to understand ERP systems without the continued sup-port of SAP America through its University Alliance program. We appreciate the efforts ofAmelia Maurizio, Heather Czech Matthews and Doug Peebles. We also thank our reviewersSam Gill; San Francisco State University and Cindy Joy Marselis, Temple University, forinsightful comments that pointed to needed improvements. In addition, we thank our inter-viewees, Maureen Sullivan, Linda Somers, Ellen Lepine, John Wheeler, and Pat Ryan with hiscolleagues from DuPont, as well as Phil Straniero and Don Scott, for their time and frankness.And finally, we thank our students, whose honesty and desire to learn have inspired us.Prefacexvii This page intentionally left blank C H A P T E R1BUSINESS FUNCTIONSAND BUSINESSPROCESSESL E A R N I N GO B J E C T I V E SAfter completing this chapter, you will be able to:●Name the main functional areas of operation used in business.Differentiate a business process from a business function.Identify the kinds of data that each main functional area produces.Identify the kinds of data that each main functional area needs.Define integrated information systems and explain why they areimportant.●●●●I N T R O D U C T I O NEnterprise Resource Planning (ERP) programs are core software used by companies to coordinateinformation in every area of the business.ERP (pronounced“E-R-P”) programs help to manage company-wide business processes, using a common database and shared management reporting tools. Abusiness process is a collection of activities that takes one or more kinds of input and creates an output,such as a report or forecast, that is of value to the customer.ERP software supports the efficient operationof business processes by integrating throughout a business tasks related to sales, marketing, manufac-turing, logistics, accounting, and staffing. In later chapters, you will learn how successful businesspeopleuse ERP programs to improve how work is done within a company.This chapter provides a backgroundfor learning about ERP software. F U N C T I O N A LP R O C E S S E SA R E A SA N DB U S I N E S STo understand ERP, you must first understand how a business works. Let’s begin by lookingat a business’s areas of operation. These areas, called functional areas of operation, arebroad categories of business activities.Functional Areas of OperationMost companies have four main functional areas of operation: Marketing and Sales (M/S),Supply Chain Management (SCM), Accounting and Finance (A/F), and Human Resources(HR). Each area comprises a variety of narrower business functions, which are activi-ties specific to that functional area of operation. For example, the business functions of eacharea for some companies are shown in Figure 1-1.Historically, businesses have had organizational structures that separated the func-tional areas, and business schools have been similarly organized, so each functional area hasbeen taught as a separate course. In a company separating functional areas in this way,Functionalarea ofoperationMarketing andSalesSupply ChainManagementAccounting andFinanceHumanResourcesMarketing of aproductPurchasinggoods and rawmaterialsFinancialaccounting ofpayments fromcustomers andto suppliersRecruiting andhiringTaking salesordersReceivinggoods and rawmaterialsCost allocationand controlTrainingCustomersupportTransportationand logisticsPlanning andbudgetingPayrollCustomerrelationshipmanagementSchedulingproduction runsCash-flowmanagementBenefitsSalesforecastingManufacturinggoodsGovernmentcomplianceBusiness functionsAdvertisingPlantmaintenanceFIGURE 1-1Examples of functional areas of operation and their business functionsChapter 12 MarketingandSalesmightbecompletelyisolatedfromSupplyChainManagement,eventhoughM/S sells what SCM procures and produces. Thus, you might conclude that what happens inone functional area is not closely related to what happens in others. As you will learn in thischapter, however, functional areas are interdependent, each requiring data from the others.The better a company can integrate the activities of each functional area, the more success-ful it will be in today’s highly competitive environment. Integration also contributes toimprovements in communication and workflow. Each area’s information system depends ondata from those of other functional areas. An information system (IS) includes the comput-ers, people, procedures, and software that store, organize, and deliver information. This chap-ter illustrates the need for information sharing between functional areas and the effects on thebusiness if this information is not integrated. You will also see examples of typical businessprocesses and how these processes routinely cross functional areas.Business ProcessesRecently, managers have begun to think in terms of business processes rather than busi-ness functions. Recall that a business process is a collection of activities that takes one ormore kinds of input and creates an output that is of value to the customer. The cus-tomer for a business process can be the traditional external customer (the person who buysthe finished product), or it may be an internal customer (such as a colleague in anotherdepartment). For example, what is sold through M/S is linked to what is procured and pro-duced by SCM. This concept is illustrated in Figure 1-2.Thinking in terms of business processes helps managers to look at their organizationfrom the customer’s perspective. For example, suppose that a customer wants to pur-chase a new computer. She wants information about the company’s products so she canselect a computer and various peripherals. She wants to place her order quickly and eas-ily, and perhaps arrange for financing through the company. She expects quick delivery ofa correctly configured, working computer, and she wants 24-hour customer support for anyproblems. The customer is not concerned about how the computer was marketed, how itscomponents were purchased, how it was built, or how the delivery truck will find the bestroute to her house. The customer wants the satisfaction of having a working computer ata reasonable price.FIGURE 1-2Sample business processes related to the sale of a personal computerBusiness Functions and Business Processes3 Businesses must always consider the customer’s viewpoint in any transaction. What is thedifference between a business function and a business process from the customer’s point ofview? Suppose the customer’s computer is damaged during shipment. Because only one func-tional area is involved in accepting the damaged item, receipt of the return is a business func-tion and is handled by the customer relationship management function of Marketing and Sales.Because several functional areas are involved in repair and return of the computer, the han-dling of the repair is a business process. Thus, the customer is dealing with many of the com-pany’s functional areas in her process of buying and obtaining a computer.A successful customer interaction is one in which the customer (either internal orexternal) is not required to interact with each business function involved in the process.Successful business managers view their business operations from the perspective of asatisfied customer.For the computer company to provide customer satisfaction, it must make sure thatits functional areas of operation are integrated. For example, computer technology changesrapidly, and the hardware the computer company sells changes frequently. In order to pro-vide customers with accurate information, people performing the sales function musthave up-to-date information about computer configurations; otherwise, a customer mightorder a computer that the company’s manufacturing plant no longer produces. People per-forming the manufacturing function need to get the details of a customer’s computer con-figuration quickly and accurately from the employees performing the sales function, so theright computer can be manufactured and shipped on time to the customer. If the cus-tomer is financing the computer through the computer company, then people perform-ing the sales order function must gather information about the customer and process itquickly, so financing can be approved in time to support shipping the computer.Sharing data effectively and efficiently between and within functional areas leads tomore efficient business processes. Information systems can be designed so that functionalareas share data. These systems are called integrated information systems. Workingthrough this textbook will help you understand the benefits of integrated information sys-tems and the problems that can occur when information systems are not integrated. Fig-ure 1-3 illustrates the process view of business operations.Customer Order ProcessSalesFunctionAccountingFunctionPurchasingFunctionProductionFunctionLogisticsFunctionMaterial Order ProcessFIGURE 1-3A process view of businessChapter 14 Businesses take inputs (resources) in the form of material, people, and equipment, andtransform these inputs into goods and services for customers. Managing these inputs andthe business processes effectively requires accurate and up-to-date information. Forexample, the sales function takes a customer’s order, and the production function sched-ules the manufacturing of the product. Logistics employees schedule and carry out the deliv-ery of the product. If raw materials are needed to make the product, production promptspurchasing to arrange for their purchase and delivery. In that case, logistics will receive thematerial, verify its condition to accounting so that the vendor can be paid, and deliver thegoods to production. Throughout, accounting keeps appropriate transaction records.A N O T H E RL O O KIntegrated Information SystemsIntegration of information is essential for company efficiency. Although people in organi-zations are often bombarded with too much information, it can still be challenging to getthe correct information to the department that needs it. The appliance giant WhirlpoolCorporation has faced just that challenge. Whirlpool is committed to Enterprise ResourcePlanning systems and in 2000 began a huge implementation of an SAP ERP system (youwill learn about SAP in Chapter 2).Managing price increases is a particular challenge. With rising oil prices and increasedraw material costs, Whirlpool needs to be able to look at the business as a whole—in otherwords, globally. Its integrated SAP system helps it to do just that.Whirlpool corporate vice president and chief information officer Esat Sezer explainsthat, regarding raw material price increases, “We had to have the capability to see prod-uct by product, category by category, country by country, day to day, the impact of mate-rial costs, logistics costs, and the impact into our (profit) margins.” With reference to thesupply chain, in particular, Whirlpool has updated and fixed an unintegrated system thatused to consist of spreadsheets and manual procedures. Now, with its integrated supplychain, demand from a trade partner or customer is integrated into production planning.“We can look into production plans and see if this item for this date in this quantity is forthis customer,” says Sezer.Some of Whirlpool’s midsized trading partners could not connect directly toWhirlpool’s order entry system, and instead were ordering either by phone or fax, whichwas extremely inefficient. With the SAP integrated system, and a new online order sys-tem, these partners now can place orders over the Web. These improvements have trans-lated into a savings of 80 percent of the cost of taking the order.continuedBusiness Functions and Business Processes5 Many other large corporations have similar integration stories. The DuPontCorporation is committed to SAP for integrating business units. For example, DuPontFluoro...

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