ERP-2 - Re-engineering and Enterprise Resource Planning...

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Unformatted text preview: Re-engineering and Enterprise Resource Planning SystemsObjectives1. Recognize the factors associated with the evolution to enterprise systems, including business process re-engineering, client-server networking and the emergence of integrated databases.2. Understand the role of process modeling in re-designing business processes.BackgroundIn the twentieth century, we have seen the emergence of the “factory farm,” which revolutionized American agriculture through the use of technology. Technology alone, however, was not the main reason for the tremendous productivity improvements associated with this form of organization, the factory farm. These productivity improvements were possible because of the combination of technology plus new, innovative procedures This was one of the first instances of “re-engineering.” In this chapter, you will learn how ERP has contributed to business process re-engineering, combined with the use of new information technology.The definition of re-engineering is “the fundamental rethinking and radical redesign of business processes to achieve dramatic improvements in critical, contemporary measures of performance such as cost, quality, service, and speed” (Hammer and Champy, 1993). To understand re-engineering, it is important to understand the concept of the value chain. The value chain consists of the primary and secondary activities of the firm. Re-engineering strives for the efficient re-design of the company’s value chain.In Table 2-1, the primary activities of the firm include inbound logistics, operations, Outbound logistics, marketing, and service. These activities are essential to creating, producing, marketing, selling, and Supporting a product or service. An information system supports each of these primary activities. This information system can cut the cost of performing a value activity, or it can be used to provide a “value-added” feature to the product or service. For example, the value activity, called outbound logistics, deals with processing orders to customers. An on-line order entry system which enables customers to order electronically can cut the time and cost of this value activity. The value activity, called service, can be supported by remote machine diagnostics, which “adds value” by providing on-line diagnostic support.In Table 2-2, a set of secondary activities support the primary activities of the organization. These secondary activities include organizational structure, human resources, technology, and purchasing. Information systems can support each of these secondary activities as well. For example, electronic mail can support the organizational structure by facilitating timely communications. Information systems can support purchasing by enabling purchasing agents to link into suppliers’ databases to place orders, determine inventory levels, and check pricing.Supply chain management, involves the planning and control of all tasks along the business value chain. In this way, suppliers can link directly to manufacturers, business value chain....
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This note was uploaded on 06/04/2009 for the course BUSINESS AIT 803 taught by Professor Peter during the Spring '09 term at Seneca.

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ERP-2 - Re-engineering and Enterprise Resource Planning...

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