Supply Chain Management

A supply chain is a network of facilities and distribution options that performs the functions of procurement of materials, transformation of these materials into intermediate and finished products, and the distribution of these finished products to customers. Supply chains exist in both service and manufacturing organizations, although the complexity of the chain may vary greatly from industry to industry and firm to firm.

Below is an example of a very simple supply chain for a single product, where raw material is procured from vendors, transformed into finished goods in a single step, and then transported to distribution centers, and ultimately, customers. Realistic supply chains have multiple end products with shared components, facilities and capacities. The flow of materials is not always along an arborescent network, various modes of transportation may be considered, and the bill of materials for the end items may be both deep and large.

Traditionally, marketing, distribution, planning, manufacturing, and the purchasing organizations along the supply chain operated independently. These organizations have their own objectives and these are often conflicting. Marketing's objective of high customer service and maximum sales dollars conflict with manufacturing and distribution goals. Many manufacturing operations are designed to maximize throughput and lower costs with little consideration for the impact on inventory levels and distribution capabilities. Purchasing contracts are often negotiated with very little information beyond historical buying patterns. The result of these factors is that there is not a single, integrated plan for the organization---there were as many plans as businesses. Clearly, there is a need for a mechanism through which these different functions can be integrated together. Supply chain management is a strategy through which such an integration can be achieved.

Supply chain management is typically viewed to lie between fully vertically integrated firms, where the entire material flow is owned by a single firm, and those where each channel member operates independently. Therefore coordination between the various players in the chain is key in its effective management. Cooper and Ellram [1993] compare supply chain management to a well-balanced and well-practiced relay team. Such a team is more competitive when each player knows how to be positioned for the hand-off. The relationships are the strongest between players who directly pass the baton, but the entire team needs to make a coordinated effort to win the race.

Supply Chain Decisions

We classify the decisions for supply chain management into two broad categories -- strategic and operational. As the term implies, strategic decisions are made typically over a longer time horizon. These are closely linked to the corporate strategy (they sometimes {\it are} the corporate strategy), and guide supply chain policies from a design perspective. On the other hand, operational decisions are short term, and focus on activities over a day-to-day basis. The effort in these type of decisions is to effectively and efficiently manage the product flow in the "strategically" planned supply chain.

There are four major decision areas in supply chain management: 1) location, 2) production, 3) inventory, and 4) transportation (distribution), and there are both strategic and operational elements in each of these decision areas.

Location Decisions

The geographic placement of production facilities, stocking points, and sourcing points is the natural first step in creating a supply chain. The location of facilities involves a commitment of resources to a long-term plan. Once the size, number, and location of these are determined, so are the possible paths by which the product flows through to the final customer. These decisions are of great significance to a firm since they represent the basic strategy for accessing customer markets, and will have a considerable impact on revenue, cost, and level of service. These decisions should be determined by an optimization routine that considers production costs, taxes, duties and duty drawback, tariffs, local content, distribution costs, production limitations, etc. (See Arntzen, Brown, Harrison and Trafton [1995] for a thorough discussion of these aspects.) Although location decisions are primarily strategic, they also have implications on an operational level.

Production Decisions

The strategic decisions include what products to produce, and which plants to produce them in, allocation of suppliers to plants, plants to DC's, and DC's to customer markets. As before, these decisions have a big impact on the revenues, costs and customer service levels of the firm. These decisions assume the existence of the facilities, but determine the exact path(s) through which a product flows to and from these facilities. Another critical issue is the capacity of the manufacturing facilities--and this largely depends the degree of vertical integration within the firm. Operational decisions focus on detailed production scheduling. These decisions include the construction of the master production schedules, scheduling production on machines, and equipment maintenance. Other considerations include workload balancing, and quality control measures at a production facility.

Inventory Decisions

These refer to means by which inventories are managed. Inventories exist at every stage of the supply chain as either raw materials, semi-finished or finished goods. They can also be in-process between locations. Their primary purpose to buffer against any uncertainty that might exist in the supply chain. Since holding of inventories can cost anywhere between 20 to 40 percent of their value, their efficient management is critical in supply chain operations. It is strategic in the sense that top management sets goals. However, most researchers have approached the management of inventory from an operational perspective. These include deployment strategies (push versus pull), control policies --- the determination of the optimal levels of order quantities and reorder points, and setting safety stock levels, at each stocking location. These levels are critical, since they are primary determinants of customer service levels.

Transportation Decisions

The mode choice aspect of these decisions are the more strategic ones. These are closely linked to the inventory decisions, since the best choice of mode is often found by trading-off the cost of using the particular mode of transport with the indirect cost of inventory associated with that mode. While air shipments may be fast, reliable, and warrant lesser safety stocks, they are expensive. Meanwhile shipping by sea or rail may be much cheaper, but they necessitate holding relatively large amounts of inventory to buffer against the inherent uncertainty associated with them. Therefore customer service levels, and geographic location play vital roles in such decisions. Since transportation is more than 30 percent of the logistics costs, operating efficiently makes good economic sense. Shipment sizes (consolidated bulk shipments versus Lot-for-Lot), routing and scheduling of equipment are key in effective management of the firm's transport strategy.

Supply Chain Modeling Approaches

Clearly, each of the above two levels of decisions require a different perspective. The strategic decisions are, for the most part, global or "all encompassing" in that they try to integrate various aspects of the supply chain. Consequently, the models that describe these decisions are huge, and require a considerable amount of data. Often due to the enormity of data requirements, and the broad scope of decisions, these models provide approximate solutions to the decisions they describe. The operational decisions, meanwhile, address the day to day operation of the supply chain. Therefore the models that describe them are often very specific in nature. Due to their narrow perspective, these models often consider great detail and provide very good, if not optimal, solutions to the operational decisions.

To facilitate a concise review of the literature, and at the same time attempting to accommodate the above polarity in modeling, we divide the modeling approaches into three areas --- Network Design, ``Rough Cut" methods, and simulation based methods. The network design methods, for the most part, provide normative models for the more strategic decisions. These models typically cover the four major decision areas described earlier, and focus more on the design aspect of the supply chain; the establishment of the network and the associated flows on them. "Rough cut" methods, on the other hand, give guiding policies for the operational decisions. These models typically assume a "single site" (i.e., ignore the network) and add supply chain characteristics to it, such as explicitly considering the site's relation to the others in the network. Simulation methods is a method by which a comprehensive supply chain model can be analyzed, considering both strategic and operational elements. However, as with all simulation models, one can only evaluate the effectiveness of a pre-specified policy rather than develop new ones. It is the traditional question of "What If?" versus "What's Best?".

Network Design Methods

As the very name suggests, these methods determine the location of production, stocking, and sourcing facilities, and paths the product(s) take through them. Such methods tend to be large scale, and used generally at the inception of the supply chain. The earliest work in this area, although the term "supply chain" was not in vogue, was by Geoffrion and Graves [1974]. They introduce a multicommodity logistics network design model for optimizing annualized finished product flows from plants to the DC's to the final customers. Geoffrion and Powers [1993] later give a review of the evolution of distribution strategies over the past twenty years, describing how the descendants of the above model can accommodate more echelons and cross commodity detail.

Breitman and Lucas [1987] attempt to provide a framework for a comprehensive model of a production-distribution system, "PLANETS", that is used to decide what products to produce, where and how to produce it, which markets to pursue and what resources to use. Parts of this ambitious project were successfully implemented at General Motors.

Cohen and Lee [1985] develop a conceptual framework for manufacturing strategy analysis, where they describe a series of stochastic sub- models, that considers annualized product flows from raw material vendors via intermediate plants and distribution echelons to the final customers. They use heuristic methods to link and optimize these sub- models. They later give an integrated and readable exposition of their models and methods in Cohen and Lee [1988].

Cohen and Lee [1989] present a normative model for resource deployment in a global manufacturing and distribution network. Global after-tax profit (profit-local taxes) is maximized through the design of facility network and control of material flows within the network. The cost structure consists of variable and fixed costs for material procurement, production, distribution and transportation. They validate the model by applying it to analyze the global manufacturing strategies of a personal computer manufacturer.

Finally, Arntzen, Brown, Harrison, and Trafton [1995] provide the most comprehensive deterministic model for supply chain management. The objective function minimizes a combination of cost and time elements. Examples of cost elements include purchasing, manufacturing, pipeline inventory, transportation costs between various sites, duties, and taxes. Time elements include manufacturing lead times and transit times. Unique to this model was the explicit consideration of duty and their recovery as the product flowed through different countries. Implementation of this model at the Digital Equipment Corporation has produced spectacular results --- savings in the order of $100 million dollars.

Clearly, these network-design based methods add value to the firm in that they lay down the manufacturing and distribution strategies far into the future. It is imperative that firms at one time or another make such integrated decisions, encompassing production, location, inventory, and transportation, and such models are therefore indispensable. Although the above review shows considerable potential for these models as strategic determinants in the future, they are not without their shortcomings. Their very nature forces these problems to be of a very large scale. They are often difficult to solve to optimality. Furthermore, most of the models in this category are largely deterministic and static in nature. Additionally, those that consider stochastic elements are very restrictive in nature. In sum, there does not seem to yet be a comprehensive model that is representative of the true nature of material flows in the supply chain.

Rough Cut Methods

These models form the bulk of the supply chain literature, and typically deal with the more operational or tactical decisions. Most of the integrative research (from a supply chain context) in the literature seem to take on an inventory management perspective. In fact, the term "Supply Chain" first appears in the literature as an inventory management approach. The thrust of the rough cut models is the development of inventory control policies, considering several levels or echelons together. These models have come to be known as "multi-level" or "multi-echelon" inventory control models. For a review the reader is directed to Vollman et al. [1992].

Multi-echelon inventory theory has been very successfully used in industry. Cohen et al. [1990] describe "OPTIMIZER", one of the most complex models to date --- to manage IBM's spare parts inventory. They develop efficient algorithms and sophisticated data structures to achieve large scale systems integration.

Although current research in multi-echelon based supply chain inventory problems shows considerable promise in reducing inventories with increased customer service, the studies have several notable limitations. First, these studies largely ignore the production side of the supply chain. Their starting point in most cases is a finished goods stockpile, and policies are given to manage these effectively. Since production is a natural part of the supply chain, there seems to be a need with models that include the production component in them. Second, even on the distribution side, almost all published research assumes an arborescence structure, i. e. each site receives re-supply from only one higher level site but can distribute to several lower levels. Third, researchers have largely focused on the inventory system only. In logistics-system theory, transportation and inventory are primary components of the order fulfillment process in terms of cost and service levels. Therefore, companies must consider important interrelationships among transportation, inventory and customer service in determining their policies. Fourth, most of the models under the "inventory theoretic" paradigm are very restrictive in nature, i.e., mostly they restrict themselves to certain well known forms of demand or lead time or both, often quite contrary to what is observed.

The preceding sections are a selective overview of the key concepts in the supply chain literature. Following is a list of recommended reading for a quick introduction to the area.

Bibliography

1. Arntzen, B. C., G. G. Brown, T. P. Harrison, and L. Trafton. Global Supply Chain Management at Digital Equipment Corporation. Interfaces, Jan.-Feb., 1995.
2. Ballou, R. H. 1992. Business Logistics Management, Prentice Hall, Englewood Cliffs, NJ, Third Edition.
3. Breitman, R. L., and J. M. Lucas. 1987. PLANETS: A Modeling System for Business Planning. Interfaces, 17, Jan.-Feb., 94-106.
4. Cohen, M. A. and H. L. Lee. 1985. Manufacturing Strategy Concepts and Methods, in Kleindorfer, P. R. Ed., The Management of Productivity and Technology in Manufacturing, 153- 188.
5. Cohen, M. A. and H. L. Lee. 1988. Strategic Analysis of Integrated Production-Distribution Systems: Models and Methods. Operations Research, 36, 2, 216-228.
6. Cohen, M. A. and H. L. Lee. 1989. Resource Deployment Analysis of Global Manufacturing and Distribution Networks. Journal of Manufacturing and Operations Management, 81-104.
7. Cooper, M. C., and L. M. Ellram. 1993. Characteristics of Supply Chain Management and the Implications for Purchasing and Logistics Strategy. The International Journal of Logistics Management, 4, 2, 13-24.
8. Deuermeyer, B. and L. B. Schwarz. 1981. A Model for the Analysis of System Service Level in Warehouse/ Retailer Distribution Systems: The Identical Retailer Case, in: L. B. Schwarz (ed.), Studies in Management Sciences, Vol. 16--Multi-Level Production / Inventory Control Systems, North-Holland, Amsterdam, 163-193.
9. Geoffrion, A., and G. Graves. 1974. Multicommodity Distribution System Design by Benders Decomposition. Management Science, 29, 5, 822-844.
10. Geoffrion, A., and R. Powers. 1993. 20 Years of strategic Distribution System Design: An Evolutionary Perspective, Interfaces. (forthcoming)
11. Houlihan, J. B. 1985. International Supply Chain Management. International Journal of Physical Distribution and Materials Management, 15, 1, 22-38.
12. Lee, H. L., and C. Billington. 1992. Supply Chain Management: Pitfalls and Opportunities. Sloan Management Review, 33, Spring, 65-73.
13. Lee, H. L., and C. Billington. 1993. Material Management in Decentralized Supply Chains. Operations Research, 41, 5, 835-847.
14. Masters, J. M. 1993. Determination of Near-Optimal Stock Levels for Multi-Echelon Distribution Inventories. Journal of Business Logistics, 14, 2, 165-195.
15. Schwarz, L. B. 1981. Introduction in: L. B. Schwarz (ed.), Studies in Management Sciences, Vol. 16--Multi-Level Production / Inventory Control Systems, North-Holland, Amsterdam, 163-193.
16. Stenross, F. M., and G. J. Sweet. 1991. Implementing an Integrated Supply Chain in Annual Conference Proceedings, Oak Brook, Ill: Council of Logistics Management, Vol. 2, 341-351.
17. Vollman, T. E., W. L. Berry, and D. C. Whybark. 1992. Manufacturing Planning and Control Systems, Irwin, Homewood, IL.

Logistics Management

Logistics is the art of managing the supply chain and science of managing and controlling the flow of goods, energy, information and other resources like products, services and people from the source of production to the marketplace. It is difficult or nearly impossible to accomplish any international trading, global export/import processes, international repositioning of raw materials/products and manufacturing without a professional logistical support. It involves the integration of information, transportation, inventory, warehousing, material handling, and packaging. The operating responsibility of logistics is the geographical repositioning of raw materials, work in process and finished inventories where required at the lowest cost possible.

Logistics and Supply Chain services are provided by a wide range of 3rd party suppliers.

Contents [hide] 1 Origins and definition 2 Logistician 3 Military logistics 4 Logistics management 5 Logistics Management Software 6 Business logistics 7 Production logistics 8 See also 9 References

[edit] Origins and definition

The word of logistics originates from the ancient Greek logos (λόγος), which means “ratio, word, calculation, reason, speech, oration”.

Logistics is an idea considered to have transformed from the military's need to supply themselves as they moved from their base to a forward position. In ancient Greek, Roman and Byzantine empires, there were military officers with the title ‘Logistikas’ who were responsible for financial and supply distribution matters.

The Oxford English dictionary defines logistics as: “The branch of military science having to do with procuring, maintaining and transporting material, personnel and facilities.”Another dictionary definition is: "The time related positioning of resources." As such, logistics is commonly seen as a branch of engineering which creates "people systems" rather than "machine systems"....

[edit] Logistician

Logistician is the profession in the logistics & transport sectors, including sea, air, land and rail modes. Professional qualifications for the logisticians can carry post-nominal letters. Common examples include FCILT/CMILT/MILT (by The Chartered Institute of Logistics & Transport) (CILT), EJLog/ESLog/EMLog (by European Logistics Association) (ELA), CML/CPL (by International Society of Logistics) (SOLE), JrLog/Log/SrLog (by China Federation of Logistics & Purchasing) (CFLP), FHKLA/MHKLA (by Hong Kong Logistics Association) (HKLA), PLS/CTL/DLP (by American Society of Transportation & Logistics) (AST&L). However, some universities and academic institutions do help in producing logisticians, by offering academic degree programmes at both undergraduate and postgraduate levels, too.

[edit] Military logistics

In military logistics, experts manage how and when to move resources to the places they are needed. In military science, maintaining one's supply lines while disrupting those of the enemy is a crucial—some would say the most crucial—element of military strategy, since an armed force without food, fuel and ammunition is defenseless.

The defeat of the British in the American War of Independence, and the defeat of Erwin Rommel in World War II, have been largely attributed to logistical failure. The historical leaders Hannibal Barca, Alexander the Great and the Duke of Wellington are considered to have been logistical geniuses.

[edit] Logistics management

Main article: Logistics Management

Logistics management is that part of the supply chain which plans, implements and controls the efficient, effective forward and reverse flow and storage of goods, services and related information between the point of origin and the point of consumption in order to meet customers' requirements. A professional working in the field of logistics management is called a logistician.

The Chartered Institute of Logistics & Transport (CILT) was established in the United Kingdom in 1919 and was granted the Royal Charter in 1926. The Chartered Institute is one of professional bodies or institutions for the logistics & transport sectors, that offers such professional qualification or degree in logistics management.

[edit] Logistics Management Software

Software is used for automating logistics automation which helps the supply chain industry in automating the work flow as well as management of the system. There are very few generalized software available in the market in the said topology. This is because there is no general rule to generalize the system as well as work flow even though the practice is more or less the same. Most of the commercial companies do use one or the other custom solution.

[edit] Business logistics

Logistics as a business concept evolved only in the 1950s. This was mainly due to the increasing complexity of supplying one's business with materials and shipping out products in an increasingly globalized supply chain, calling for experts in the field who are called Supply Chain Logisticians. This can be defined as having the right item in the right quantity at the right time at the right place for the right price and is the science of process and incorporates all industry sectors. The goal of logistics work is to manage the fruition of project life cycles, supply chains and resultant efficiencies.

In business, logistics may have either internal focus (inbound logistics), or external focus (outbound logistics) covering the flow and storage of materials from point of origin to point of consumption (see supply chain management). The main functions of a qualified logistician include inventory management, purchasing, transportation, warehousing, consultation and the organizing and planning of these activities. Logisticians combine a professional knowledge of each of these functions so that there is a coordination of resources in an organization. There are two fundamentally different forms of logistics. One optimizes a steady flow of material through a network of transport links and storage nodes. The other coordinates a sequence of resources to carry out some project.

[edit] Production logistics

The term is used for describing logistic processes within an industry. The purpose of production logistics is to ensure that each machine and workstation is being fed with the right product in the right quantity and quality at the right point in time.

The issue is not the transportation itself, but to streamline and control the flow through the value adding processes and eliminate non-value adding ones. Production logistics can be applied in existing as well as new plants. Manufacturing in an existing plant is a constantly changing process. Machines are exchanged and new ones added, which gives the opportunity to improve the production logistics system accordingly. Production logistics provides the means to achieve customer response and capital efficiency.

Production logistics is getting more and more important with the decreasing batch sizes. In many industries (e.g. mobile phone) batch size one is the short term aim. This way even a single customer demand can be fulfilled in an efficient way. Track and tracing, which is an essential part of production logistics - due to product safety and product reliability issues - is also gaining importance especially in the automotive and the medical industry.

[edit] See also

• Air transport
• Commercial vehicle operations
• Containerization
• Crossdocking
• Defense Logistics Agency
• Defence Logistics Organisation
• Distribution
• Food distribution
• Information logistics
• Integration of short sea shipping and deep sea shipping operations
• Intelligent transportation system
• International Journal of Physical Distribution & Logistics Management
• Just In Time
• List of post-nominal letters
• Liquid Logistics
• Logistician
• Logistics automation
• Marketing
• Matériel
• Medical logistics
• Military Supply Chain Management
• Packaging and labelling
• Pallet
• Professional certification
• Rail transport
• Reverse logistics
• Sea transport
• Short sea shipping
• Supply chain management
• Supply chain network
• Supply Officer
• Third-party logistics provider
• Tracking and tracing
• Trade route
• Traffic
• Transport

[edit] References

This article does not cite any references or sources. (June 2007) Please help improve this article by adding citations to reliable sources. Unverifiable material may be challenged and removed.

Retrieved from "http://en.wikipedia.org/wiki/Logistics"

Categories: Cleanup from August 2007 | All pages needing cleanup | Articles lacking sources from June 2007 | All articles lacking sources | Logistics

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Basis

BASIS provides administrative tools for SAP. It is a logical collection of R/3 software components. Basis is the layer between the hardware and R/3 system software.

BASIS provides for the following

Tools for administration:

Basis includes various administration tools for managing the system resources like hardware, software and printers. It includes tools for monitoring the system performance, monitoring user sessions, setting up alerts and deriving various statistics and graphs which give indications of the system performance.

User Administration:

This includes creating user ids, modifying user details and deleting users ids, viewing system users, sending messages to multiple users.

Runtime environment for the user:

The runtime environment for the user includes the default menu path for the user, the date format for the user, the default printer for the user, changing user’s password.

Provide Authorisations to the users:

In order to enable the user to access the various transactions, it is essential that the users have the correct set of authorisations. Setting of authorisations for the users based on their job roles. An authorisation tool is used to create the user authorisations. Once the authorisations have been created, profiles are created and the authorisations are attached to them. Each profile can have many such authorisations attached to them. The profiles are created based on the role definition of the user in the company. After the authorisations and profiles are created, user ids are created and the profiles are attached to the user profiles. Each user id could have multiple user profiles attached to them. For example, if we create a user profile for a business head, then that user id could have profiles relating to various departments / job definitions attached to it.

Printer Administration:

This includes installing the network printers and local and remote printers for the users, setting up printer queues, and managing printer spooler.

System Administration:

This includes starting and stopping the SAP service manager, diagnosing the system start-up, monitoring work processes, viewing transaction codes, clearing locked entries, monitoring system updates, transport of customising change requests and ABAP change requests at the OS level.

Database Administration (including Backup and Restore):

Database management including database backup and restore, database performance monitor, and analysing database activity.

Interfaces with non-SAP products:

BASIS also includes tools for interfacing with non-SAP products, which will continued to be in use in the organisation.

ABAP/4

ABAP is the development tool in SAP. All SAP Transactions and Reports are developed in ABAP/4. ABAP/4 aids in the development of new reports, batch conversion programs and data entry screens (module pool programs) and interfaces with third party standard software.

SAP software is totally transaction based. All the menu paths in SAP point to a particular transaction. A transaction is a four-letter alphanumeric code, which executes a program in SAP. Everything in SAP is a transaction. For e.g.- Creating a Purchase Order is a transaction, Changing the Purchase Order details is another transaction. Transactions are also used to run various reports. Each report has a unique transaction code. Each transaction code is unique in the SAP system.

ABAP/4 Reports

There are following types of ABAP/4 reports that can be developed.

Simple Lists:

ABAP/4 can be used to generate simple lists as well as interactive reports.

Interactive reports

Event Driven Reports: These reports are generated on click of a button.

Drill Down Reports: Reports are initially shown as simple upper level lists. If the user is interested in getting further details, then he can drill down on a particular item like material code or project number and get further details. Thus many levels can be incorporated into the report based on the user requirements.

Graphic Reports: Reports can be developed to provide a graphical representation of the data.

Layout Sets: ABAP also facilitates developing of various documents sent to external parties like customers and vendors. These documents require special formatting and printing of company logos. This can be done through ABAP Layout sets tool, which enables the programmer to specify various fonts, set the logo in the format and perform special formatting in the document.

ABAP/4 Batch Data Conversion

Batch Data Conversion programs are developed to import the data from legacy systems into SAP. Batch programs are written specifically for the particular transaction. For example, to upload all the purchase order data from the legacy system, a BDC for the purchase order transaction is developed.

Online or Scheduled: BDCs could be online or they could be scheduled to run at a particular time / date or after a particular other BDC has run.

ABAP/4 Job Scheduling: The user can schedule the running of reports / BDCs on a periodic basis (monthly / weekly).

ABAP Module Pool Programs: These are new data entry screens that can be developed in ABAP based on the user requirements.

ABAP Queries: ABAP Query is a quick and effective tool, which is used to create queries and generate simple lists.

ABAP Module Pool Programs: To build interactive data entry screens, Module Pool programs are developed in ABAP/4

implementation of SAP at site.

oftware / Hardware requirements for implementation of SAP at site.

VSAT: PAMA VSAT (preferably) or TDMA VSAT.

PC running NetWare or Router for Routing.

NetWare If a PC running Novell NetWare is used for routing then, the PC should have 2 NetWare Interface Cards (NIC), one NIC connected to the LAN and one NIC connected to the IDU of the VSAT. Both the NICs should have valid IP addresses assigned by LTITL.

Router If a Router is used for routing, then the router should have a serial port to connect to the IDU of the VSAT, and it should have one Ethernet port (NetWare interface card) to connect to the local area network.

Hardware One Personal Computer

Pentium 166MHz MMX / Pentium II with 32MB RAM 1.44MB FDD, 4 GB HDD

14" SVGA color monitor

VGA Card with 1MB RAM 101/102 keyboard Mouse Ethernet 32Bit Card SMPS,

2 serial & 1 Parallel Ports

Software MS-DOS 6.2, Windows 95 / Windows 98,MSOffice 97, SAP GUI 3.1H

Printer Printer connected to the LAN can be accessed.

To use the printer connected to the LAN,

1) Set the printer on the PC as the default printer

2) Select LOCL in the SAP print menu

What is SAP?

SAP is an ERP package, which caters to the key function of integration. It provides integrated functionality for finance, sales, materials management, production and human resources.

SAP is DBMS transactional software written in ABAP/4. Various modules provide various functionalities. It can be configured to meet the business process logic through customisation. SAP is customisable software. The database in SAP can be either Oracle or Informix.

Technical Architecture (refer diagram a)

The technical architecture of SAP R/3 is as per the diagram. The Technical Architecture of SAP R/3 is a three-tier architecture. This means that the architecture can be broken down into three layers. First is the Data base Layer. The Database layer hosts the central database. The central database is a Relational Database Management System (RDBMS). The next layer is the application layer. The business logic processing occurs in the application layer. The presentation layer is the Graphic user interface or the GUI, which interacts with the user and receives inputs and gives output to the user.

SAP recommends four concurrent Servers:

To have better control over the production system, SAP recommends four different servers in a typical SAP implementation. These are:

Development: All development work is carried out in the development server. Unit

testing is done in the development server.

Integration: The changes are then tested for their correctness by integration testing in the integration server

Consolidation: The consolidation system consolidates all the changes before they

are transported to the production environment.

Production: The production system is the live system which contains all the current data.

Technical Information - SAP

SAP is a 32 Bit Client Server Application.

SAP uses 4GL (4^th Generation Language) called ABAP/4 for Front end Development

ABAP/4- Advanced Business Application Programming Language

Uses ALE (Application Link Enabling)

Loose Coupling of Database

Independent Servers

SAP uses Messaging Mechanism to Synchronize database

IDES - Integrated Documentation and Educational System. IDES contains example data for all transactions.

OSS - Online Support System. This is an Online Support System provided by SAP.

Modules in SAP

SAP is divided into various modules that cater to different functionalities. The various modules of SAP are as follows:

Sales and Distribution

Project Management

Materials Management

Quality Management

Finance and Controlling

Human Resources

Production Planning

Plant Maintenance

ERP and Change Management:

ERP calls for a lot of change. The changes can be categorised as follows:

Business Processes

The business processes are most likely to undergo some changes. These changes could even involve scrapping the process entirely or tasks in the process, if they are considered as a redundant tasks in the ERP environment.

Organisation Authority, Jobs and Roles

The organisation authority and role definition of an individual also changes. In the new environment, information is available on-line, and access to information makes it easier to take decisions quickly at any levels. This creates new jobs and role definitions and new authority definitions.

Performance Measures and Rewards System

The new system also calls for a revised set of performance measures and rewards system. This is necessary since ERP causes a change in the job definition and role definition of the organisation employees.

Technology and IT Infrastructure

ERP involves a change in the existing technology and IT infrastructure. The architecture of ERP system requires an upgradation of the existing hardware and implementing of new technology.

Post Implementation Activities:

The post implementation activities can be categorised as follows:

User Training

Constant training needs to be given to all users atleast in the initial phase after the go live. This is important, so that, users feel more comfortable with the new system.

Troubleshooting and Support

Troubleshooting of user related problems and Support to users forms the major chunk of the activity after the implementation of ERP. This also involves setting up a helpdesk functionality wherein the users can address their problems.

New developments

Another important activity, which is conducted in parallel to the other activities, is the development of new programs or modification of the existing programs. New Developments also include new configurations that were not envisaged earlier and come to light at this stage. This also involves upgrading the existing package to a higher version.

Implementing ERP – Business Process Re-engineering:

An ERP implementation involves a number of steps. In effect these steps lead to a BPR. Business Process Re-engineering can be of two types – The Big ‘R’ or the small ‘r’. The big ‘R’ re-engineering is the complete re-engineering of all the process. The small ‘r’ re-engineering is a package enabled re-engineering. At L&T, we have adopted the small ‘r’ or the package enabled re-engineering. In a package enabled re-engineering, the changes are made in the business process to adapt to the package.

A typical ERP implementation involves the following steps:

AS-IS Analysis:

This involves an in-depth analysis and mapping of the existing business processes. In the AS-IS phase, there were many good but disjointed systems. All the systems were independent of each other and there was no integration between the various systems.

TO-BE and GAP Identification:

This stage reflects the business process re-engineering phase. Once the existing business processes are mapped, then the second step is to identify how the organisation would require the particular business process to be addressed after implementing ERP. The business process may be continued to be addressed as it is being done so or the organisation might go in for a different method of addressing the business process. Thus each and every process mapped at the AS-IS phase is re-visited with a view of objectively analysing the same and thus increasing the effectiveness of the business process. Each AS-IS process is mapped to a TO-BE process.

After the TO-BE maps are prepared, each TO-BE map is studied with respect to how the ERP package addresses these processes. In this way each and every TO-BE map is studied and the end of the exercise, a list of issues that are not addressed directly by the ERP system, is generated. This list is called as the GAP List. GAPS are those business processes, which are not directly addressed by the ERP system. It is then decided whether to use workarounds, or develop patches, which will address these missing links, or decide not to address the GAP – if the process is not affected by it.

Prototyping and Design

In the prototyping and design stage, a design or prototype of the new configuration is created. This involves creating a story situation wherein the whole cycle of the business process is simulated in the system.

Construction

In the construction phase, the configurations are done, new developments (forms, reports and BDCs) are made for the new requirements. These configurations are first done in the development environment and then tested thoroughly before transporting the same to the production environment.

User Acceptance Test (UAT)

The users are trained in the new system and set of users representing the user community, are selected for conducting the testing and confirm their acceptance after testing the system and satisfying themselves regarding the same.

Go-Live

After the users have tested the system and given the user acceptance, a cut-off date is decided for going live in the new system. The go-live could be done by two methods. The organisation can decide to use the new system as well as the old system for some time. This method is called as handholding and is usually adapted for accounting systems. The other method is to decide a date from which all new transactions will be entered and will be available in the new system.

Implementation Approaches

The following are the implementation approaches for ERP

Big Bang Approach

In this approach, ERP is implemented at one-go at all the offices of the organisation.

Pilot Rollout

In the Pilot rollout approach, one subsidiary business unit (SBU) is selected as the pilot and ERP is first implemented in that unit. Then it is rolled out to other business units in a phased out manner.

Functional Rollout

In the functional rollout approach, one function like finance or materials management is selected for implementation. Then one by one ERP is implemented for each of the functions in the organisation.

Cross-Develop Global Prototype

In the cross-develop global prototype, a prototype is first developed and tested. Once successful, the implementation is done for the entire organisation.

ERP Vendors:

The following are the major ERP vendors locally and

internationally.

Local

RAMCO : Marshall

MASTEK : Mamis

International

SAP (Systeme Anwengdung Producte)

BAAN

PeopleSoft

Oracle

Mfg*Pro

J.D.Edword

Evolution of ERP:

MRP: ERP started with Materials Requirement Planning (MRP). MRP catered to the two basic functions of Materials Management and Inventory Management and typically catered to a manufacturing organisation.

MRP-II: An upgrade over MRP was MRP-II. MRP-II provided for production Planning along with Materials Management and Inventory Management.

ERP: Enterprise Resource Planning. This package provided for the complete suite of applications ranging from Sales and distribution, Planning, Materials Management, Quality Management, Human Resources and Financial Accounting.

The keyword with ERP is "Integration".

ERP: An introduction

Software Trends:

Initially application software was developed in-house. To maintain this in-house developed software, the organisation needed a team of experts – who were expensive to maintain. This gave way for outsourcing of application software development. Outsourcing led to over dependence on third parties. This also created a situation wherein there were several third party software, and it became increasingly difficult for the various applications to "talk" to each other. Data exchange between the various softwares became increasingly difficult or impossible. Integration between the various application softwares was grossly lacking. So, instead of buying best of breed solutions for Materials Management, Accounting, Human Resources and Planning, it was necessary to have a single window solution or a single package solution, which would address all the different business processes and offer the advantage of being totally integrated. ERP – Enterprise Resource Planning provided an integrated single window solution, which catered to the above need.