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Advanced
How To Guides
Systems Integration
Integration
- the components of the acronym jigsaw
Just as the Eskimos have many different words for snow,
business consultants and software suppliers have defined
a myriad of different terms for different types of business
process management - each of which was assigned a Three
Letter Acronym (TLA). Before embarking on an integration
project, it may help to remind ourselves of the typical
applications involved.
Integrated applications became commonplace among manufacturing
enterprises in the 1970's when Ollie Wight and Dave
Goddard introduced Materials Requirements Planning
(MRP). This provided a new computer-based approach to
planning and scheduling of material requirements and
inventory, featuring the time-phased order point. MRP
provided material planning projections based on bill
of material explosions.
MRP evolved to MRP II (Materials Resources Planning),
the "closed loop" process which includes all
manufacturing resources for "What If" proactive
process simulations. As MRP II came into vogue in the
late 1970's and early 1980's, software companies began
to develop software packages around MRP II concepts.
The early software packages were generally highly unfriendly
to a user. With the advent of the personal computers,
the development of Microsoft's Windows NT, and the midrange
IBM AS/400 computer, client-server systems began to
emerge. Windows, used as the base operating system,
allowed software packages to become more and more user-friendly.
At the same time, research of integrated databases was
in progress at a university, and out of that research
emerged database management systems (DBMS). One of the
earliest successful commercially-produced database management
systems was IDMS (for IBM-based systems) and DBMS (for
DEC-based systems) produced by Cullinane - the company
name later changed to Cullinet. IMS, structured for
high-volume transactions, was another database management
system produced by IBM.
The idea of the integrated database at the core of fully
integrated software was probably one of the greatest
outgrowths of MRP. Eventually, the acronym ERP -
Enterprise Resource Planning was conceived to represent
what had already been developed by software companies.
Today, ERP systems have proliferated extensively, and
have reached a stage where development has become industry
specific. Thus it is plausible to search for an ERP
package developed for one's specific industry idiosyncrasies.
ERP is a people process supported by the computer, rather
than the other way around. People -- and their behaviour
and discipline in utilising the ERP process -- is vital.
When people understand how to utilise the ERP process,
tools, and techniques, the data and information will
be highly accurate, and they will make sound decisions.
ERP is the core of an enterprise information system,
involving integrated management processes which extend
horizontally across the company, including product development,
sales, marketing, manufacturing, and finance. It must
extend vertically throughout the company's supply chain
to include the acquisition of raw materials, suppliers,
customers, and consumers. The fundamental purpose of
ERP is to establish a process that links projected demand
plans to supply plans, so that the resources of manufacturers,
their suppliers, and especially their customers are
utilise in the most efficient and cost effective way.
To do so requires a process for anticipating demand
and planning and scheduling resources in a manner that
supports a company's strategic and financial goals.
There are five major elements in this:
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An integrated business operating process that links
strategic plans and business plans to sales plans
and operations plans.
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A people-driven process that is supported by a computer
system.
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A formal resource planning process that involves
all functions within a company.
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Defined responsibilities and performance measurements
for all functions in a company.
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Communications among all functions in a company
as well as communications among all divisions and
sister companies.
Strategies
must be tied to tactics, supply is resolved with demand,
the financial system is tied to the operating system,
aggregate planning is translated into detailed planning,
and planning and execution are linked together via a
two-way flow of information and a spirit of co-operation
among all functions.
ERP creates organisational synergy that drives the development
of highly effective processes that are properly managed
for continual success. The dramatic results are derived
from a deep organisational understanding of ERP philosophy.
Proactive strategies become the mainstay of the company-wide
operating system. Without this organisational understanding,
well-intended efforts will deliver wrong results. Organisational
profitability is derived from the organisation's overall
willingness and ability to improve. Therefore people
at every level must see beyond their local functions
and interactively understand how their individual actions
increase or decrease profitability.
ERP systems must address those business functions with
the widest appeal. It is simply impossible for them
to integrate all valuable functionality and technologies.
Bolt-on Systems is shorthand for software / hardware
systems that add specialised functionality to ERP systems.
There are many types of Bolt-on Systems. Typical of
those that relate to manufacturing and logistics are
Warehouse Management Systems (WMS), Manufacturing
Execution Systems (MES), Manifest and Electronic
Data Interchange (EDI).
BPM - Business Process Management is the most
commonly used term when talking about any type of process
level control, management or integration. However, to
be more precise, we need to pay more attention to the
"management" in BPM. Process management actually
needs to be done at both the operational and business
level. IT personnel need to manage error messages generated
by the system, points on the network that are down,
messages that don't arrive. This can be very complex
as the end-to-end process can cross multiple platforms
and applications.
Using the term BPM for everything makes it more difficult
to find the right solution for the particular business
problem we are trying to solve. It also makes technology
decisions more difficult to make. Conversely, if we
begin to distinguish among different types of process
management, we will have an easier time communicating
with vendors and each other, and choosing the right
tool for the right job.
Business level process management is far more compelling
for those signing the purchase orders for the software.
It includes tracking a process in terms of business
metrics such as: How long does the end-to-end process
take? How much does it cost? Is there a more efficient
way to perform the process and cut costs? This is the
level of business process management that can deliver
significant competitive advantage.
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