The fundamental objective of an EBS is to extend the structure and benefits of computer integration and networking to encompass the entire enterprise and the supply chains in which they are intertwined. In practical terms, this means that not just a portion but all business functions, from purchasing and inventory control to forecasting and general ledger, must be integrated together. The goal is to place all internal enterprise processing, decision-making, and performance measurement in a common database system capable of being maintained and referenced in real-time by all company users and selected supply chain partners. The EBS itself is com-posed of two elements. The first is the hardware, consisting of the computer, input/
output devices, and data storage/warehousing. The central features of this element are discussed in detail in Chapter 2. The second element, the software, contains the application programs used for processing transactions, displaying the database, printing reports, management control, and operational and strategic planning. This element is the subject of this chapter.
Core Functional Areas of Operation
The EBS is the workhorse of a business and truthfully can be said to constitute the hub or “backbone” of the enterprise’s information infrastructure. An effectively
implemented and utilized EBS links the different functions of the business, drives continuous improvement and process efficiency and effectiveness, provides the mechanism to support company strategies, and enables the pursuit of e-business technologies.
As illustrated in Figure 3.2, an EBS can be described as having two major components: the technical architecture and eight tightly integrated business modules, one for each of core functions found in a typical business. The EBS technical architecture refers to the hardware configuration, programing languages, graphic presentation, document output capabilities, database designs, and a host of other enablers available in the system. In a wider sense, the technical architec-ture refers to the choice of how the EBS is assembled. It can be composed of a single, homogenous, fully integrated business software system or it might be the result of a company’s decision to assemble a best-of-breed portfolio model linking third party point solutions to a home-grown or previously implemented packaged solution.
The second component of an EBS is the array of eight possible core business applications that an enterprise might deploy. These applications are described as follows: customer management, manufacturing, procurement, logistics, product data, finance, asset management, and human resources. Depending on the nature of the business, an enterprise may utilize some or all of the modules. For example, the EBS of a manufacturing company that performs distribution functions will
Business
have all eight modules activated. A wholesaler would most likely have all except for manufacturing related functions. A dot-com catalog business would most likely have customer management, human resources, finance, and perhaps procurement and logistics functions. Regardless of the business environment, every company will at least have to install customer service, order management, and finance. These base functions would be difficult to outsource without loosing corporate integrity.
A description of each of the eight modules is as follows:
Customer Management.
◾ The primary role of this module in an EBS is to pro-vide availability to the user interface screens that enable order entry, order promising, and open order status maintenance. Order entry and service maintenance are the gateway to the sales and marketing database. Second, this module should provide the data necessary to perform real-time prof-itability analysis to assist in calculating costs, revenues, and sales volumes necessary for effective quotation and ongoing customer maintenance. Third, a well- designed EBS will provide marketers with tools to design sophisti-cated pricing schemes and discount models. In addition, the software should permit the performance of miscellaneous functions such as order configu-ration, bonus and commissions, customer delivery schedules, tax manage-ment, currency conversion, customer returns, and service and rental. Finally, the customer database should be robust enough to permit the generation of sales budgets for forecast management and statistical reporting illustrating everything from profitability to contributing margins analysis.
Manufacturing
◾ . Functions in this module comprise most of the foundation applications in the suite of a modern day EBS. Originating as a bill of material (BOM) processor, this module has been enhanced over the decades to include MRP processing, manufacturing order release, work in progress (WIP) man-agement, cost reporting, and overall shop floor control. A critical integrative aspect is the real-time linkage of demand to supply management facilitating order-to-production and WIP modeling while promoting real-time available-to-promise (ATP) and capable-available-to-promise (CTP) to assist in customer order management. In addition to these basic tools, today’s EBS manufacturing module also contains functionality for activities such as inspection, project management, capacity/resource management, and the compilation of produc-tion statistics. Finally, advances in technology have enabled the interface of EBS applications with “bolt-on” data collection devices and advanced planning and optimizing software.
Procurement
◾ . In today’s business climate the ability to effectively integrate procurement requirements with a variety of supplier management concepts and technology tools is one of the most important components of an effective EBS. Although much press has been given to Web-based business-to-business (B2B) technologies, basic management of procurement requires a close inte-gration with internal MRP and maintenance, repair, and operations supplies
(MRO) systems. Today’s EBS contains robust functionality to facilitate pur-chase order processing, delivery scheduling, open order tracking, receiving, inspection, and supplier statistics and performance reporting. In addition, detailed request for quotation (RFQ) must be available that ties back to cus-tomer demands and extends out to supplier management, negotiation, and pricing capabilities. Finally, the system architecture must include electronic data interchange (EDI) and Internet capabilities.
Logistics
◾ : The ability to link in real-time logistics functions to sales, manufac-turing, and finance is fundamental to competitive advantage in the twenty-first century. Today’s EBS must provide the mechanism to run the internal supply chain of the business as well as provide the necessary connectivity with remote trading partners located on the rim of the supply network. Critical tools in the module center on distribution channel configuration, warehouse activity management, channel replenishment planning and distribution order management, and the generation of distribution, asset, and profitability reporting. Also, of growing importance is the integration of EBS functions with “bolt-on” warehouse and transportation management systems, as well as applications supporting Web-based customer and SCM systems.
Product Data.
◾ At the core of manufacturing and distribution information sys-tems reside the databases describing the products that a company builds and distributes. Often considered highly proprietary, these databases contain data ranging from engineering descriptions to details concerning cost, sources of acquisition, planning data, and product structure details. Besides obvious uses for inventory and manufacturing planning and shop floor management, these databases are critical for marketing product life cycle management analysis and costing, engineering product introduction, and financial report-ing and analysis. As the speed of time-to-market and ever-shortenreport-ing product life cycles accelerates, progressive companies have been looking to channel partners to implement collaborative technologies through the Internet that can link in real-time computer-aided design (CAD) and design documenta-tion in an effort to compress development, introducdocumenta-tion, and phase-out of products and services.
Finance.
◾ Without a doubt, one of the strong suits of an EBS is its ability to support effective management accounting. In fact, one of the criticisms lev-eled at EBS is that it is really an accounting system requiring everyone in the business to report on an ongoing basis each transaction they perform with 100% accuracy. Today’s financial applications provide for the real-time reporting of all transaction information originating from inventory move-ment, accounts receivable, accounts payable, taxes, foreign currency, and journal entries occurring within the enterprise. The more timely and accurate the posting of data, the more effective are the output reports and budgets that can be used for financial analysis and decision-making at all levels in the business.
Assets.
◾ Effective control of a company’s fixed assets is essential to ensuring continuous planning of the productive resources necessary to meet competi-tive strategies. EBS databases in this module center on the establishment of equipment profiles, diagnostics and preventive maintenance activities, and depreciation tracking.
Human Resources.
◾ The final module composing a modern EBS is the manage-ment of an enterprise’s human capital. Functions in this area can be broken down into two main areas. The first is concerned with the performance of transaction activities, such as time and attendance reporting, payroll admin-istration, compensation, reimbursable expenses, and recruitment. The second is focused on the creation of databases necessary to support employee pro-files, skills and career planning, and employee evaluations and productivity statistics.
Secondary Functional Areas of Operation
Today’s extended EBS is the product of the merger of the eight core business functions with the integrative networking capabilities of advanced Internet-enabled software applications. Realizing today’s requirements for speed, agility, real-time control, and exceptional customer satisfaction means that enterprises must employ a variety of technology applications beyond the core business model that enable the construction of a business architecture that is effective, efficient, purposeful, integrative, and collaborative. The resulting system, consisting of a mixture of often disparate noncore EBS technology applications, data collection devices, B2B point solutions, and legacy systems, must be capable of being disas-sembled and rapidly reasdisas-sembled into a single framework that matches the needs of the marketplace.
The merger of information technology suites as a business enabler is not a new idea. Historically, even in the days of silo-based organizations, the perpetual sys-tems challenge centered on integration and collaboration issues. The advent of e-business simply heightened the gaps separating the “closed” environment of local-ized ERP and legacy systems and the requirement for “open” or networked operat-ing systems, databases, and hardware platforms. Effectively meetoperat-ing this challenge requires businesses to develop architectures and frameworks that permit enterprises to synthesize available integration software and existing solutions to address the ever-evolving structure of today’s demanding business climate. Integrative infor-mation technology is about much more than just moving inforinfor-mation back and forth: it is also about integrating into whole business processes the capabilities of enterprises that span the supply chain.
At first sight, the application suites comprising the universe of today’s enterprise systems appear to be a maze of software products. ERP, customer relationship man-agement (CRM), SCM, EDI, supplier relationship manman-agement (SRM) and other technology acronyms litter current business literature and impart an impression of
incoherency, comprehendible only to a select club of industry analysts and “techies.”
Figure 3.3 is an attempt to assemble the core EBS functions and the possible com-ponents of today’s extended business system into a coherent model. As can be seen, the model is divided into three distinct regions of software products: core EBS, Middleware, and connectivity-enabling applications. Each of the regions can be briefly explained as follows:
1. EBS. The eight core functions of EBS stand at the center of today’s integrative information business solution. As described in detail at the beginning of this chapter, an EBS acts as the hub or “backbone” of an enterprise’s transaction and information management functions. Using the core EBS functional soft-ware applications as a foundation, today’s extended EBSs have been gradually converging with once stand-alone point solutions and Web-based applications to provide enhanced functionality and networking capabilities not available in the past. For example, supply chain planning (SCP) and APS have dramat-ically enlarged MRP planning functions. e-Procurement is encroaching on traditional purchasing functions, while CRM has radically expanded the one dimensional customer management functions of legacy systems. Also, the trend to outsource select business software to third parties, such as Software-as-a-Service (SaaS), is moving tomorrow’s EBS toward being a mixture of proprietary backbone applications, on-demand add-on software suites, and e-business capabilities.
2. EDI. The definition, advantages, and drawbacks of EDI are discussed in the previous chapter. In summary, EDI refers to the structured transmission of data and documents between organizations by electronic means. Even in this era of technologies such as XML Web services and the Internet, EDI is still the data format used by the vast majority of companies for the transaction of electronic commerce. EDI documents generally contain the same informa-tion that would normally be found in a paper document used for the same business function. Trading partners are free to use any format for the trans-mission of information. While recently there has been a move toward using some of the many Internet protocols for transmission, most EDI is still trans-mitted using a VAN.
3. Web-Based Applications. The third major area of today’s extended EBS is compromised of a variety of customer- and supplier-side software appli-cations that are Web-enabled and directly integrated with EBS backbone applications. When they were first introduced, these applications were simply “bolted-on” to supporting EBS applications. Today, the former monolithic structure of EBS is being decoupled and merged with these supporting e-business tools. For example, as Figure 3.3 illustrates, APS that provide manufacturing functionality, such as finite loading, optimization, and production synchronization, has been integrated with traditional MRP to provide planning and control capabilities not possible within the stan-dard ERP architecture. This merging of traditional ERP and specialized applications is expected to accelerate. A brief review of the applications illustrated in Figure 3.3 is as follows:
B2C and CRM
− (Customer Relationship Management). Utilizing the Internet to sell directly to the customer has become one of today’s top avenues for sales management and is discussed in detail in the previous chap-ter. CRM applications enable companies to closely manage all aspects of a customer’s relationship with an organization focused on increasing customer loyalty, retention, and profitability. CRM toolsets provide an integrated view of customer data and interactions allowing sales and marketing to be more responsive to customer needs. CRM components typically include the following: Internet-driven order management, sales force automation, promotions and event management, social network-ing, customer information storage, analytics for marketing research, and customer service.
− CPC (Collaborative Product Commerce). This can be defined as the enable-ment through Web-based tools of virtual communities of manufacturing and product designers focused on new product development. Because it is Internet empowered, CPC permits companies to focus more intensely on their core capabilities while leveraging external design partnerships to dramatically decrease the time-to-market of product configuration and product rollout.
− MES (Manufacturing Execution Systems). These systems manage and monitor work-in-process (WIP) data, including manual or automatic labor and production reporting, online inquiries, and links to tasks that take place on the production floor. Among the core functionalities of a MES can be found WIP tracking (labor, machines, materials), inventory management, production reporting (finished parts/goods, scrap, material issues, and returns), machine setup and downtime, online work orders, instructions, documentation, and drawings, quality management (sam-pling tests and employee certifications), automation integration (PLC/
SCADA/HMI/SPC), and other functions. While most MES do nothing to connect the shop floor with the broader supply chain they do enable companies to better coordinate manufacturing with overall supply chain needs.
− SCM (Supply Chain Management Applications). These applications enable not just companies, but whole supply networks to be closely integrated.
SCM applications encompass all operations within the supply chain, including the sourcing, acquisition, and storage of inventories, the sched-uling and management of WIP, and the warehousing and distribution of finished goods. SCM solutions enable businesses to streamline and automate the planning, execution, and control of these key activities.
Additionally, since there are often many third parties involved in a sup-ply chain, SCM software is designed to enhance communication, col-laboration, and coordination with suppliers, transportation and shipping companies, intermediaries, and other partners. Internet-enabled SCM provides for the synchronization of the supply channel community, mini-mization of channel costs, optimini-mization of network capabilities, real-time connectivity of channel supply and demand, and instantaneous visibility to demand and supply conditions within the entire supply chain network.
Through the use of optimization software, whole supply networks can make better decisions concerning priorities, demand, inventory, and asset utilization.
− BI (Business Intelligence). This comprises performance management and data warehouse software platforms. This software is used to access, trans-form, store, analyze, model, deliver, and track information to enable fact-based decision-making and extend accountability by providing all decision-makers with timely, relevant information. Additionally, business analytics is a framework that extends beyond software and systems to include culture, process, and performance strategies. The software tools considered part of business analytics span several areas, including analyt-ics, data integration, query/reporting, and performance management.
B2B and SRM
− (Supplier Relationship Management). Much has already been discussed about the content of B2B Web-based applications. Tools in this part of the extended EBS application suite are focused on deploying
independent, private, and consortia exchanges to facilitate materials and finished goods acquisition, requisitioning, sourcing, contracting, order-ing, and payment utilizing online catalogs, contracts, POS, and shipping notices. Similar to CRM, SRM software ensures that effective collabora-tive relationships are being formed, the right suppliers are being used, supplier performance targets are being hit, and buyers are paying the right price for the quality and services contracted.
e-Finance and Human Resources
− . The utilization of Internet technologies
to facilitate financial and human resource functions is a developing ele-ment in assisting companies to build competitive advantage in today’s complex, global business environment. e-Finance focuses on embedding core banking services, such as invoicing and payment, financing, and risk management within purchasing and logistics functions. A significant area is international commerce where Web applications are used to settle transactions in real-time regardless of currency. In the area of human resources, companies are expected to make much greater use of online tools to assist employees populate and access personnel databases, such as human skills repositories, recruiting, hiring, compensation, payroll, and knowledge management solutions housing the expertise and best prac-tices of an entire corporate culture.
Portals
− . Portal technologies are designed to provide company personnel and trading partners with secure, personalized access to data and self-ser-vice applications enabling them to react to changes in production sched-ules, forecasts, and other information. Usually information is accessed through Web browsers. The data retrieved is normally static and there is no direct access to the stored data. Not to be confused with PTXs, which require extensive system-to-system, application-to-application integration at the process level, portals provide people-to-system coordination where data from core functions such as ERP can be extracted, consolidated, and published on a portal for trading partners to see. Portals provide an
− . Portal technologies are designed to provide company personnel and trading partners with secure, personalized access to data and self-ser-vice applications enabling them to react to changes in production sched-ules, forecasts, and other information. Usually information is accessed through Web browsers. The data retrieved is normally static and there is no direct access to the stored data. Not to be confused with PTXs, which require extensive system-to-system, application-to-application integration at the process level, portals provide people-to-system coordination where data from core functions such as ERP can be extracted, consolidated, and published on a portal for trading partners to see. Portals provide an