Bco2000 Business Process Modelling: Organizational Assessment Answers

1. What is the most common Organizational Structure? How did the structure evolve? List at least 3 benefits and 3 drawbacks associated with the implementation of such a structure?
   
   
2. Define Functional information system and an Enterprise Resource Planning System (ERP)? What value does each system provide to an Organization? List 2 advantages and 2 drawbacks of each system?
   
   
3. Explainthe difference between the functional view and process view of Organizations. Why is the process view important today?

1. What is meant by silo effect? Given an example. How this silo effect can be eliminated by implementing an ERP System? Give an example
   
   
2. What mechanism is used by a company to verify that the validity of an invoice sent to them for payment? Explain what is involved in the process.
   
   
3. Explain the difference between a Bill of Materialand Product Routing with a suitable example)
   
   
4. What factors must an organisation take into account when it decides to transfer a planned order into a production order?
   
   
5. Explain the difference between a Made to Orderand Made to Stock What are the perceived advantages and disadvantages of each approach in relation to the customer and the organization?
   
   
6. What impact has globalizationhad on an organization? How have organizations responded?
   
   
7. In SAP functional view have restricted view of the master data. What does it mean when it is said that a product may have several views?What is a view and how are they used?
   
   
8. In the SAP environment, explain the difference between Organizational, Master and Transactional data? Provide examples.

12. Explain the four common material types in an ERP System.

The functional Structure is said to be the most commonly implemented Organizational Structure. Evolution of this structure was marked by the tendency of almost all of the companies to adapt the attribute of functional grouping (Bolman and Deal 2017). This grouping would tend to special requirements within a certain company which will in turn provide the most useful framework for productivity.

Benefits:

• Specialization is one of the greatest benefits of this structure. People who are experts in certain fields are assigned to their fields of expertise and this would bring out the best possible qualities in them.
• The functional grouping provides efficiency in work processes as employees are expected to work in their most capable sectors (Bolman and Deal 2017). This in turn enhances productivity.
• Reaching a goal becomes easier as task handling is quite simple and dynamic.

  Drawbacks:

• Creating groups for various fields limits the scope of communication. It results in reduced teamwork.
• Large number of divisions or departments in a company results in poor management. Controlling each department would be much more complex than handling a large team.
• Cohesion of ideas is less (Bolman and Deal 2017). It often is necessary to experiment ideas with all the sections of a task to provide better business solutions and that can be difficult to perform with functional structures.

2.

Functional Information System is the generalised combination of various specialised business functions such as marketing, production and many more (Seidel, Recker and Vom Brocke 2013). Managing information related to these departments create the ultimate functional information system.

Enterprise Resource Planning is the system for the purpose of managing the core processes of a business (Kilic, Zaim and Delen 2015). It is more of an integrated platform for performing several crucial business operations.

Functional information systems focus on specific departmental information and these departments separately develop the overall information system of the business (Kilic, Zaim and Delen 2015). The independent nature of this system helps in enhancement of different departments in a simple yet elegant fashion.

There are many processes in a business and handling of all the process information manually is extremely complex and time consuming (Kilic, Zaim and Delen 2015). This type of information management leads to fatal errors and therefore, an integrated ERP system reduces the complexities of business process management by providing efficient software means.

Advantages of Functional Information System:

• It helps in consistent development of the specialised departments within a company (Seidel, Recker and Vom Brocke 2013).
• It can provide efficient mechanism to handle complex processes with ease.

Disadvantages of Functional Information System:

• It involves little focus on data sharing.
• Manual information exchange is the worst feature of this system (Seidel, Recker and Vom Brocke 2013).

Advantages of Enterprise Resource Planning:

• The problems with manual exchange of data is solved with ERP platforms.
• Complex business processes are integrated into ERP software and it effectively helps in process analysis (Kilic, Zaim and Delen 2015).

Disadvantages of Enterprise Resource Planning:

• In case of small and medium businesses, the direct cost involved in implementation of ERP systems is extremely high (Kilic, Zaim and Delen 2015).
• A little incorrect measurement in customization can hurt the whole business.

3.

Functional view and Process view are differentiated in terms of business in the way that functional view focuses on the business functions including sales and production, whereas the process view focuses on the process of business operations such as order processing (McCormack and Johnson 2016).

Process view is more important today because it provides better interactive structure among the functions and it enhances businesses as it focuses on core activities (McCormack and Johnson 2016). The coordination among various departments within a company is essential and this is ensure by the process view. The functional view works independently of its departments and hence, enhancement of one department can create an operational imbalance. However, the process view covers the entire operation of the company and thus, provides better development. The independent nature of functional view can cause problems when it comes to meeting targets for all the departments. However, process view encourages the departments to work together and hence, results in outstanding productivity.

4.

The Silo effect is known to be an organizational disease where several departments within an organization suffer from lack of information exchange (Bevc, H. Retrum and M. Varda 2015).

An example of Silo effect would be such when various departments in an organization face a limited exposure to communication and data exchange. It ultimately ruins the business productivity (Bevc, H. Retrum and M. Varda 2015).

Issues arise in companies due to the divided functional nature. However, ERP system resolves the issues with its integrated platform and it provides the departments with access to all of the operational data and business processes (Bevc, H. Retrum and M. Varda 2015). Integration solves the communication issues and develops productivity. ERP helps the sales department by distributing sales data throughout the company. The marketing plans can adapt to changes due to ERP systems. The business operations do not have to be enclosed by a specific field of expertise. Departments can share views and exchange data for better process management.

5.

Companies use Three-Way Match mechanism for avoiding frauds in invoice processing (Bayar 2016).

The three-way mechanism is so named due to the involvement of three documents. These documents handle the following:

• The first document will include the invoice of the vendor confirming the amount payable by the organization.
• The second is consisted of a purchase order.
• The third includes a report that the item is received.

The matching is performed to confirm the quantities involved in a transaction. After the matching is performed, the invoice gets validated and the process proceeds (Bayar 2016). This mechanism helps in alleviating fraudulent activities that could harm the assets of a company.

6

Bill of Material is the record that keeps track of all the raw materials required for production (Shamsuzzoha and Helo 2017). Whereas, product routing is the processes or steps undertaken to manufacture a product.

A specific material can have its own requirements which will generate its own bill of material and it will add into the overall bill of material (Shamsuzzoha and Helo 2017). However, product routing needs specific places as work centres for the processing purpose of the materials. A certain time duration is allocated to each material processing operation.

For example, bill of material for production of motor bikes would need to list the assembly of wheels and tires, a frame, gear assembly, engine components, seat assembly, pedal kit, chain, brake assembly, warranty papers, packaging etc.

For example, product routing for bikes would require a centre where the entire development or production will take place. Different processes will take place for the different parts (Shamsuzzoha and Helo 2017). Proper mechanisms will be performed separately for wheels fitting, brake adjustments, engine implementation, ergonomic measurement for sit adjustment etc. These operations will be allocated specific durations.

7.

A Planned Order is the initial phase in the overall process of manufacturing (Atan et al. 2015). Before knowing the proper production requirements, the planned order defines the specifications for production. A Production Order is the complete information which is utilized in the process of final production (Atan et al. 2015).

Planned order specifies the needs or specialized aim at production. Planned order helps in organizing a purpose of a production. It can specify whether the order is from customers or it is for inventory enhancement.

Now, to convert a planned order into production order, a few factors have to be analysed. These factors are:

• A specification and definition of the product to be produced.
• The amount of production.
• The deadline of production.
• The centre where the production will take place.
• The resources utilized in the production process.
• The expected cost of manufacturing.

8.

Make to Order is a strategy undertaken by a company that specifies a process of production (Bolman and Deal 2017). This process is associated with the orders from customers. For example, the firm Dell Computers manufactures devices as per the customer requirements and they provide services regarding the requests generated by customers.

However, Make to Stock strategy is a different process that specifies the benefit of an organization itself (Bolman and Deal 2017). This process is not related to customer needs or orders. This strategy basically focuses on the inventory management of an organization. For example, Apple does not manufacture as per customer orders. The firm increases its inventory through its production.

Advantages and Disadvantages of Make to Order Strategy:

The biggest advantage of this strategy is its ability to focus on specialisation. Development of products as per the customer requirements helps in understanding the market trend in a specialized field of production (Bolman and Deal 2017). It also reduces the unnecessary increase of inventory. Extra inventory can affect the profit of an organization negatively and hence, this strategy provides a solution to unprofitable productions.

However, this strategy suffers from low supply. This strategy does not include inventory as its production and hence, responding to customer needs by means of supply is decreased (Bolman and Deal 2017). It also takes a large amount of time to take care of the customer requirements, which in turn hampers the sales and profit of the organization.

Advantages and Disadvantages of Make to Stock Strategy:

The advantage of this strategy is its immense inventory supply (Bolman and Deal 2017). This helps in fast supply of goods and no time is wasted in delivering products.

The biggest disadvantage is that with high amount of inventory comes a high requirement for warehousing (Bolman and Deal 2017). Extra inventory would need a storage place and company would have to spend a large sum of money in affording such places where it could spend the money in other business ideas. It also reduces quality of products.

9.

Globalization is the expansion of a business throughout the globe breaking the geographical boundaries. It results in expansion of markets. It means, the products enter the largest scope in terms of sales. Expanding a business globally creates an advantage of acquiring resources at a cheaper rate (McCormack and Johnson 2016). It creates opportunities for outsourcing. The products of the company gets a global exposure and this helps the company in understanding the trending requirements in specific fields of production. This results in internationally developing products and getting into competition with other large companies. It affects the technological aspects of the company.

Globalization requires the companies to shift its traditional business methods to suit an international perspective. Many organizations have thrived on the global competition. Several companies have evolved by changing their business plans and cultures according to the international business trends. Organizations have to welcome the diversities in the world business (McCormack and Johnson 2016). Companies often have to modify their business strategies according to the diversity in production trends in different areas of the world. In this case, managing the teams involved in the changing business process is extremely necessary and thus, successful global organizations have always encouraged its teams to evolve with the needs of the market. The work ethic is a big issue that every firm faces while facing global competition and this requires efficient development of ethical standards. Keeping these factors in mind and pursuing them with dedication will help a business establish itself globally.

10.

In SAP, products are presented in multiple views. These views are nothing but various stages of production process and in every view, certain data are processed that help in production (McCormack and Johnson 2016).

There is Basic view that provides a general information about materials required in production.

In Classification view, the source and characteristics of the materials are identified.

Sales views are presented to provide various level of production. Statistical analysis is involved in this view (McCormack and Johnson 2016).

Plant view analyses the sales properties of a material and evaluates the potential plant level for it. It also checks the availability of the material along with its quantitative properties.

The Export views contains data related to the exporting of materials and its origin.

The Sales Text view contains general sales and distribution information in various languages.

The MRP views include the planning of a product, procurement calculations, consumption period and few other valuable fields.

The Work Scheduling view contains the production scheduling data. The capacity of the requirements is calculated in this view (McCormack and Johnson 2016).

Plant Data Storage views mostly present the material supply data and their storage information. These views are responsible for calculating size and weight related calculations for storage management.

Warehouse Management views indicate the stock placement and removal strategies (McCormack and Johnson 2016). These views also deal with the quantity information of the materials and the type of storage these stocks require.

Quality Management view is presented to review or inspect the quality of the materials.

Accounting views are developed to provide proper price calculations with tax.

The Cost views are developed due to analysing the productions costs along with currencies (McCormack and Johnson 2016). This view also delivers the period of development and unit values.

The Purchasing view consists of the unit in which the orders are recorded and the value of the production is calculated.

The Import view is quite similar to the Export view and sales text view. In this view, the orders are reviewed.

The Additional data view holds the information about the order specifications. It also deals with the overall data of the entire product sales.

11.

The Organizational data is the information that provides parameters to various transactional operations in a business (McCormack and Johnson 2016). Data produced from the sales and marketing operations are considered as organizational data. For example, client details, storage specifications are the organizational data.

The Master data is something which stays constant over a period of time. It is a central data of a business which needs to be update on a regular basis (McCormack and Johnson 2016). The Master data provides a base to the transactional processes in a business. For example, material and customer data can be considered as Master Data as they specify the purchasing, selling and inventory data.

Transactional data is the data that gets altered more frequently than the other two (McCormack and Johnson 2016). This data is based on the daily transaction operations. For example, the payment, date of delivery etc. are the transactional data.

12.

The four materials common in the ERP platform are as follows:

• Raw Materials (ROH): These materials are basically bought from vendors and utilized in the business production (Kilic, Zaim and Delen 2015). These are not in turn sold to the customers. Examples are wheels, tires etc.
• Semi-Finished Goods (HALB): These are derived from the raw materials and they are utilized in producing finished goods (Kilic, Zaim and Delen 2015). For example, wheel assemblies.
• Finished Goods (FERT): These goods are created as end products from raw materials and semi-finished goods. For example, a motor bike.
• Trading Goods (HAWA): These are basically bought from vendors and in turn sold to end customers (Kilic, Zaim and Delen 2015). No extra processing is required before selling these goods. For example, a helmet.

References:

Kilic, H.S., Zaim, S. and Delen, D., 2015. Selecting “The Best” ERP system for SMEs using a combination of ANP and PROMETHEE methods. Expert Systems with Applications, 42(5), pp.2343-2352.

Seidel, S., Recker, J.C. and Vom Brocke, J., 2013. Sensemaking and sustainable practicing: functional affordances of information systems in green transformations. Management Information Systems Quarterly, 37(4), pp.1275-1299.

Kilic, H.S., Zaim, S. and Delen, D., 2015. Selecting “The Best” ERP system for SMEs using a combination of ANP and PROMETHEE methods. Expert Systems with Applications, 42(5), pp.2343-2352.

McCormack, K.P. and Johnson, W.C., 2016. Supply chain networks and business process orientation: advanced strategies and best practices. CRC Press.

Bevc, C.A., H. Retrum, J. and M. Varda, D., 2015. New perspectives on the “silo effect”: initial comparisons of network structures across public health collaboratives. American journal of public health, 105(S2), pp.S230-S235.

Bayar, S., 2016, October. Performance analysis of e-Archive invoice processing on different embedded platforms. In Application of Information and Communication Technologies (AICT), 2016 IEEE 10th International Conference on (pp. 1-4). IEEE.

McCormack, K.P. and Johnson, W.C., 2016. Supply chain networks and business process orientation: advanced strategies and best practices. CRC Press.

Bolman, L.G. and Deal, T.E., 2017. Reframing organizations: Artistry, choice, and leadership. John Wiley & Sons.