1.

Marketing and Sales Department

Benefits:
 Customer Data Integration: ERP centralizes customer information, purchase behavior, transaction history, and customer needs,
enabling personalized marketing and sales strategies.
 Campaign Management: Tracks and analyzes the performance of marketing campaigns and promotions.
 Sales Process Optimization: Automates sales processes, from order reception to payment processing and delivery.
Example: The Sales team uses ERP to track leads, automatically generate quotations based on predefined product and service data. The
Marketing team leverages ERP to analyze customer data, create targeted campaigns, and monitor their real-time effectiveness.

2. Production and Supply Chain Department

Benefits:
 Production Optimization: ERP manages production lines, tracks raw materials, products, and machine performance, optimizing
productivity and minimizing waste.
 Inventory and Supply Chain Management: Tracks inventory levels and forecasts demand, optimizing procurement and storage
processes.
 Effective Coordination and Delivery: Improves coordination between departments and suppliers, reducing material shortages or
overstocking.
Example: The Production team uses ERP to monitor production orders, schedules, and the status of each process, minimizing machine and
labor downtime. The Supply Chain team tracks delivery schedules and inventory levels, ensuring timely availability of materials without
excess stock.

3. Accounting and Finance Department

Benefits:
 Automated Financial Reporting: ERP gathers data from other departments, enabling accurate and rapid financial reporting.
 Cash Flow and Budget Management: Tracks expenses, revenue, and assists in budget planning and financial forecasting.
 Regulatory Compliance: Tracks financial transactions, minimizes errors, and ensures compliance with tax and accounting
regulations.
Example: The Accounting team uses ERP to automate invoice processing, track costs, revenue, and accounts receivable/payable. The Finance
team generates monthly or quarterly financial reports using ERP, supporting strategic financial decisions.

4. Human Resources Department

Benefits:
 Efficient HR Management: ERP stores employee information, tracks recruitment, training, and promotion processes.
 Attendance and Payroll Management: Automates calculations for working hours, salaries, and employee benefits.
 Performance Analysis: Tracks and analyzes employee performance through KPI metrics.
Example: The HR department uses ERP to maintain employee work histories, automate attendance tracking, and calculate payroll. ERP also
generates performance reports, helping HR identify high-performing employees or those needing additional training.
Week 1 & 2: Introduction to the course Business functions, business process and ERP
Monk – Chap 1 - Business Functions and Business Processes
1: Distinguish between a business function and a business process. Describe how a business process cuts across functional lines in an
organization. How might a manager organize his or her staff in terms of business processes rather than functional departments?
What benefits would there be with this type of organization? What challenges would it pose?

1.1. Distinguish Between a Business Function and a Business Process

 A business function is a specific activity or set of activities performed within a functional area, such as marketing, sales, accounting,
or human resources. For example, payroll processing is a function within the Human Resources department.
 A business process, on the other hand, is a collection of activities that cuts across multiple functional areas to achieve a specific
outcome, make output that is of value to the customer. For instance, the process of fulfilling a customer order involves sales,
inventory, production, and logistics, all coordinated to deliver the product to the customer.
(GPT):

Criteria Business Function Business Process

Definition A broad area of activity or responsibility within an A sequence of tasks or activities designed to achieve a
organization. specific goal.

Scope Covers key organizational activities like finance, HR, Focuses on specific workflows or steps to achieve a result.
sales.

Goal Ensures the efficient operation of core organizational Achieves a particular outcome or objective through a set of
areas. actions.

Characteristics Typically managed by specific departments (e.g., Involves a series of connected tasks, often across multiple
finance, HR). departments.

Complexity Relatively simple and straightforward. More complex, usually involving multiple departments or
roles.

Examples Finance, HR, Marketing, Sales. Order fulfillment process, employee onboarding, invoicing
process.

1.2. Describe How a Business Process Cuts Across Functional Lines in an Organization
 Business processes often require collaboration between different departments to meet a common objective. For example:
 A sales process begins in the marketing and sales department where the order is taken, extends to supply chain management
for product preparation and shipping, and involves accounting and finance for billing and payments.
 The flow of data across these functional areas ensures a seamless operation. For instance, data on a customer’s order from sales is
required by production to manufacture the product, logistics for delivery, and accounting for invoicing.
(GPT):
A business process cuts across functional lines by involving multiple departments or functions working together towards a common goal.
Unlike business functions, which are focused on a specific area (e.g., finance, HR), business processes require collaboration between
departments.
For example, in an order fulfillment process, sales initiates the order, inventory manages stock, shipping handles delivery, and finance
processes payments. Information flows across functions, and integrated systems (like ERP) help coordinate tasks.
Each function contributes to the process, and cross-functional teams or process owners ensure the process is efficient and continuous,
reducing silos and improving decision-making. This cross-functional approach helps achieve smooth, coordinated operations.

1.3. How Might a Manager Organize Their Staff in Terms of Business Processes Rather than Functional Departments?
 Instead of grouping employees by department (e.g., marketing, sales, production), the manager can create cross-functional teams
focused on specific processes such as “Order Fulfillment” or “Customer Support.”
  Teams would consist of members from different functional backgrounds, such as a marketer, a supply chain specialist, and an
accountant, who work collaboratively to manage the entire process.
(GPT):
A manager organizing staff around business processes rather than functional departments would focus on outcomes rather than individual
departmental tasks. Here’s a concise approach:
Steps:
1. Identify Key Processes: Pinpoint core processes like order fulfillment, product development, or customer onboarding.
2. Create Cross-Functional Teams: Form teams from different departments (sales, finance, IT, HR) to manage specific processes.
o Example: An order fulfillment team could include members from sales (order taking), inventory (stock management),
shipping (delivery), and finance (billing).
3. Assign Process Owners: Appoint a manager or process owner to oversee and optimize the entire process.
4. Empower Teams: Grant decision-making authority to process teams for faster response times and accountability.
5. Measure Process Outcomes: Evaluate performance based on the success of the process, like customer satisfaction or order delivery
time.
6. Continuous Improvement: Regularly review and refine processes to eliminate bottlenecks and improve efficiency.
Example:
Instead of having separate departments for marketing, sales, and customer service, a customer onboarding process team would include staff
from all three areas. They work together to ensure a smooth and efficient onboarding experience, with the process owner tracking key
outcomes like customer satisfaction and time to first value.
This model improves collaboration, accelerates decision-making, and aligns teams towards a common goal.

1.4. What Benefits Would There Be With This Type of Organization?

 Customer-Centric Approach: Business process teams align their goals with customer satisfaction, as processes are designed from the
customer’s perspective.
 Improved Communication: Cross-functional teams enhance collaboration and reduce silos, leading to better decision-making.
 Efficiency and Responsiveness: Streamlining processes can reduce redundancies and bottlenecks, enabling quicker responses to
customer needs.
 Enhanced Accountability: Teams take ownership of the entire process, fostering a sense of responsibility and alignment with
organizational objectives.

1.5. What Challenges Would This Pose?

 Resistance to Change: Employees and managers may struggle with shifting from a function-based to a process-oriented structure.
 Coordination Complexity: Managing cross-functional teams may require significant effort in coordination and leadership.
 Skill Development: Employees may need additional training to understand and perform roles outside their traditional functional
expertise.
 Initial Costs: Transitioning to a process-oriented organization may involve costs related to restructuring, training, and adapting
information systems

Leon - Chap 1: Enterprise – An overview

1. Give an example of conflicting departmental interests.
Conflicting departmental interests can occur between the sales and marketing department and the production department. The sales
and marketing team may push for greater product variety to meet diverse customer needs, while the production department prefers to limit
variety to reduce production costs. This conflict arises because each department operates with goals specific to its function, which may not
align seamlessly with those of other departments (cuối page 3)
A common example of conflicting departmental interests occurs between the Sales and Finance departments.
 Sales typically focuses on closing deals quickly to meet revenue targets, sometimes offering discounts or flexible payment terms to
close sales.
 Finance, on the other hand, is concerned with the company's cash flow, profitability, and managing the risk of bad debt. They may
oppose overly aggressive discounting or long payment terms if they believe it will impact the company's financial stability.
This conflict arises because while the Sales team is incentivized to drive immediate revenue, Finance is focused on maintaining long-term
financial health.
2. What is the traditional approach of an organization? What are the pros and cons of the traditional approach?
The traditional approach of an organization involves dividing it into separate units or departments based on the functions they
perform, such as manufacturing, production planning, purchasing, sales and distribution, finance, and R&D. These departments operate
independently as isolated silos, with their own systems for data collection and analysis. Information generated by one department is typically
unavailable to other departments and is shared only with top management in the form of summary reports. This approach often leads to a lack
of communication and coordination between departments, causing inefficiencies and hindering the organization’s progress toward common
goals (page 3)

Pros Cons

 Clear Roles and Responsibilities:  Silos and Lack of Collaboration:

 Well-defined roles and departmental boundaries help  Departments may become isolated and reluctant to share
avoid confusion and ensure accountability. information, leading to communication breakdowns and
 Stability and Control: inefficiencies.
 A hierarchical structure can provide a stable environment  Slow Response to Change:
where processes are standardized, and decision-making is  Rigid structures and traditional processes can make it
clear, particularly in large organizations. harder to adapt to new technologies or market changes
 Expertise and Specialization: quickly.
 Departments focus on their areas of expertise, which can  Limited Cross-Functional Innovation:
lead to deeper specialization and efficiency within each  Focusing on department-specific goals can stifle innovation
department. or opportunities for cross-departmental collaboration,
 Easier Performance Measurement: potentially missing out on synergistic solutions.
 With distinct roles and responsibilities, performance can  Bureaucracy:
be measured and managed more easily in a  Hierarchical decision-making can result in slow approvals
straightforward manner. and excessive red tape, which delays initiatives and reduces
 Structured Decision-Making: operational agility.
 Decision-making is often concentrated at higher levels,  Employee Morale and Engagement:
which can lead to consistent and aligned strategic  The focus on hierarchy and top-down management can
direction. create a disconnect between leadership and staff, leading to
lower engagement or job satisfaction.
 Resource Redundancy:
 Each department may maintain its own resources, leading
to duplication of efforts and inefficiencies in terms of
resource utilization.

Example: An example of the traditional approach in organizations can be seen in manufacturing:

 Scenario: The production department needs to manufacture a specific product and requests raw materials from the procurement
department. The procurement department, however, delays the purchase due to budgeting constraints in the finance department.
 Result: The lack of communication and coordination among the departments causes delays in production, which impacts sales and
customer satisfaction. Each department focuses on its goals—procurement prioritizes cost-saving, finance focuses on limiting
expenditures, and production aims to meet manufacturing targets—without aligning with the organizational objective of timely
product delivery.
This illustrates the silo effect, where departments operate in isolation, leading to inefficiencies and missed opportunities for synergy.

3. Explain the enterprise way of functioning of organizations.

Định nghĩa trong sách: In the enterprise way, the entire organization is considered as a system and all the departments are its sub-
systems. Information about all the aspects of the organization is stored centrally and is available to all departments (page 4)
(GPT)
The enterprise way of functioning treats the entire organization as a single, integrated system where all departments are interconnected and
work collaboratively toward common goals. This contrasts with the traditional siloed approach.
Key Features of the Enterprise Way:
1. Centralized Information Sharing:
 All departments have access to a central database that stores information about every aspect of the organization.
 Example: The sales team can access real-time production data to provide customers with accurate delivery timelines, while the
finance team can view purchasing details to plan cash flow.
2. Integrated Business Processes:
 Business processes are viewed holistically, cutting across departmental boundaries to achieve end-to-end efficiency.
 Example: In a customer order fulfillment process, the sales department validates the order, the warehouse prepares the shipment, and
the accounting team handles invoicing and payment—all coordinated seamlessly.
3. Alignment of Departmental Goals:
 All departments align their objectives to the organization’s overall goals, minimizing conflicts.
 Example: Instead of the marketing team pushing for product variety while production limits it, both departments can use shared data
to balance customer needs with cost efficiency.
4. Improved Transparency and Collaboration:
 Departments are aware of what others are doing, why they are doing it, and how their actions contribute to the organization’s
objectives.
 Example: If the manufacturing team knows which products are in high demand from marketing data, they can prioritize production
accordingly.
5. Customer-Centric Approach:
 The enterprise way focuses on business processes from the customer’s perspective, ensuring better service and satisfaction.
 Example: A car manufacturer coordinates between sales, production, and finance to deliver a customized car to the customer
promptly while ensuring all formalities like financing and registration are efficiently handled.

Advantages:
• Efficiency: Eliminates redundancies and reduces delays by ensuring smooth communication between departments.
• Agility: Enables the organization to respond quickly to market changes with integrated information.
• Customer Satisfaction: Enhances the customer experience by aligning internal processes with customer needs.
By integrating information systems and automating processes, the enterprise way helps organizations function as a cohesive entity, driving
better decision-making and achieving shared objectives
Key Features of the Enterprise Way of Functioning:
1. Integrated Organizational Structure
 Cross-functional Collaboration: Instead of isolated departments, there’s an emphasis on collaboration across different functions
(e.g., Sales, Marketing, Finance, HR). This fosters greater synergy and a holistic view of the organization.
 Flat or Matrix Structures: Companies may adopt flatter or matrixed organizational structures, where decision-making is distributed
and employees work across functional areas.
2. Enterprise Resource Planning (ERP) Systems
 Unified Technology: Businesses typically rely on integrated ERP systems that consolidate data across various departments (e.g.,
finance, HR, production). This streamlines processes and ensures a single source of truth for all departments, improving accuracy
and coordination.
 Data Sharing: Information is accessible across functions, reducing data silos and improving transparency and decision-making.
3. Strategic Alignment
 Unified Goals: All departments and teams are aligned towards common strategic objectives, ensuring that each function contributes
to the overarching business goals. This fosters a sense of shared purpose.
 Performance Metrics: Metrics are often shared across departments to ensure that everyone is focused on key performance
indicators (KPIs) that contribute to enterprise success.
4. Decentralized Decision-Making
 Empowered Employees: While strategic decisions are often centralized, operational decisions are pushed down to lower levels,
giving employees the autonomy to make decisions that align with enterprise goals.
 Faster Adaptation: Decentralized decision-making enables the organization to be more responsive and adaptable to changes in the
market or environment.
5. Customer-Centric Approach
  End-to-End Customer Focus: The enterprise model often shifts focus from just departmental goals to customer-centric goals. Each
function, whether it’s sales, production, or marketing, is aligned to deliver a seamless customer experience.
 Cross-Departmental Customer Engagement: For example, customer service and marketing teams might work together to ensure
consistent messaging and quick issue resolution, improving overall customer satisfaction.
6. Innovation and Continuous Improvement
 Culture of Innovation: There’s a strong emphasis on continuous improvement and innovation at every level of the organization.
Employees are encouraged to collaborate across teams to create new solutions and improve existing processes.
 Agile Methodologies: Many enterprises adopt agile methodologies to remain flexible and innovative in their operations, allowing
for iterative progress and faster response to changing business environments.
7. Knowledge Sharing and Learning
 Learning Organization: Enterprises often focus on knowledge management systems where employees share best practices,
insights, and lessons learned, ensuring the entire organization benefits from individual experiences.
 Collaborative Tools: Tools like intranets, chat platforms (e.g., Slack, Teams), and knowledge-sharing software (e.g., Confluence,
SharePoint) help facilitate information exchange across departments.
Benefits of the Enterprise Way of Functioning:
 Increased Efficiency: Integration and collaboration between departments lead to more streamlined processes and fewer
redundancies.
 Better Decision-Making: Access to real-time, enterprise-wide data ensures that decisions are based on accurate and comprehensive
information.
 Flexibility and Adaptability: Decentralized decision-making and cross-functional teams enable the organization to quickly adapt to
changes in the market or technology.
 Improved Customer Satisfaction: A unified approach to customer service, sales, and support ensures a more seamless and
personalized customer experience.
 Innovation: Encouraging collaboration across departments fosters a culture of creativity and innovation that can drive the business
forward.
Challenges of the Enterprise Way of Functioning:
 Complexity: Managing a large, integrated system with cross-functional teams can become complex, requiring robust governance
and clear communication.
 Resistance to Change: Shifting from traditional, siloed structures to more integrated models can face resistance from employees
who are accustomed to established processes and hierarchies.
 Coordination Costs: While collaboration is beneficial, it can also require significant time and effort in coordinating across
departments, especially if there are unclear processes or conflicting priorities.
 Risk of Over-centralization: If strategic decision-making is too centralized, it may slow down the organization’s response to
changes on the ground.
In essence, the enterprise way of functioning is about creating an organization where different functions work together seamlessly, technology
is leveraged for efficiency, and everyone is aligned toward common business objectives, often with a focus on customer satisfaction and
innovation.

4. What are the advantages & disadvantages of the enterprise way of functioning?

Advantages Disadvantages

1. Improved Communication and Coordination: 1. Complexity in Implementation:

 Departments can access and share data seamlessly, breaking  Transitioning to an integrated system requires
down silos. significant time, effort, and expertise.
 Example: The purchasing team can view production  Example: Implementing an ERP system may involve
planning details to schedule purchases, avoiding overstock months of training and customization for different
or shortages. departments.
2. Holistic Decision-Making: 2. High Initial Costs:
 Integrated information systems provide accurate, relevant,  Developing or purchasing integrated systems and
and timely data, enabling better decision-making. training staff requires substantial investment.
 Example: Management can monitor real-time sales and  Example: A small business might struggle with the cost
 inventory data to decide on production adjustments or of setting up an ERP system.
marketing strategies. 3. Dependency on Technology:
3. Alignment of Goals:  The system’s effectiveness depends on robust
 All departments work toward shared organizational technology; any failure can disrupt the entire
objectives rather than conflicting departmental goals. organization.
 Example: The sales team’s customer-focused strategies can  Example: A system outage could halt operations across
align with the production team’s cost optimization by using sales, production, and finance.
real-time data to find a balanced solution. 4. Resistance to Change:
4. Increased Efficiency and Productivity:  Employees may resist adopting new processes or
 Automation of processes and elimination of redundancies systems, hindering full integration.
reduce delays and errors.  Example: Workers in the finance department might find
 Example: Automating order processing ensures timely it challenging to switch from legacy systems to an
communication between sales, production, and delivery integrated ERP system.
teams. 5. Security Risks:
5. Enhanced Customer Satisfaction:  Centralized data storage increases the potential impact
 Viewing processes from the customer’s perspective leads to of data breaches.
better service and faster responses.  Example: If the central database is compromised,
 Example: A customer placing a car order experiences sensitive information across all departments could be
smooth and efficient handling of queries, order processing, exposed.
and delivery due to coordinated departmental efforts.
6. Reduction in Data Redundancy:
 A centralized database eliminates duplicate data entries and
inconsistencies.
 Example: Sales, inventory, and accounting systems update
simultaneously when an order is placed.

5. What is an enterprise, and what are the different types? Give examples.
An enterprise is a group of people with a common goal and certain resources at their disposal to achieve that goal. It acts as a single
entity and is organized to accomplish specific objectives. The enterprise can range in scale, from a small sidewalk espresso cart to a large
organization. (page 3)
Types of enterprises currently in Vietnam
According to the provisions of the Law on Enterprises 2020), in Vietnam, there are currently 5 types of enterprises, including:
(1) Multi-member limited liability companies in Vietnam
- A multiple-member limited liability company means an enterprise that has 02 – 50 members that are organizations or individuals.
A member’s liability for the enterprise’s debts and other liabilities shall be equal to the amount of capital that member contributed to the
enterprise, except for the cases specified in Clause 4 Article 47 of the Law on Enterprises 2020.
The member’s stake (contributed capital) may only be transferred in accordance with Articles 51, 52 and 53 of the Law on Enterprises 2020.
- A multiple-member limited liability company has the status of a juridical person from the day on which the Certificate of Enterprise
Registration is issued.
- Multiple-member limited liability companies must not issue shares except for equitization.
- Multiple-member limited liability companies may issue bonds in accordance with this Law and relevant laws; private placement of bonds
shall comply with Article 128 and Article 129 of the Law on Enterprises 2020.
Example:
 Viettel Group: A large telecommunications company in Vietnam, which operates as a multi-member limited liability company,
owned by the State and various stakeholders.
(2) Single-member limited liability company in Vietnam
- A single-member limited liability company is an enterprise owned by a single organization or individual ((hereinafter referred to as
“owner”). The owner’s liability for the company’s debts and other liabilities shall be equal to the company’s charter capital.
- A single-member limited liability company has the status of a juridical person from the day on which the Certificate of Enterprise
Registration is issued.
- A single-member limited liability company must not issue shares except for equitization.
- Single-member limited liability companies may issue bonds in accordance with this Law and relevant laws; private placement of bonds shall
comply with Article 128 and Article 129 of the Law on Enterprises 2020.
Example:
 Vingroup: Initially started as a single-member LLC before becoming a joint-stock company, Vingroup is an example of a company
that expanded from a single-member setup into a large conglomerate in the real estate and retail sectors.
(3) Joint stock companies in Vietnam
- A joint stock company is an enterprise in which:
+ The charter capital is divided into units of equal value called shares;
+ Shareholders can be organizations and individuals; the minimum number of shareholders is 03; there is no limit on the maximum number of
shareholders;
+ A shareholder’s liability for the company’s debts and liabilities is equal to the amount of capital contributed to the company by the
shareholder;
+ Shareholders may transfer their shares to other persons except for the cases specified in Clause 3 Article 120 and Clause 1 Article 127 of
this Law.
- A joint stock company has the status of a juridical person from the day on which the Certificate of Enterprise Registration is issued.
- A joint stock company may issue shares, bonds and other kinds of securities.
Example:
 Vinamilk (Vietnam Dairy Products Joint Stock Company): One of the largest dairy producers in Vietnam, Vinamilk is a joint-
stock company listed on the Vietnam Stock Exchange (HOSE), with shareholders who can buy and sell shares publicly.
(4) Partnerships in Vietnam
- A partnership is an enterprise in which:
+ There are least 02 partners that are joint owners of the company and do business under the same name ((hereinafter referred to as “general
partner”). There can be limited partners in addition to general partners;
+ A general partner shall be an individual whose liability for the company’s obligations is equal to all of his/her assets;
+ A limited partner can be an organization or an individual whose liability for the company’s debts is equal to the promised capital
contribution.
- A partnership has the status of a juridical person from the day on which the Certificate of Enterprise Registration is issued.
- A partnership must not issue any kind of securities.
Example:
 Hanoi Law Firm: A local law firm formed as a partnership, where the partners share liability and management responsibilities in
the firm. Each partner's personal assets can be used to cover any business liabilities.
(5) Sole proprietorships in Vietnam
- A sole proprietorship is an enterprise owned by a single individual whose liability for its entire operation is equal to his/her total assets.
- A sole proprietorship must not issue any kind of securities.
- An individual may only establish one sole proprietorship. The owner of a sole proprietorship must not concurrently own a household
business or hold the position of general partner of a partnership.
- A sole proprietorship must not contribute capital upon establishment or purchase shares or stakes of partnerships, limited liability
companies or joint stock companies.
Example:
 A local bakery or café: A small business owned and operated by a single individual, such as a neighborhood bakery or a small street
food vendor. The owner is personally liable for any debts or obligations the business incurs.

6. What are business systems, and how did they function?

Definition: Business systems are structured frameworks within an organization that support specific functional areas, such as marketing,
production, finance, or human resources. These systems were historically designed to cater to the isolated needs of individual departments,
focusing on their respective functions.
How Did Business Systems Function
1. Departmental Isolation:
 Each department had its own independent system for collecting, analyzing, and managing data.
  Example: The accounting department maintained a financial management system, while the production team used a production
planning system. These systems operated independently, with little interaction.
2. Limited Data Sharing:
 The information generated within one department was not accessible to others, except at the top management level through summary
reports.
 Example: Sales data might not be directly accessible to the inventory team, causing delays in inventory replenishment.
3. Pre-Defined Outputs:
 These systems were designed to produce specific, pre-defined reports and data outputs, which limited their flexibility.
 Example: If a manager needed data outside the scope of the predefined reports, they could not generate it directly.
4. Lack of Integration:
 These systems operated in silos, making it difficult to coordinate activities that spanned multiple departments.
 Example: A customer order requiring input from sales, inventory, and accounting might involve significant manual effort to collate
and share data across departments.
5. Time-Consuming Data Consolidation:
 Decision-makers had to manually gather and correlate data from various systems, delaying the decision-making process.
 Example: To assess production costs, a manager might need to collect reports from both the finance and production systems,
reconcile the data, and then analyze it.
Business systems served as the foundation for managing individual departmental tasks but were constrained by their lack of integration and
cross-functional communication .
What are Business Systems?
A business system is a structured set of processes, practices, technologies, and resources that organizations use to operate, manage, and
improve their operations. These systems are designed to streamline and integrate various business functions such as production, finance,
marketing, sales, HR, customer service, and supply chain management to ensure efficiency, consistency, and growth.
In simpler terms, business systems are the organized approaches and tools that enable a company to carry out its day-to-day activities and
strategic objectives effectively.

How Do Business Systems Function?

Business systems function by integrating various components, processes, and technologies to work in harmony. Below are the key elements
and how they function:
1. Processes and Procedures
 Definition: These are the established ways of doing business within an organization. It includes workflows, operational procedures,
and guidelines for tasks.
 Function: Processes ensure that work is performed consistently and efficiently. For example, a sales process might involve lead
generation, prospecting, sales pitch, and closing the deal. A purchasing process involves identifying needs, sourcing suppliers,
ordering, and receiving goods.
2. People
 Definition: The individuals involved in carrying out the various activities within the system, including employees, managers, and
external partners.
 Function: People are responsible for executing the processes. They ensure that tasks are done correctly, decisions are made, and
customer needs are addressed. For example, a sales team is crucial for generating revenue, while an HR team manages recruitment
and employee relations.
3. Technology and Tools
 Definition: Software, hardware, and digital tools that support business functions. This includes Enterprise Resource Planning (ERP)
systems, Customer Relationship Management (CRM) software, financial systems, and more.
 Function: Technology helps automate tasks, store data, improve communication, and streamline processes. For example, CRM
systems help sales teams track customer interactions and improve relationship management, while ERP systems integrate different
business functions like finance, procurement, and HR into one system.
4. Information
 Definition: The data collected and used by the business to make decisions. This includes both structured data (like sales reports or
financial statements) and unstructured data (like customer feedback or market trends).
  Function: Information supports decision-making and provides insights for improving business performance. It can be used for
strategic planning, forecasting, performance measurement, and optimization. For example, sales data can be analyzed to understand
market demand and adjust product offerings accordingly.
5. Control and Feedback Mechanisms
 Definition: Mechanisms put in place to monitor, measure, and improve business processes. This includes performance indicators,
audits, reviews, and feedback loops.
 Function: Control mechanisms help organizations ensure that business systems are functioning as intended. Regular performance
reviews, employee feedback, and customer satisfaction surveys provide insights into areas that need improvement. For instance, a
financial control system helps ensure that budgets and cash flows are maintained, while quality control systems ensure product
standards.

Types of Business Systems and How They Function

There are several types of business systems that organizations rely on, and each plays a specific role in managing and improving different
aspects of the business.
1. Enterprise Resource Planning (ERP) Systems
 Function: ERP systems integrate and manage key business processes such as finance, supply chain, procurement, human resources,
and customer relationships. By consolidating data from various departments into a unified system, ERPs ensure that everyone has
access to the same data, improving decision-making and operational efficiency.
 Example: SAP, Oracle ERP, or Microsoft Dynamics 365.
2. Customer Relationship Management (CRM) Systems
 Function: CRMs focus on managing interactions with customers and prospects. These systems help track customer data, sales leads,
communication, and support tickets to improve customer service and sales strategies.
 Example: Salesforce, HubSpot CRM, Zoho CRM.
3. Supply Chain Management (SCM) Systems
 Function: SCM systems manage the flow of goods, services, and information from suppliers to customers. These systems optimize
procurement, inventory management, distribution, and logistics to ensure products are delivered efficiently and cost-effectively.
 Example: SAP SCM, Oracle SCM, Infor SCM.
4. Human Resource Management (HRM) Systems
 Function: HRM systems handle employee-related processes such as recruitment, payroll, performance management, benefits, and
employee development. These systems improve workforce management by centralizing HR data and automating administrative
tasks.
 Example: Workday, ADP Workforce Now, BambooHR.
5. Accounting and Financial Management Systems
 Function: These systems are used to manage financial transactions, bookkeeping, budgeting, financial reporting, and compliance.
They help ensure that financial data is accurate and accessible for decision-making and legal reporting.
 Example: QuickBooks, Xero, Sage.
6. Project Management Systems
 Function: These systems help manage projects, from planning and scheduling to execution and tracking. They provide tools for task
assignment, progress tracking, resource management, and collaboration.
 Example: Asana, Trello, Microsoft Project.

How Business Systems Function Together

Business systems often work together in an integrated way to optimize overall performance. For example:
 Data Flow and Integration: Data from the sales department (via CRM) may flow into the ERP system, which updates inventory
and triggers procurement processes. Financial data from the ERP system can then feed into the financial management system for
reporting and analysis.
 Automation: A business system may automate repetitive tasks, such as invoicing or inventory restocking. This reduces human error
and frees up employees to focus on higher-level tasks.
 Real-Time Monitoring: Business systems provide real-time data and analytics to monitor performance and help managers make
informed decisions quickly.
Conclusion
Business systems are fundamental to the smooth operation of any organization. By combining processes, technology, people, and
information, these systems help improve efficiency, decision-making, customer satisfaction, and overall business performance. The proper
functioning of business systems ensures that the company can scale, adapt to market changes, and maintain competitive advantage.

7. What are the benefits & drawbacks of the business systems approach?
Benefits of the Business Systems Approach
1. Improved Efficiency and Productivity
o How it works: By streamlining and automating processes, business systems reduce manual work and redundant tasks,
enabling employees to focus on higher-value activities. Integration between systems (e.g., ERP, CRM) ensures data flows
seamlessly across departments, avoiding delays.
o Example: In a manufacturing company, an ERP system that integrates inventory management, procurement, and sales
reduces stockouts and overstocking, optimizing production schedules and minimizing costs.
2. Better Decision-Making
o How it works: Business systems centralize data from various departments and provide real-time analytics, giving managers
the insights needed to make informed decisions. This reduces guesswork and helps with strategic planning.
o Example: A sales dashboard integrated with a CRM system allows managers to quickly assess customer trends, sales
performance, and forecast revenue, leading to more effective marketing and sales strategies.
3. Consistency and Standardization
o How it works: Business systems ensure that processes are standardized across the organization. This ensures that tasks are
performed consistently, reducing errors and ensuring high-quality output.
o Example: A customer service system that standardizes the handling of complaints and queries ensures that all customers
receive the same quality of service, regardless of who handles the case.
4. Improved Customer Satisfaction
o How it works: Integrated business systems provide employees with up-to-date customer information, allowing for
personalized service, quicker responses, and more efficient handling of issues or inquiries.
o Example: A CRM system that tracks customer interactions allows customer service representatives to immediately access
a customer’s history and resolve issues quickly, improving customer satisfaction.
5. Scalability and Growth
o How it works: As organizations grow, business systems can scale with them, adapting to increased complexity. By
automating tasks and improving workflows, businesses can grow without the need to significantly increase headcount.
o Example: A project management system like Asana can handle an increasing number of projects and teams as the
company grows, without requiring a complete overhaul of the process.
6. Better Compliance and Risk Management
o How it works: Business systems help businesses adhere to regulatory requirements by automating compliance checks,
tracking documentation, and generating reports. This reduces the risk of human error and non-compliance.
o Example: An HRM system that automatically updates employee records and tracks labor law compliance ensures that
businesses stay compliant with labor regulations and avoid legal issues.

Drawbacks of the Business Systems Approach

1. High Initial Implementation Costs
o How it works: Implementing integrated business systems, such as ERP or CRM, requires a significant upfront investment
in software, hardware, training, and consulting. These costs can be prohibitive, especially for smaller businesses.
o Example: A company that installs an ERP system may face high costs related to customization, training, and system
integration, which can be burdensome for businesses with limited resources.
2. Complexity in Implementation and Maintenance
o How it works: Implementing business systems requires careful planning, coordination across departments, and sometimes
significant changes in how people work. This can lead to complications, delays, and disruptions in operations. Additionally,
maintaining and updating systems can be time-consuming.
 o Example: A global supply chain management system may involve coordinating multiple regions and partners, leading to
integration challenges and extended implementation timelines.
3. Resistance to Change
o How it works: Employees who are accustomed to older ways of working may resist adopting new systems. This can lead to
a decline in morale, slower adoption rates, and errors during the transition.
o Example: A company transitioning from a paper-based system to a digital accounting system might face resistance from
older employees who are more comfortable with manual processes, affecting the effectiveness of the implementation.
4. Dependence on Technology
o How it works: Business systems often rely heavily on technology, making businesses vulnerable to system failures, data
breaches, or cybersecurity issues. A single failure can disrupt multiple operations, leading to downtime and potential loss of
business.
o Example: A CRM system crashing due to a server issue can prevent the sales team from accessing customer data, delaying
sales processes and affecting revenue generation.
5. Overcomplication
o How it works: Sometimes, in an effort to integrate and optimize every aspect of the business, organizations may end up
over-complicating their systems, leading to inefficient processes and longer response times.
o Example: An overly complex ERP system that integrates every business function from HR to supply chain might be
difficult to navigate, leading to inefficiencies as employees struggle with the system instead of focusing on their tasks.
6. Lack of Flexibility
o How it works: Some business systems, especially older ones, can be rigid and difficult to adapt to new business needs or
changes in the market. This can limit a company’s ability to innovate or respond to shifts in the business environment.
o Example: A legacy financial system might not be able to accommodate new payment methods or international
transactions, requiring expensive updates or a complete replacement of the system.

Example of Business Systems Approach in Action:

Example: E-Commerce Company
 Business System: The company implements an integrated e-commerce platform that combines inventory management, order
processing, CRM, and financial management in one system.
 Benefits:
o Real-time tracking of inventory ensures customers know stock availability.
o The CRM system personalizes marketing and customer support, increasing customer retention.
o Financial management is automated, making tax compliance and reporting much easier.
 Drawbacks:
o The company faces initial setup costs for the platform.
o The transition period causes some disruption as employees learn to use the new system.
o If the platform experiences a technical issue, the entire business process from sales to delivery could be affected.

Conclusion
The business systems approach offers substantial benefits, including greater efficiency, better decision-making, and improved customer
satisfaction. However, the implementation and maintenance of such systems come with challenges, such as high initial costs, resistance to
change, and the risk of overcomplication. Companies need to carefully assess their needs and resources before adopting such an approach,
ensuring that the systems they choose are scalable, adaptable, and aligned with their long-term goals.

8. Give examples of some functional areas of operation of enterprises.

Interprises have several functional areas of operation, each focusing on specific aspects of the business. Examples of these functional areas
include:
1. Marketing
 Function: Responsible for promoting and selling products or services, including market research, advertising, and customer
engagement.
 Example:
 o Market Research: A company like Coca-Cola conducts market research to understand consumer preferences, which
influences their product development and marketing strategies.
o Advertising: Nike uses global campaigns and celebrity endorsements to increase brand visibility.

2. Sales
 Function: Focuses on converting leads into customers and generating revenue through direct interactions with clients.
 Example:
o Sales Team: Apple's retail staff and online sales teams promote and sell products to consumers, providing personalized
recommendations based on customer needs.

3. Finance and Accounting

 Function: Manages financial resources, ensures the accuracy of financial records, budgets, and regulatory compliance.
 Example:
o Financial Management: Tesla uses detailed financial analysis to guide strategic investments in production and expansion.
o Accounting: Amazon manages a complex accounting system to track transactions and ensure timely tax reporting across
different regions.

4. Human Resources (HR)

 Function: Handles recruitment, training, employee relations, performance management, and compensation.
 Example:
o Recruitment: Google runs rigorous recruitment processes to hire top talent, ensuring a competitive advantage.
o Employee Training: Microsoft invests in continuous learning programs for employees to improve skills and career
growth.

10. How do ERP systems make the task of information integration easier?
ERP (Enterprise Resource Planning) systems help to make this task easier by integrating the information systems, enabling smooth
and seamless flow of information across departmental barriers, automating business process and functions, and thus helping the organization
to work and move forward as a single entity. (đầu trang 5)
1. Centralized Database:
 ERP systems store all organizational data in a single database accessible to all departments.
 Example: The sales team can view production schedules and inventory levels, enabling them to provide accurate delivery timelines
to customers.
2. Elimination of Silos:
 ERP systems break down the barriers between departmental silos, fostering collaboration.
 Example: When the production planning team updates manufacturing schedules, the purchasing and finance teams are immediately
notified to adjust their activities accordingly.
3. Automation of Business Processes:
 ERP automates workflows, reducing the need for manual intervention and ensuring smooth handoffs between departments.
 Example: When a customer order is placed, the ERP system automatically updates inventory, generates an invoice, and notifies the
warehouse for shipment.
4. Real-Time Data Sharing:
 ERP systems provide up-to-date information, ensuring that decisions are based on the latest data.
 Example: If inventory is running low, the ERP system can alert the purchasing department immediately to replenish stock.
5. Improved Decision-Making:
 With integrated and accurate data, decision-makers can quickly access comprehensive reports and analytics.
 Example: Management can analyze sales trends alongside production capacity to plan future production more effectively.
Example in Practice:
In an order fulfillment process, the ERP system ensures that:
1. The sales department validates the customer order and inputs it into the system.
 2. The warehouse is automatically notified to prepare and ship the order.
3. The accounting department generates an invoice and tracks payment status.
This integration eliminates delays and errors, streamlining the entire process and enhancing customer satisfaction .

11. Describe the role of the enterprise in the ERP implementation. Examples.
(Lý thuyết trang 8,9 sách. Nma dài quá, ko biết tìm info như nào nên hỏi GPT)
Role Key Responsibilities Example
Align ERP goals with business objectives, decide Global retail company choosing an ERP to integrate global
Strategic Planning
on vendor and system scope. supply chain management.
Defining Collaborate across departments to identify needs Manufacturing company outlining needs for better production
Requirements and requirements. tracking, financial reporting, and HR integration.
Allocate budget, personnel, and technology for Pharmaceutical company allocating dedicated resources for
Resource Allocation
implementation. ERP setup, including internal and external teams.
Manage organizational readiness, prepare for Banking institution providing extensive training and
Change Management
system adoption, and train employees. communication to employees about the ERP system.
Select and manage relationships with ERP vendors Logistics company choosing Microsoft Dynamics 365 based on
Vendor Selection
or system integrators. its compatibility with logistics and Microsoft tools.
Customization & Oversee customization of the ERP system to fit Food manufacturing company customizing ERP for inventory,
Configuration specific business processes. supplier, and compliance tracking.
Testing & Quality Ensure thorough testing before full implementation Telecommunications company conducting performance and
Assurance to avoid errors and ensure system integrity. functional tests on the ERP system before full deployment.
Implementation & Oversee the deployment of the ERP system, Retail chain planning phased roll-out of ERP system, starting
Roll-Out manage data migration, and ensure smooth go-live. with a pilot.
Post-Implementation Provide ongoing support, resolve issues, and Hospital network monitoring ERP system performance for
Support continuously improve the system post-launch. patient management, fixing bugs, and improving workflows.
Performance Track KPIs and evaluate system performance to Distribution company monitoring inventory levels and order
Monitoring ensure that it meets business goals. fulfillment through ERP-generated reports.

Example in Practice:
During the implementation of an ERP system in a manufacturing company:
• The HR department reallocates employees to focus on the ERP project while handling their regular tasks.
• The IT team works with consultants to configure the system.
• The management ensures that all stakeholders are aligned with the project’s goals and provides necessary resources to meet
deadlines.
By playing these roles effectively, the enterprise ensures that the ERP implementation succeeds, enabling the organization to operate as a
unified system

12. What is an information system? What is the new definition of information system? What are the three elements of an information
system?
Old definition: An information system is an open, purposive system that uses the input-process-output cycle to produce information. The
three elements of an information system, as described in the document, are:
1. People:
• Individuals who use and manage the information system to perform tasks and make decisions.
• Example: Employees input data, interpret reports, and act on the information provided by the system.
2. Procedures:
• The rules, guidelines, and methods followed to process data and generate meaningful information.
• Example: Steps to record a customer order, verify payment, and update inventory records.
3. Data:
 • Raw facts and figures that the system processes to produce useful information.
• Example: Customer orders, sales figures, inventory levels, or employee records.
These elements work together to transform data into actionable insights, enabling efficient decision-making within an organization .
In its basic form, an information system allows people to follow specific procedures to manipulate data and generate information that
supports decision-making.

The New Definition of Information System:

In today’s computer-driven world, the definition of an information system has evolved. Now, it is considered:
“An organized combination of people, hardware, software, communication networks, and data resources that collects, collates, transforms,
and disseminates information within an organization.”

This broader definition reflects the integration of technology into information systems, highlighting their ability to:
• Automate the input-process-output cycle.
• Enable real-time data processing and sharing.
• Support complex decision-making through advanced analytics.
Key Differences Between the Old and New Definitions:
• Traditional Definition: Focuses on the manual and procedural aspects of processing data.
• New Definition: Emphasizes automation, technological integration, and the role of communication networks.
Example:
A Management Information System (MIS) in the finance department:
• Old Definition: A tool that generates pre-defined financial reports for managers using manually entered data.
• New Definition: A digital platform that integrates with sales, procurement, and production systems to provide real-time
financial dashboards and predictive insights for decision-making.

This evolution reflects the increasing complexity and capability of modern information systems

13. What are integrated information systems? (p7)

Integrated information systems are systems designed to enable accurate, real-time sharing of data and information across all
functional areas of an organization. These systems treat the organization as a single entity, eliminating isolated departmental systems and
ensuring seamless communication and coordination. These systems enable sharing of accurate, real-time data across departments, ensuring
efficient decision-making and operational processes.
Key Features:
1. Centralized Data Storage:
 All data is stored in a single database accessible to all departments.
 Example: A central database that updates inventory levels in real time whenever a sale is made.
2. Real-Time Information Sharing:
 Data entered by one department is instantly available to others.
 Example: The sales department updates an order in the system, which is immediately visible to the production and finance teams
3. Automation of Processes:
 Automates workflows across departments, reducing manual effort and errors.
 Example: Automatically generating purchase requisitions when inventory levels fall below a certain threshold.
4. Cross-Functional Coordination:
 Facilitates smooth execution of business processes that involve multiple departments.
 Example: In an order fulfillment process, the system coordinates actions between sales, inventory, shipping, and accounting.

Example:
 In a manufacturing company:
 When a sales order is placed, the integrated system updates inventory levels, notifies the production team to manufacture the
required products, and informs the finance team for invoicing.
 This real-time integration ensures that the order is processed efficiently, without delays or errors.
Integrated information systems enhance efficiency, decision-making, and customer satisfaction by ensuring that all parts of the organization
work with up-to-date, consistent information .

14. Why is it said that the business process way of doing things is like viewing the organization from the customer’s point of view?

The business process approach focuses on end-to-end activities that create value for the customer. It breaks down the traditional silos within
an organization and instead emphasizes seamless workflows that fulfill customer needs. This way of operating mirrors the customer’s
perspective because it prioritizes delivering outcomes that matter to them, rather than focusing solely on internal departmental objectives.
Key Reasons:
1. End-to-End Perspective:
 Rather than looking at isolated functions (like marketing, sales, or production), it emphasizes the entire flow of activities that create
value for the customer, ensuring seamless integration across departments.
 Example: A customer ordering a car doesn’t care which department handles manufacturing, shipping, or financing. They want a
quality product delivered quickly and with minimal hassle.
2. Outcome-Oriented:
 The focus is on delivering a result that satisfies the customer, rather than on the internal tasks of individual departments.
 Example: In an order fulfillment process, the goal is to ensure that the product is delivered on time, regardless of the internal steps
involved.
3. Customer-Centric Integration:
 The business process view prioritizes outcomes that matter to customers, such as product quality, service speed, and responsiveness.
It helps organizations align their internal processes with customer needs.
 Example: When a customer places an order, the system ensures that the inventory, shipping, and billing processes work together
smoothly to fulfill the request.
4. Seamless Collaboration:
 Employees view their tasks as part of a larger process aimed at delivering value to the customer, fostering better coordination.
 Example: The sales team communicates customer preferences to the production team, ensuring the product matches the order
specifications.
5. Improved Experience: By understanding processes from the customer’s perspective, businesses can identify inefficiencies or pain points in
how products or services are delivered, leading to better customer satisfaction and loyalty.

Example:
Consider a car purchase:
• A customer wants to buy a car with specific features.
• The sales department provides detailed product information and processes the order.
• The production team ensures the car is manufactured with the requested specifications.
• The finance team arranges the customer’s payment and financing options.
• The delivery team ensures the car is shipped to the customer promptly.
The customer sees this as a single, smooth transaction, while internally, multiple departments work together as part of a coordinated business
process. This alignment of internal activities with customer expectations exemplifies why the business process way is like viewing the
organization from the customer’s perspective .

15. How does a company ensure customer satisfaction?

A company ensures customer satisfaction by integrating its functional areas, streamlining processes, and focusing on delivering outcomes that
meet or exceed customer expectations. The key strategies outlined in the file include:
1. Viewing the Business from the Customer’s Perspective:
 The company adopts a business process approach to view operations as a seamless workflow focused on customer needs.
 Example: A customer ordering a car expects timely delivery, efficient service, and minimal hassle. The company ensures that sales,
production, and delivery processes are aligned to meet these expectations.
2. Coordinating Functional Areas:
• Departments work collaboratively, sharing real-time data to fulfill customer requirements effectively.
 • Example: The sales team communicates order details to the production team, ensuring the product is ready on time, and the
finance team manages billing and payment efficiently.
3. Ensuring Accurate and Timely Information Flow:
• Integrated systems provide all departments with up-to-date information, eliminating delays and errors.
• Example: A centralized ERP system allows the warehouse to prepare shipments as soon as orders are confirmed, ensuring
timely delivery.
4. Customizing Products and Services:
• Processes are tailored to address customer-specific needs and preferences.
• Example: Offering a variety of car models and features to meet different customer demands while ensuring efficient
production and delivery.
5. Automating Processes:
• Automation reduces manual errors and accelerates service delivery.
• Example: Automatically updating inventory levels and generating invoices when a customer places an order.
6. Providing a Seamless Experience:
 Customers experience a smooth process from inquiry to delivery without concern for the internal workings of the company.
 Example: A car purchase process involves coordinated efforts between sales, production, finance, and delivery, but the customer sees
it as a single transaction.
7. Responding to Customer Needs Quickly:
• The organization reacts promptly to customer inquiries, orders, or complaints.
• Example: If a customer orders a specific model, the production team prioritizes manufacturing and communicates estimated
delivery timelines.
By integrating functional areas, focusing on customer-centric processes, and leveraging information systems, companies can enhance the
customer experience and ensure satisfaction .

16. What is MIS, what are its uses, and who are its end-users?
MIS, or Management Information Systems, are information-reporting systems designed to produce information that supports decision-making
within an organization. These systems use predefined processes and data to generate reports, charts, and other outputs needed for operational
and managerial decisions.
Uses of MIS:
 Decision Support: Provides accurate, timely, and relevant information to managers at all levels to assist in making strategic, tactical, and
operational decisions.
 Performance Monitoring: Tracks key metrics (KPIs) to assess organizational performance and identify areas for improvement.
 Forecasting & Planning: Helps in planning by analyzing historical data to predict future trends, market demands, or resource
requirements.
 Resource Management: Supports resource allocation decisions, such as inventory management, staffing, and budgeting.
 Problem Identification: Identifies inefficiencies, bottlenecks, or issues within business processes, enabling corrective action.
 Coordination: Facilitates better coordination between different departments by providing a central repository of organizational data and
insights.
 Compliance & Reporting: Assists in ensuring compliance with regulations and generating necessary reports for stakeholders like
auditors, investors, or government agencies.

End-Users of MIS:
 Top Management: CEOs, CFOs, and other executives use MIS for strategic decision-making, setting long-term goals, and assessing
overall company performance.
 Middle Management: Managers and department heads use MIS for tactical decisions, resource allocation, and monitoring team
performance.
 Operational Managers and Supervisors: These users leverage MIS to monitor day-to-day operations, ensure process efficiency, and
address operational issues.
 Staff/Employees: In some cases, employees may use MIS to access operational data, track performance, and contribute to data input.

Examples of MIS in Practice:

 1. Sales MIS:
• Tracks customer orders, sales trends, and revenue generation.
• Example: A company uses a sales MIS to identify top-performing products and adjust marketing strategies.
2. Inventory MIS:
• Monitors stock levels and automates reordering processes.
• Example: An inventory MIS sends an alert to the purchasing team when stock falls below a threshold.
3. Financial MIS:
• Tracks income, expenses, and financial health.
• Example: A financial MIS produces profit-and-loss statements for quarterly reviews.
MIS simplifies and streamlines the decision-making process across various levels of an organization by providing relevant, timely, and
accurate information tailored to the needs of its end-users .

17. What are the advantages & disadvantages of management information systems? Give examples

Advantages Disadvantages

Supports Decision-Making: 1, Lack of Integration Across Departments:

• MIS provides predefined reports and • Traditional MIS often operates at the departmental
data that help managers make informed decisions. level, lacking an integrated approach.
• Example: A sales manager can use daily • Example: The production and finance departments
sales performance reports generated by MIS to adjust sales may have separate systems, requiring manual data consolidation.
strategies. 2. Limited Flexibility:
2. Improves Efficiency: • MIS can only generate predefined reports and may
• By automating routine tasks and not adapt to new or unexpected informational needs.
providing accurate information, MIS increases operational • Example: A manager may need data that falls
efficiency. outside the system’s reporting capabilities, requiring manual analysis.
• Example: An inventory management 3. Dependency on Predefined Processes:
system reduces manual stock checks and ensures timely • MIS relies on processes defined at the time of
reordering. implementation, which might not align with future organizational
3. Enhances Data Accuracy: needs.
• MIS systems reduce human error by • Example: If a company changes its reporting
automating data collection and reporting processes. format, it might need to overhaul its MIS.
• Example: A financial MIS automates 4. Time-Consuming Data Consolidation:
calculations for budgeting and expense tracking, ensuring • MIS requires manual compilation of data from
precision. different departmental systems if not integrated.
4. Facilitates Coordination: • Example: A manager might need to combine
• MIS allows different departments to reports from sales and inventory systems manually to analyze order
access consistent information, improving cross-functional fulfillment efficiency.
coordination. 5. High Implementation Costs:
• Example: The sales team can check • Setting up and maintaining MIS involves
inventory levels before confirming customer orders. significant financial and human resources.
5. Provides Historical Data: • Example: Small businesses may find it challenging
• MIS stores historical data, allowing for to afford sophisticated MIS software.
trend analysis and forecasting.
• Example: A production manager can
analyze past manufacturing outputs to plan future
production.

MIS offers powerful tools for improving efficiency, decision-making, and coordination. However, its limitations, such as lack of integration
and predefined outputs, require organizations to balance the benefits against the drawbacks when implementing MIS
18. Why is MIS called information-reporting systems?
Because it provides pre-defined reports and responses specified in advance for operational decision-making. (page 7)
MIS (Management Information Systems) is called information-reporting systems because they are designed to produce predefined
reports that provide specific, structured information to meet the decision-making needs of managers. These systems focus on collecting,
processing, and delivering relevant data in a format that helps operational and managerial personnel in their daily tasks.
Why the Name “Information-Reporting Systems”?
MIS earns this name because its primary function is to report information in a structured and usable format to the appropriate
decision-makers at various levels of the organization. These systems prioritize clarity and accessibility of data rather than complex analyses
or predictive insights .
Key Characteristics of MIS as Information-Reporting Systems:
1. Predefined Reports:
• MIS generates reports, charts, graphs, and summaries that have been specified in advance by management.
• Example: A daily sales report that details the number of products sold, revenue generated, and regional performance.
2. Supports Structured Decision-Making:
• MIS is designed to assist in routine, structured decisions that follow a predictable pattern.
• Example: Inventory reports used to reorder stock when levels fall below a predefined threshold.
3. Standardization:
• Reports are standardized to ensure consistency and uniformity across the organization.
• Example: Monthly financial summaries that compare budgeted versus actual expenses.
4. Focus on Operational and Managerial Needs:
• MIS primarily addresses the information needs of middle and operational management rather than strategic-level decisions.
• Example: A production MIS providing real-time data on machine performance for operational supervisors.

19. Why is it difficult to make quality decisions with the information that one gets from the MIS?
Making quality decisions based on information from a Management Information System (MIS) can be difficult due to the following
reasons:
1. Data Quality Issues: Inaccurate, incomplete, or outdated data can lead to incorrect decisions.
2. Data Overload: MIS may generate too much irrelevant data, making it hard for decision-makers to focus on the important
information.
3. Lack of Context: MIS often provides raw data without sufficient context or explanation, making it difficult to interpret accurately.
4. Delayed Information: Information may not be updated in real-time, leading to decisions based on outdated data.
5. System Inflexibility: MIS may not allow for customized reports or ad-hoc analysis, reducing the ability to make decisions based on
specific situations.
6. Lack of Data Integration: When MIS operates in silos and lacks integration across departments, it can result in incomplete or
isolated data, leading to suboptimal decisions.
7. Interpretation Bias: Decision-makers may bring their personal biases or assumptions into interpreting the data, affecting the
objectivity of their decisions.
8. Complex Decision-Making: Some decisions require qualitative factors (e.g., customer sentiment, market dynamics) that MIS
cannot capture.
9. Dependence on User Training: If users are not adequately trained, they may misinterpret the data and make incorrect decisions.
In summary, while MIS provides valuable information, challenges such as data quality issues, overload, lack of context, and delayed updates
can make it difficult to make high-quality decisions.

Example of Difficulty in Making Quality Decisions with MIS:

A retail chain uses an MIS to track sales.
 Data Quality Issues: The sales data is outdated, showing a dip without considering a recent promotion. The manager reduces
inventory, missing customer demand.
 Data Overload: The MIS report shows too many metrics, making it hard for the manager to focus on key data, leading to delayed
actions.
 Lack of Context: The MIS shows lower sales but doesn't account for external factors like weather or local events, causing the
manager to misinterpret the decline.
  Delayed Information: The MIS data is delayed by a day, so by the time the manager acts, the sales trend has changed.
 Interpretation Bias: The manager assumes poor customer satisfaction caused the sales drop, while it was actually due to a
competitor’s new product.
In this case, the MIS provides data, but issues like outdated info, overload, and lack of context lead to poor decision-making.

Summary: MIS provides structured, predefined data, but its limitations in adaptability, integration, and depth of analysis make it challenging
to use for comprehensive and dynamic decision-making .
20. Why is information said to be the key resource of an organization?
Information is considered the key resource of an organization because it is essential for effective decision-making, operational efficiency, and
gaining a competitive edge in today’s fast-paced business environment. The file highlights the following reasons:
1. Supports Decision-Making:
• Accurate, relevant, and timely information is crucial for managers to make informed decisions that guide the organization
toward its goals.
• Example: Real-time sales data helps managers adjust marketing strategies or production plans.
2. Enhances Organizational Efficiency:
• Properly managed information allows departments to coordinate their activities efficiently, reducing redundancies and
delays.
• Example: An integrated database enables the purchasing team to align their schedules with production needs, ensuring
materials are available on time.
3. Facilitates Adaptability to Market Changes:
• Organizations need timely information to respond to market trends, customer preferences, and competitive challenges.
• Example: Analyzing market data can help a company adjust pricing strategies to stay competitive.
4. Reduces Uncertainty:
• High-quality information minimizes the risk of errors in decision-making by providing clarity and reducing ambiguity.
• Example: Accurate inventory data ensures that stock levels meet customer demand without overstocking.
5. Drives Competitive Advantage:
• Organizations with superior mechanisms for collecting, analyzing, and utilizing information can outperform competitors.
• Example: Data-driven insights enable a company to identify and exploit opportunities before competitors do.
6. Improves Customer Satisfaction:
• Information enables organizations to understand and meet customer needs more effectively.
• Example: Customer feedback data helps companies tailor products and services to match expectations.
Summary:In the modern business landscape, information is as critical as traditional resources like capital or labor. Without accurate, relevant,
and timely information, organizations struggle to make decisions, adapt to changes, and achieve their objectives effectively .

21. What are the three fundamental characteristics of information? Explain with examples.
According to the file, the three fundamental characteristics of information are:
1. Accuracy:
• Information must be correct and free from errors to ensure reliable decision-making.
• Example: If a company’s sales data contains inaccuracies, such as inflated revenue figures, managers might overestimate
performance and make poor strategic decisions, like increasing production unnecessarily.
2. Relevance:
• Information must be appropriate and useful for the specific decision-making context. Irrelevant data can distract or mislead
decision-makers.
• Example: A production manager needs information about raw material availability and production schedules, not details
about employee payroll, to effectively plan manufacturing processes.
3. Timeliness:
 Information must be available when required. Delayed information can result in missed opportunities or ineffective decisions.
 Example: If inventory data is updated too late, the purchasing department might not reorder materials on time, leading to production
delays.
Summary: For information to be truly valuable and support an organization’s goals, it must meet these three characteristics: accuracy ensures
reliability, relevance ensures utility, and timeliness ensures the ability to act promptly. Together, they make information a powerful tool for
decision-making and organizational success .

22. What is business modeling, and what are its uses?

Business modeling is the process of creating a representation of the business as a single, integrated system. It outlines the interconnections
and interdependencies of various sub-systems and business processes within the organization. A business model serves as a blueprint for how
an organization operates and interacts internally and externally.
Uses of Business Modeling:
1. Representation of Business Processes:
• Helps visualize how different functions and processes within the organization are interrelated.
• Example: A business model might show how the sales process triggers production and inventory updates.
2. Foundation for ERP Systems:
• Business models act as a guide for designing ERP systems, ensuring the software mirrors the organization’s actual
processes.
• Example: An ERP system for a manufacturing company could be designed to integrate sales, inventory, and production
planning based on the business model.
3. Facilitates Process Improvement:
• Identifies inefficiencies or redundancies in existing processes, providing insights for optimization.
• Example: A business model might reveal that duplicate data entry occurs in both the sales and finance departments,
suggesting the need for integration.
4. Supports Strategic Planning:
• Aligns business processes with organizational goals and objectives, enabling better resource allocation and prioritization.
• Example: A retail company might use business modeling to align its logistics operations with a strategic goal of offering
same-day delivery.
5. Aids Communication Across Stakeholders:
• Provides a common framework for understanding the organization, improving communication among employees,
management, and external consultants.
• Example: During an ERP implementation, a business model helps consultants understand how the company operates and
where improvements are needed.

Example of Business Modeling in Practice:

In a car manufacturing company, the business model might:
1. Map the process of receiving a customer order, from sales to production and delivery.
2. Highlight interdependencies, such as how production depends on timely material procurement and inventory updates.
3. Serve as the basis for integrating ERP modules like order management, inventory, and billing.
Summary:
Business modeling is a critical tool for visualizing, analyzing, and improving organizational processes. It ensures that business operations
align with goals, supports ERP system design, and enhances efficiency across the enterprise .

23. What do you mean by an integrated data model, and what is its importance?
An integrated data model is a unified representation of all the data used across an organization. It consolidates previously isolated
departmental data into a single, coherent structure, enabling seamless access, analysis, and sharing of information. This model is designed to
reflect the organization’s day-to-day transactions and activities.

Importance of an Integrated Data Model:

1. Eliminates Data Redundancy:
• Consolidates all organizational data into a single system, removing duplicate data entries and ensuring consistency.
• Example: Instead of separate customer databases for sales, marketing, and support, an integrated data model ensures all
departments use the same customer records.
 2. Provides Real-Time Information:
• Ensures data is continuously updated and reflects the current state of the organization, enabling timely decision-making.
• Example: When a sale is made, the inventory and financial systems are updated instantly.
3. Supports Accurate Decision-Making:
Centralized and up-to-date information reduces errors and provides managers with the data needed for informed decisions.
• Example: A purchasing manager can view real-time production schedules to plan material procurement efficiently.
4. Enables Cross-Functional Collaboration:
• Integrates data across departments, facilitating smooth workflows and coordination.
• Example: The finance department can view purchase orders raised by procurement in real time to plan cash flows.
5. Improves Process Automation:
 Automates data flow between systems, reducing manual intervention and enhancing process efficiency.
 Example: An order entry system automatically triggers inventory updates and generates invoices without manual inputs.
6. Enhances Transparency:
 Provides a clear and comprehensive view of the organization, ensuring that all employees and departments are aligned.
 Example: Top management can view consolidated reports covering sales, production, and finances.

Example in Practice: In a retail organization, an integrated data model might:

• Automatically reduce inventory levels when a sale is made.
• Update the accounts receivable ledger in the finance department.
• Notify the warehouse to prepare for shipping.

This ensures that all departments are aware of the transaction and can act accordingly without delays or errors.
Summary:
An integrated data model is essential for modern organizations to achieve operational efficiency, accuracy, and collaboration. By unifying
data, it supports timely and well-informed decision-making, streamlines processes, and eliminates redundancies.
Week 3: ERP system development and ERP project
Monk – Chap 7 – Process modeling, process improvement, and ERP implementation
1. Develop a swimlane process map for the online ordering process for Active Bicycle Company, shown below. Each of the following
functions should be one swimlane: sales, accounting, warehouse, and shipping
The process begins when a customer submits an online order form to Active Bicycle via the Web. The customer supplies his or her name,
address, email address, model number of the bicycle they desire, and credit card number.
When the customer clicks on the Confirm button on the Web page, Active Bicycle’s system gets approval for the transaction from the
credit card company. If the credit charge is approved, the system assigns a number to the sales order, displays an order summary for the
customer to print, and sends a confirmation email to the customer. If the credit charge is denied, the customer is asked to provide a different
form of payment.
The system then generates a two-part invoice, a stock release form, and a two-part packing slip form. The stock release form is sent to
the Warehouse Department, and the two-part packing slip and one copy of the invoice are sent to the Shipping Department. The other copy of
the invoice is maintained in a holding file in the Accounting Department to be filed later with the shipping certificate.
In the warehouse, employees use the stock release form to pull the appropriate inventory to fill the order. Assuming there is enough stock
(for the purposes of this exercise you can assume there is enough stock), the bicycle is packed into a special box for shipping, with added
protection so it will not be damaged in transit. Using the stock release form, the warehouse staff inputs data into the inventory management
program to update the master inventory file. The warehouse clerk also must take the information from the stock release form and manually
fill out a shipping certificate, which is sent to the Accounting Department for a further check that the items are being released from the
warehouse. The boxed inventory, along with the packing slip, is then sent to the Shipping Department.
In the Shipping Department, one copy of the two-part packing slip is placed in the shipping department’s file cabinet, and one is included
with the goods to be sent to the customer.
Back in the Accounting Department, the shipping certificate is matched with the copy of the invoice, and the accounting database is
updated to record the completion of the order. The accounting program then submits a payment request to the credit card company, and both
the shipping certificate and the invoice are filed in the accounting office.
2. Develop an event process chain (EPC) diagram for the following staff-recruiting process at Yellow Brook Photography:
The current recruitment process for Yellow Brook Photography takes approximately 90 days. It begins when a manager completes a
requisition and sends it to the Human Resources Department. The Human Resources Department reviews and assigns a number to the
requisition and returns it to the manager for approval. He or she approves it, obtains the required approval signatures, and then returns it to
Human Resources.
Next, Human Resources creates a job posting and announces the position internally through the company’s intranet, bulletin boards, or a
binder of current job openings. Human Resources collects responses internally for eight days. After that, Human Resources solicits résumés
from external sources by advertising in newspapers and online. Human Resources then prescreens the résumés and forwards information on
qualified candidates to the hiring manager for review. The hiring manager tells Human Resources which candidates should be interviewed.
Human Resources conducts brief phone interviews of candidates recommended by the hiring manager; if the phone interview is promising,
Human Resources schedules an on-site interview. Candidates interview with the hiring manager and with a Human Resources staff member.
Human Resources records the interviews in an applicant flow log.
Once a candidate is selected for hire, Human Resources and the hiring manager prepare an offer, and a background check on the
candidate is initiated. Then, the hiring manager must approve the offer and obtain the required approval signatures on a job offer approval
form. Subsequently, the hiring manager extends the offer verbally to the candidate, while Human Resources sends the written offer, including
an employment start date. Once the applicant accepts the offer, a drug screening is scheduled for the candidate, who must also sign the offer
letter and return it to Human Resources. At that point, Human Resources notifies the hiring manager of the candidate’s acceptance. Finally, if
the drug test comes back negative, the new employee completes new-hire orientation on the first day of work.

Summer – Chap 3 – Planning, Design, and Implementation of ERP Systems

1. How does the traditional systems development life cycle differ from the ERP information systems design and implementation
process? (Sách - trang 40)

Aspect Traditional SDLC ERP Information Systems Design

Scope Focused on one application or function Enterprise-wide, integrated system

Customization High customization for specific needs Limited customization, more standardization

Implementation Approach Linear or iterative phases Multi-phase, complex implementation process

 Integration Focus on one isolated process Full integration across business functions

User Involvement Involvement mainly in testing and feedback Continuous involvement throughout all phases

Change Management Minimal organizational change Significant organizational change required

Cost and Time Generally predictable High cost, long implementation time

Post-Implementation Support Focus on technical support Ongoing support, updates, and optimization

In essence, while both the traditional SDLC and ERP implementation follow structured processes, ERP design and implementation require a
more holistic, cross-functional approach, with a strong emphasis on integrating business processes, managing organizational change, and
ensuring long-term scalability and support.

2. What are the advantages of the re-engineering method and customizing approach of implementing ERP? What are its
disadvantages? (Sách - trang 45)

Criteria Re-engineering Method Customizing Approach

Redesigning business processes to align with the ERP Modifying the ERP system to fit the organization's
Definition
system's structure. unique processes.
Advantages
Efficiency
Streamlines operations by removing inefficiencies. Provides a tailored solution for specific business needs.
Improvement
Allows retention of unique and effective current
Best Practice Adoption Incorporates industry-standard practices.
processes.
Reduces operational costs over time through Avoids disruption of current workflows, reducing
Cost Reduction
standardization. adaptation costs.
Eliminates extensive customization, enabling quicker
Faster Implementation Ensures minimal retraining due to familiar workflows.
deployment.
Disadvantages
Change Resistance Employees may resist adapting to new workflows. Higher development and maintenance costs.
Criteria Re-engineering Method Customizing Approach
Requires significant upfront investment in process Lengthier implementation timelines due to custom
High Initial Costs
redesign. development.
Loss of Legacy Complex to upgrade and maintain due to customized
May discard effective legacy processes during redesign.
Processes features.
Operational Major changes can disrupt ongoing operations during
Compatibility issues with future ERP system upgrades.
Disruption transition.
Example:
 A company using the Re-engineering Method may redesign its procurement process to match the standard workflows of an ERP
system like SAP.
 A company opting for the Customizing Approach may modify the ERP system to accommodate a unique supplier approval
workflow.

3. What are the advantages and disadvantages of using an ASP to implement ERP? (Sách - trang 47)

Criteria Advantages Disadvantages

Lower Upfront Costs: ASPs often provide ERP on a Ongoing Subscription Fees: Subscription costs can accumulate
Initial Costs
subscription basis, reducing initial capital investment. over time, potentially making it more expensive in the long run.
Limited Customization: ASP solutions may offer less
Implementation Faster Implementation: ERP is already configured by
flexibility to customize the system to specific business
Speed the ASP, enabling quicker deployment.
requirements.
Reduced IT Burden: The ASP manages maintenance, Limited Control Over Updates: Updates are managed by the
IT Management upgrades, and security, minimizing the need for in- ASP, which can disrupt business operations or introduce
house IT support. unwanted changes.
Scalable Solutions: ASPs allow businesses to easily Vendor Lock-in: Organizations may become dependent on the
Scalability scale the system as needed without additional ASP, making it difficult to switch providers or migrate to
infrastructure investments. another system.
Remote Access: Cloud-based systems allow users to Dependence on Internet Connectivity: Access to the system is
Access access ERP from anywhere, enhancing flexibility and reliant on internet connectivity, which can lead to disruptions if
remote work. there’s an outage.
Cost Efficiency Access to Latest Features: ASPs often provide Data Security and Privacy Risks: Storing sensitive data with a
continuous updates, ensuring the system always has the third-party provider can raise concerns about privacy and
 Criteria Advantages Disadvantages
latest features. compliance with regulations.
Examples:
 Advantages:
o Lower Initial Costs: A small business may opt for an ASP to avoid the large upfront investment of purchasing and
maintaining hardware, and instead pay a monthly subscription.
o Remote Access: A global company using an ASP for its ERP system allows its employees across different locations to
access and use the system from anywhere with an internet connection.
 Disadvantages:
o Limited Customization: A company with highly specialized workflows may find that the ASP’s ERP system doesn’t offer
enough customization options to match their unique needs.
o Data Security Risks: A financial institution using an ASP may have concerns about storing confidential customer data in a
third-party cloud, fearing potential security breaches.
In summary, using an ASP for ERP implementation offers benefits like lower initial costs, quicker deployment, and scalability, but also comes
with challenges such as ongoing fees, limited customization, and potential security concerns.

Summer – Chap 8 - Managing an ERP Project

1. Use articles in trade publications which are available in the library or through on-line databases to explore factors contributing to
the successful implementation of ERP projects. In your analysis, include the following:
1.1. Technology factors
1. System Integration: ERP must integrate seamlessly with existing systems (CRM, SCM, etc.), ensuring smooth data flow.
Example: Companies that implement ERP systems with strong integration capabilities (e.g., APIs, middleware) tend to achieve
smoother transitions. ERP vendors offering modular solutions allow organizations to tailor the system to specific needs, reducing
incompatibilities.
2. Scalability: The system should grow with the business, adapting to increased data and processes.
Example: A company may choose a cloud-based ERP solution like SAP S/4HANA, which scales with business growth, allowing for
incremental adoption of additional modules over time.
3. Customization vs. Standardization: Balancing customization with ERP's standardized processes avoids complexity and ensures
maintainability.
Example: Successful companies often use ERP systems' standard features and customize only where absolutely necessary, ensuring
that core business processes align with best practices.
4. Data Quality & Migration: Clean, accurate data migration is critical to ensure reliable performance and reporting.
Example: Thorough data cleaning and validation during migration stages can prevent errors. Using tools like data cleansing software
or involving data specialists ensures accurate and consistent data flow into the new ERP system.
1.2. Project management factors
1. Clear Scope and Objectives: Well-defined goals and deliverables prevent scope creep and keep the project on track.
Example: Setting a clear goal like “improve order fulfillment time by 20% in the first quarter after ERP implementation” helps teams
stay focused and aligns project deliverables with business outcomes.
2. Strong Leadership: Effective leadership and governance ensure alignment with business objectives and proper resource allocation.
Example: A CEO who actively supports the ERP implementation and addresses concerns across departments will motivate
stakeholders to align with the project goals.
3. Risk Management: Identifying risks early and having mitigation strategies reduces project failures.
Example: Companies that deploy comprehensive change management strategies, such as training programs, stakeholder engagement
sessions, and communication plans, often experience a smoother transition.
4. Realistic Timelines & Budget: Setting achievable timelines and budgets based on project complexity ensures successful delivery.
Example: A phased implementation approach (i.e., implementing the ERP system in stages rather than all at once) often helps
organizations stay on track with time and budget constraints.
1.3. User-related factors
1. User Involvement: Engaging end-users early in the process ensures the system meets their needs and builds support.
Example: Companies that involve key users in the requirements gathering and testing phase tend to achieve higher acceptance rates
post-implementation.
 2. Training & Support: Adequate training and ongoing support are crucial for user adoption and effective system use.
Example: Organizations that offer tailored, role-based training and have dedicated help desks during the post-implementation phase
tend to have better user satisfaction and system adoption rates.
3. Change Management: Managing resistance and ensuring clear communication helps users embrace new processes.
Example: Companies that foster a culture of continuous improvement and technological adoption often experience smoother ERP
transitions, as employees are more willing to adapt.
4. User Testing & Feedback: Involving users in testing helps identify issues and ensures the system is functional before going live.
Example: Organizations that set up regular surveys and user forums to gather feedback on ERP performance can continuously
improve the system and adapt it to meet user needs.
⇒ By addressing these factors—technology, project management, and user-related—companies improve the likelihood of a successful
ERP implementation.
Week 4 & 5: Database processing
Boyle - Chap 5
1. What is the purpose of a database?
 The purpose of a database is to keep track of things. (Sách - trang 163)
 The purpose of a database is to store, organize, and manage data efficiently. It allows for easy retrieval, updating, and manipulation
of data, ensuring data consistency, security, and accessibility. Databases support the structure, storage, and querying of large volumes
of information, enabling applications to perform operations like searching, sorting, and reporting. They are used to handle data in a
way that minimizes redundancy, ensures integrity, and allows for scalability.

2. What is a database?
 A database is a self-describing collection of integrated records. (Sách - trang 165)

 A database is an organized collection of structured data, typically stored and accessed electronically. It uses a system known as a
Database Management System (DBMS) to facilitate the creation, maintenance, and querying of data. Databases store data in
tables, which consist of rows (records) and columns (fields), and they support operations like data retrieval, updates, insertions, and
deletions. Examples include relational databases (like MySQL, PostgreSQL) and non-relational databases (like MongoDB,
Cassandra). Databases are used in various applications, from managing business records to powering websites and apps.

3. What is a database management system (DBMS) (Sách - trang 170)

 A database management system (DBMS) is a program used to create, process, and administer a database. As with operating systems,
almost no organization develops its own DBMS. Instead, companies license DBMS products from vendors such as IBM, Microsoft,
Oracle, and others. Popular DBMS products are DB2 from IBM, Access and SQL Server from Microsoft, and Oracle Database from
the Oracle Corporation. Another popular DBMS is MySQL, an open source DBMS product that is license-free for most
applications.Other DBMS products are available, but these five process the great bulk of databases today.
 Note that a DBMS and a database are two different things. For some reason, the trade press and even some books confuse the two. A
DBMS is a software program; a database is a collection of tables, relationships, and metadata.

4. How do database applications make databases more useful? (Sách - trang 174)
A database application is a collection of forms, reports, queries, and application programs that serves as an intermediary between users and
database data. Database applications reformat database table data to make it more informative and more easily updated. Application programs
also have features that provide security, maintain data consistency, and handle special cases.
The specific purposes of the four elements of a database application are:

5. How are data models used for database development?

(Sách - trang 178) Database structures can be complex, in some cases very complex. So, before building the database the developers construct
a logical representation of database data called a data model.
Data models are used in database development to define the structure, relationships, and constraints of the data that will be stored in a
database. They serve as blueprints for designing the database and ensure that the data is organized in a way that supports both current and
future requirements. Here's how data models are used in the process:
 Define Structure: Organize data into entities (tables), attributes (fields), and relationships (e.g., keys).
 Normalize Data: Minimize redundancy and ensure consistency.
 Establish Relationships: Link data across tables using keys (primary and foreign).
 Set Constraints: Define rules for data integrity, validation, and consistency.
 Optimize Performance: Improve query efficiency and storage, ensuring scalability.
 Ensure Integrity: Maintain accurate, reliable data by enforcing business rules.
Types of data models include conceptual (high-level), logical (detailed structure), and physical (storage-specific).

6. How is a data model transformed into a database design?

Database design is the process of converting a data model into tables, relationships, and data constraints. The database design team
transforms entities into tables and expresses relationships by defining foreign keys.

A data model is transformed into a database design through several key steps:
1. Convert Entities to Tables: Each entity in the data model becomes a table, and its attributes become columns in the table.
2. Normalization: This step eliminates data redundancy and ensures data integrity by restructuring tables into well-formed forms.
Tables are divided if necessary to ensure each table has a single theme, reducing duplication and preventing integrity issues.
However, normalization can slow down performance, which must be balanced based on use cases.
3. Represent Relationships: Relationships between entities are represented using foreign keys. For example, in a 1:N relationship, the
foreign key is placed in the table corresponding to the "many" side of the relationship. In N:M relationships, an additional junction
table is created to link the two entities.
4. Implement Constraints: Constraints such as primary keys, foreign keys, and other data integrity rules are applied to ensure
consistency and validity.
5. Final Design: After tables are normalized and relationships defined, the database design is finalized with keys, relationships, and
constraints ready for implementation in a DBMS.
This process ensures that the data model is effectively translated into a usable database structure while maintaining data integrity, consistency,
and performance considerations.

7. How can eHermes benefit from a database system?

eHermes can benefit from a database system in several ways, especially in its efforts to streamline the inventorying process for new items:
1. Speed and Efficiency: By automatically recognizing items using Google’s image classifier, eHermes can fill its database with
detailed and accurate product information much faster than relying on manual input from sales associates. This reduces wait times
for inventorying new items and allows products to be sold more quickly.
 2. Improved Data Accuracy: Using image recognition ensures more accurate product descriptions than what is often provided by
customers. This leads to better product listings, reducing errors and improving the overall customer experience.
3. Scalability: As eHermes grows, the database needs to handle increased data storage and multiple data flows (e.g., images from
mobile storefronts, cloud processing, and external queries for product info). A database system will provide the scalability needed to
manage these demands efficiently.
4. Flexible Data Architecture: eHermes can choose between two database architectures:
o Relational Database: Using Microsoft SQL Server to store metadata (e.g., image URL and product info) offers a familiar,
proven technology. This approach is low-risk, easy to query, and integrates well with existing systems.
o NoSQL Database: Alternatively, MongoDB could be used to store both images and metadata together, enabling more
flexibility in handling unstructured data. This could be beneficial if eHermes chooses to store images directly in the
database, although it comes with the need to evaluate its query capabilities.
5. Data Integration: The database can automatically integrate with external sites to retrieve additional product information, reviews,
and past sales data, enriching the inventory with valuable details that improve decision-making and sales strategies.
6. Automation and Faster Processing: The process of identifying and categorizing products would be automated, with the database
handling real-time data processing to ensure that inventory management remains fast and efficient as the business scales.
7. Low-Risk and Quick Development: Given that eHermes is already familiar with Microsoft SQL Server, using it to store metadata
minimizes risk, facilitates faster development, and allows for easy querying of the data using SQL.
In summary, a well-implemented database system will streamline eHermes' inventory management, improve data accuracy, enable faster
product sales, and scale as the company grows. The choice of database architecture—either a relational database or NoSQL—depends on
eHermes' specific needs for scalability and flexibility.
Week 6 & 7: Marketing information systems and Sale order process
Monk - Chap 3 - Marketing information systems and the sales order process
1. What is document flow? Why is it important for auditors of a company? (p63-64)
The SAP ERP system has a mechanism for keeping track of the document numbers associated with each sales order so employees
can track the status of an order while it is in process or research it after shipping. The linked set of document numbers related to a sales order,
also known as the audit trail, is called the document flow in SAP ERP.
⇒ Importance: If an order includes partial shipments, partial payments, and returned material credits, the document flow can
become quite complex. Without an integrated information system, the audit trail can be hard to establish, especially if many paper documents
are involved. With an integrated system such as SAP ERP, document numbers are all linked together electronically. Not only does the
document flow show all documents related to a sales order, but the user can look at the details of each document simply by double-clicking a
line in the document flow.

2. How can a business better serve its customers using the APO tool in SAP ERP? (p69-70)
SAP CRM relates to the SAP ERP system as well as SAP’s Business Warehouse (BW) and Advanced Planner and Optimizer (APO)
modules. The SAP CRM system communicates with the SAP ERP, BW, and APO systems in developing and executing its plans, thereby
allowing SAP CRM to not only facilitate a company’s interactions with its customers, but to also enable the company to analyze the customer
data and best serve the customer.
The Advanced Planner and Optimizer (APO) is a component of SAP’s Supply Chain Management (SCM) system that supports
efficient planning of the supply chain. APO’s role in the CRM process is to provide higher levels of customer support through its global
available-to-promise (ATP) capabilities.

Summer - Chap 4 - ERP system - Sales and Marketing

1. Gather information about the best practices which are associated with the Sales and Marketing modules within an ERP package.
You can do this by (1) conducting research on the web; (2) interviewing a user of a Sales and Marketing package; (3) using an on-line
data- base to find an article in a trade publication which describes the effective use of a Sales and Marketing module; or (4) using a
Sales and Marketing module within an ERP system to identify new best practices.
1.1. What are the best practices, which you have discovered? (Chat)
Here are the key best practices identified for Sales and Marketing modules within ERP systems:
a) Integrated Customer Relationship Management (CRM):
 Description: The Sales and Marketing modules should be fully integrated with the CRM system. This ensures that all customer
interactions, including inquiries, sales activities, and feedback, are recorded in one place. It allows sales teams to get a 360-degree
view of the customer journey.
 Best Practice: Automatically capture and track customer interactions across different channels (email, phone, social media, etc.) and
synchronize this data with the ERP system.
 Benefits: Better customer service, improved sales targeting, and stronger long-term customer relationships.
b) Segmentation and Targeting:
 Description: Use the data in the ERP to create customer segments based on various criteria such as demographics, buying behavior,
product preferences, or geographic location. This allows for targeted marketing campaigns.
 Best Practice: Leverage data analytics tools within the ERP to segment customers and tailor marketing messages for each segment.
 Benefits: Increases the effectiveness of marketing campaigns and boosts customer conversion rates.
c) Automation of Sales Processes:
 Description: Automate key sales processes such as lead generation, follow-ups, quotes, orders, and invoicing. ERP systems should
streamline these processes to reduce manual effort and prevent human error.
 Best Practice: Set up automated workflows that trigger actions at predefined stages (e.g., sending reminders for follow-ups or
generating quotes when certain conditions are met).
 Benefits: Reduces operational costs, speeds up the sales cycle, and minimizes errors in the sales process.
d) Sales Forecasting and Analytics:
 Description: Sales forecasting and performance analysis are critical to making informed decisions. ERP systems can integrate sales
data, historical trends, and market conditions to generate accurate forecasts.
 Best Practice: Use ERP analytics tools to track key sales metrics, generate forecasts, and identify trends in customer behavior and
sales patterns.
  Benefits: Provides better visibility into sales performance, allows for more accurate predictions, and helps in inventory and resource
planning.
e) Cross-Functional Collaboration:
 Description: Sales and marketing teams should be able to collaborate with other departments like finance, logistics, and customer
service through the ERP system. This improves the flow of information and ensures alignment across functions.
 Best Practice: Enable collaboration features such as shared dashboards, task assignments, and communication channels within the
ERP system.
 Benefits: Facilitates real-time collaboration, improving decision-making and customer service while ensuring consistency across the
organization.
f) Real-Time Reporting and Dashboards:
 Description: Having real-time access to key performance indicators (KPIs) and sales data is crucial. Dashboards and reports within
the ERP should provide up-to-date insights into sales performance, customer behavior, and marketing campaign effectiveness.
 Best Practice: Use custom dashboards and reports to track sales performance, lead conversion rates, customer acquisition costs, and
campaign ROI.
 Benefits: Improves decision-making by providing up-to-the-minute insights into sales and marketing activities.
g) Mobile Access:
 Description: Sales teams often need access to customer information and sales data while on the move. ERP systems should offer
mobile access for remote sales personnel.
 Best Practice: Ensure that the ERP system is accessible on mobile devices, with real-time syncing of data, allowing sales teams to
update records, access customer profiles, and make decisions from anywhere.
 Benefits: Increases sales team productivity, accelerates response times, and enhances customer interaction.
h) Lead and Opportunity Management:
 Description: Proper management of leads and opportunities helps ensure no prospect falls through the cracks. ERP systems should
track the entire lifecycle of leads, from prospecting to closing.
 Best Practice: Implement lead scoring, automated follow-ups, and opportunity tracking to prioritize leads and ensure timely
engagement.
 Benefits: Enhances lead conversion rates and ensures a more structured and organized sales pipeline.

1.2. How do they contribute to overall productivity? (Chat + p65)

These best practices contribute to productivity in the following ways:
a) Efficiency Gains:
 Automation of sales processes reduces the need for manual intervention, enabling sales and marketing teams to focus on higher-
value tasks such as strategy and relationship-building.
 Automation of routine tasks like lead generation, quote creation, and order processing speeds up workflows, reduces human errors,
and cuts down on administrative overhead.
b) Data-Driven Decision Making:
 The ability to forecast sales, analyze performance metrics, and understand customer behavior allows sales and marketing teams to
make better, more informed decisions.
 Access to real-time data and analytics helps teams to act quickly, optimize strategies, and adjust marketing campaigns or sales
approaches as needed.
c) Improved Resource Allocation:
 Sales and marketing teams can allocate their time and resources more effectively by focusing on high-potential leads, profitable
customer segments, or underperforming products.
 Better forecasting and reporting help in anticipating future demand, which in turn aids inventory planning, staffing, and budgeting.
d) Enhanced Collaboration and Communication:
 Cross-functional collaboration ensures that all departments are aligned toward common goals, reducing miscommunication and
silos. This improves the overall workflow and speeds up decision-making processes.
 Shared dashboards and real-time communication channels ensure everyone is on the same page, which prevents delays caused by
miscommunication.
⇒ The purpose of the Sales and Marketing module within ERP is to identify sales prospects, to process sales orders, to manage inventory, to
handle deliveries, to provide billing, and to accept and process payments.
1.3. What information for decision-making do they provide? (Chat + p65)
These best practices provide several critical data points and insights for decision-making:
a) Sales Performance Metrics:
 Metrics such as revenue per salesperson, lead conversion rates, sales cycle length, and customer acquisition costs help measure
individual and team performance.
 These insights allow managers to identify areas of improvement, reward high performers, and develop strategies to boost low-
performing areas.
b) Customer Insights:
 Segmentation and customer data (e.g., preferences, behavior patterns, lifetime value) help shape marketing strategies and sales
approaches.
 Understanding the customer journey and pain points allows for more personalized sales tactics, better product offerings, and
improved customer satisfaction.
c) Forecasting Data:
 Sales forecasts and trend analysis help organizations plan future production, inventory, staffing, and budget allocations.
 Accurate forecasting also assists in anticipating market changes, economic fluctuations, and customer demand, leading to better
business planning.
d) Campaign Effectiveness:
 ERP-generated reports on the ROI of marketing campaigns (such as customer engagement rates, sales conversion rates, and cost per
acquisition) provide insight into which campaigns are most effective.
 By tracking which marketing strategies lead to the highest return, companies can reallocate resources toward more successful
initiatives.
e) Opportunity and Lead Management:
 Detailed data on leads, opportunities, and sales pipeline health enables informed decisions about where to invest time and resources
to close deals.
 This information also helps in determining which market segments or sales approaches are working best, allowing teams to optimize
their sales processes accordingly.
⇒ As with other ERP modules, the Sales and Marketing module provides the benefits of standard codes, a common database,
standard documents, an audit trail, and data integration.
For example, a standard document number follows an order throughout its life cycle, including partial shipments, partial payments, and
returns. This document flow prevents errors and inaccuracies and keeps accounting data relevant.

2. The Sales and Marketing module within ERP is regarded as the module with the most interfaces to other modules, including
Human Resources, Materials Management, Production Planning, and Financial Accounting. Describe the interfaces between the
Sales and Marketing module and each of these other modules (Chat + p69 + Slide 1.1-p24)
Interface with Sales
ERP Module Detailed Description Information Shared Benefits
and Marketing

Human 1. Employee - HR tracks sales and marketing - Sales performance data, - Supports performance
Resources (HR) Management and Sales employees' performance, sales sales targets, commission management, commission
Performance targets, and commissions. information. allocation, and training.

- HR provides information about

available personnel for sales
2. Resource Allocation - Employee availability - Ensures proper staffing for

⇒ Legal requirement and job

campaigns and marketing activities
for Sales Activities and allocation data. sales and marketing activities.

information

- Sales data from the Sales module is - Commission rates, - Accurate processing of
3. Sales Commission
sent to HR for calculating payroll data, and sales commission and payroll for
and Payroll
commissions and payroll. figures for calculations. sales teams.

4. Training and - Sales data helps HR identify - Sales team performance - Improves skills and efficiency
Development training needs for the sales team and gaps, training of the sales team.
 requirements, and skill
develop targeted training programs.
assessments.

- Real-time inventory
- Sales module accesses real-time - Enhances order fulfillment
1. Inventory levels, stock availability,
inventory data to ensure product and minimizes stockouts or
Management and backorder
availability for customer orders. overstocking.
information.

- Sales orders are communicated to - Sales order details,

2. Order Fulfillment and - Ensures timely and accurate
Materials MM for inventory allocation and delivery schedules,
Delivery Scheduling delivery of products.
Management delivery scheduling. product availability.
(MM) - If stock levels are insufficient, Sales - Information on product - Minimizes stockouts and
3. Procurement and
module triggers procurement actions shortages and order optimizes the procurement
Purchase Orders
within MM to restock. quantities. process.

- Sales module communicates return - Return requests, product - Optimizes return handling
4. Return Processing requests to MM for processing, conditions, and restocking and maintains accurate
restocking, and updating inventory. instructions. inventory data.

- Aligns production with actual

- Sales module provides sales - Sales forecasts, actual
1. Production customer demand, reducing
forecasts and actual order data to PP orders, and demand
Scheduling overproduction or
for production planning. projections.
underproduction.

- For make-to-order production, - Sales orders,

2. Make-to-Order and - Ensures production aligns
Sales module triggers production customization
Make-to-Stock with specific customer orders,
orders based on customer sales requirements, and
Production Production enhancing flexibility.
orders. delivery dates.
Planning (PP)
- Sales forecasts from the Sales
- Sales forecasts, planned - Optimizes production
module help PP plan production
3. Capacity Planning production volumes, and capacity and resource
capacity and allocate resources
capacity requirements. utilization.
accordingly.

4. Product - Sales module sends customer- - Customer-specific - Ensures products are

Configuration and specific requirements to PP for configurations, manufactured according to
Customization product customization. customization details. customer specifications.

- Sales orders are passed to Financial - Ensures accurate invoicing

1. Order-to-Cash - Sales orders, payment
Accounting for invoicing, revenue and timely payment
Process terms, and invoice data.
recognition, and payment processing. processing.

- Sales module collaborates with FI

2. Pricing and Tax - Pricing structures, tax - Ensures pricing accuracy and
to determine pricing, taxes, and
Calculations rates, discount conditions. proper tax calculations.
applicable discounts.

- Financial Accounting verifies - Customer credit limits, - Reduces credit risk and
3. Customer Credit
Financial customer credit limits to ensure sales payment history, and ensures responsible sales
Management
Accounting are within approved limits. outstanding balances. practices.
(FI)
- Revenue data, sales
4. Revenue Recognition - Sales data is passed to FI to ensure - Ensures proper revenue
figures, and invoicing
and Financial Reporting revenue is recognized according to recognition and compliance
details for financial
(Cost/profit analysis) accounting standards. with accounting standards.
reporting.

- Financial Accounting processes - Customer payment

5. Customer Payments
customer payments and updates status, accounts - Improves accounts receivable
and Receivables
accounts receivable. Sales module receivable details, aging management and cash flow.
Management
tracks payment status. reports.
⇒ Data integration across functional modules saves time, facilitates customer service, and improves productivity and profitability.
Week 8 & 9: Production and supply chain information systems
Monk - Chap 4 - Production and Supply Chain Management Information Systems
1. In which industries is supply chain management important? In which industries is it not? Why, or why not? (Chat)
1.1. In which industries is supply chain management important?
Supply chain management (SCM) plays a critical role in various industries where the flow of goods, services, and information needs to be
efficiently managed to meet customer demand, control costs, and ensure timely delivery. Below are some industries where SCM is
particularly important:

1. Manufacturing Industry
 Why SCM is Important: In manufacturing, the efficient flow of raw materials, components, and finished goods is vital for
production schedules, cost management, and meeting customer demand. SCM helps manufacturers optimize their operations,
maintain the right inventory levels, reduce waste, and ensure timely production.
 Example: Automobile Manufacturing – Companies like Toyota and Ford rely on sophisticated supply chain management systems to
coordinate the procurement of parts from global suppliers, manage inventory, and schedule production to meet fluctuating consumer
demand. Just-in-time (JIT) inventory systems are widely used in this sector.
2. Retail Industry
 Why SCM is Important: Retailers need to manage large volumes of products across multiple locations, ensuring that the right
products are available at the right time and in the right quantities. SCM helps retailers manage inventory, reduce stockouts, optimize
delivery routes, and improve customer satisfaction by ensuring quick and reliable order fulfillment.
 Example: Walmart – Walmart’s efficient supply chain system ensures it has products available in its stores worldwide. The company
uses real-time data and advanced forecasting techniques to manage its inventory and distribution systems, ensuring that shelves are
stocked with high-demand products.
3. Food and Beverage Industry
 Why SCM is Important: The food and beverage industry requires careful management of perishable goods, temperature-controlled
logistics, and a high level of coordination between suppliers, manufacturers, and retailers. SCM helps ensure timely delivery, prevent
spoilage, reduce waste, and meet regulatory standards.
 Example: Coca-Cola – Coca-Cola operates a complex supply chain involving suppliers, bottling plants, and distributors worldwide.
The company needs an efficient supply chain to manage the high volume and perishable nature of raw materials like syrup and
packaging.
4. Healthcare Industry
 Why SCM is Important: The healthcare sector depends heavily on the timely delivery of critical medical supplies, pharmaceuticals,
and equipment. SCM ensures that hospitals, clinics, and pharmacies have the necessary products to care for patients. With increasing
demand for personalized and timely treatments, a well-managed supply chain is vital for patient safety and cost control.
 Example: Medtronic – Medtronic, a global medical device manufacturer, relies on its supply chain to deliver high-tech medical
devices and equipment to healthcare providers around the world, ensuring they are available for critical surgeries and treatments.
5. Electronics and Technology Industry
 Why SCM is Important: The electronics industry is highly globalized and relies on complex networks of suppliers, manufacturers,
and distributors. As consumer electronics products have short life cycles and technology evolves quickly, managing inventory, lead
times, and cost control becomes critical.
 Example: Apple – Apple manages a global supply chain for its products, such as iPhones and MacBooks, sourcing parts from
different suppliers and managing logistics across regions. Any disruption in its supply chain can lead to production delays or
shortages.
6. E-commerce and Logistics
 Why SCM is Important: In e-commerce, the need for fast, reliable, and cost-efficient logistics is crucial for delivering products to
consumers. Supply chain management ensures timely order fulfillment, inventory management, and efficient shipping to customers
worldwide.
 Example: Amazon – Amazon’s entire business model is built on the back of an efficient and scalable supply chain system. From
warehousing to last-mile delivery, Amazon ensures that millions of products are shipped quickly to customers across the globe.

1.2. In which industries is supply chain management not as important?

While SCM is crucial in most industries, there are some sectors where its impact is less significant or different in nature. Here are some
examples:

1. Creative Industries (e.g., Arts, Entertainment)

 Why SCM is Less Important: In creative industries, such as the arts, entertainment, and media, the focus is more on creativity,
content development, and artistic output than on the flow of physical goods. Supply chain management in these industries is often
more related to managing resources like talent, technology, and intellectual property rather than physical inventory or distribution.
 Example: Film Production – Film studios and production companies focus on the development and creation of content. While
distribution (e.g., through streaming platforms or physical media) requires some supply chain management, it is not as complex or
mission-critical as in manufacturing or retail.
2. Professional Services (e.g., Consulting, Legal, Accounting)
 Why SCM is Less Important: In industries like consulting, legal, or accounting services, the "product" is intangible and is based on
human expertise. There is little to no need for physical supply chains because the primary asset is knowledge or service delivery
rather than products or materials.
 Example: Legal Firms – A law firm doesn’t require supply chain management to manage goods. The firm's focus is on delivering
legal advice and services based on expertise rather than managing material resources.
3. Financial Services (e.g., Banking, Insurance)
 Why SCM is Less Important: Financial services primarily deal with intangible assets such as money, investments, and policies.
While they do need effective systems for data management and security, physical supply chains for goods or services aren’t as
integral to their operations.
 Example: Investment Banks – Investment banks, such as Goldman Sachs or JPMorgan, rely more on financial models, data
analytics, and advisory services. Supply chain management doesn’t play a key role in their operations compared to industries that
deal with physical products.
4. Education and Training
 Why SCM is Less Important: While education and training institutions may need to manage supplies like books, computers, or
equipment, they don’t depend heavily on supply chain management for their core operations. The focus is more on curriculum
development, faculty management, and student outcomes.
 Example: Universities – Universities require administrative systems for course scheduling, student registration, and staffing, but
their supply chain management needs are relatively simple compared to industries dealing with large-scale product manufacturing or
logistics.
5. Hospitality (e.g., Hotels, Resorts)
 Why SCM is Less Important: In hospitality, supply chain management is important to a degree, especially in managing food and
beverage inventory, cleaning supplies, and hotel amenities. However, it’s less complex than in manufacturing or retail because the
industry doesn’t deal with large-scale production of goods.
 Example: Hotels – While hotels need to manage food, beverages, linens, and toiletries, the scale of supply chain management is
generally less intricate compared to sectors like automotive or consumer goods.

1.3. Why is supply chain management important or not in these industries?

Why SCM is Important:
 Physical Goods: Industries that deal with physical products, such as manufacturing, retail, and food production, need SCM to
manage the production, procurement, inventory, and delivery of goods to customers efficiently.
 Complex Networks: Sectors with complex, global supply chains, such as electronics, automotive, and healthcare, depend on SCM to
coordinate multiple suppliers, manage lead times, ensure quality, and minimize costs.
 Customer Expectations: In industries where customers demand timely deliveries (e.g., e-commerce and retail), effective SCM helps
businesses meet these expectations.
Why SCM is Not as Important:
 Intangible Products: Industries like consulting, legal services, and financial services deal with intangible products like knowledge,
advice, and services, where supply chain management is less relevant.
 Lower Complexity: In sectors with simpler logistical needs (e.g., hospitality), the level of complexity in managing physical goods is
lower, so SCM is not as mission-critical.
 Focus on Human Capital: Industries that primarily rely on human expertise, such as education or entertainment, may need logistical
support but don’t require the same level of supply chain complexity as industries that depend on large-scale product flows.
Conclusion:
Supply chain management is indispensable in industries that deal with physical goods, require complex logistics, or have global operations.
However, in industries centered around services, intellectual property, or human expertise, SCM plays a smaller role, as the focus is on
human resources or intangible outputs rather than physical product flow.

2. Metrics are used to measure improvements in supply chain management. What are the benefits of tracking metrics? How often
should they be calculated and recorded? Does it depend on the industry? Does it depend on the competitive environment? Why?
(Chat + p112)
2.1. Benefits of Tracking Metrics in Supply Chain Management
Tracking metrics in supply chain management (SCM) is essential for assessing performance, identifying improvement opportunities, and
making data-driven decisions. Here are the key benefits of tracking SCM metrics:

1. Improved Decision-Making
 Benefit: Metrics provide valuable insights into the performance of the supply chain, allowing management to make informed
decisions about operations, resource allocation, and strategy.
 Example: Monitoring key performance indicators (KPIs) such as inventory turnover, order fulfillment time, and supplier
performance helps supply chain managers make better decisions about inventory replenishment, demand forecasting, and supplier
relationships.
2. Operational Efficiency
 Benefit: By tracking specific metrics, companies can identify inefficiencies, bottlenecks, or delays in the supply chain. This allows
for targeted process improvements that can optimize overall supply chain operations.
 Example: Measuring lead time (the time it takes to process an order from receipt to shipment) can help identify delays and optimize
production and delivery schedules to reduce wait times.
3. Cost Reduction
 Benefit: Metrics help identify areas where costs can be minimized, whether through better inventory management, transportation
optimization, or more efficient production processes.
 Example: Tracking cost per unit or inventory carrying costs can highlight opportunities to reduce overheads and improve margins by
optimizing inventory levels or negotiating better terms with suppliers.
4. Customer Satisfaction
 Benefit: Metrics like on-time delivery and order accuracy directly impact customer satisfaction. Regularly monitoring these metrics
ensures that companies meet customer expectations, improving loyalty and retention.
 Example: Order cycle time (the time from order placement to delivery) and order fill rate (the percentage of customer orders fulfilled
completely) are crucial for ensuring that customers receive their products when and how they expect them.
5. Benchmarking and Continuous Improvement
 Benefit: Metrics allow companies to benchmark their performance against industry standards or competitors. This drives continuous
improvement as companies strive to improve their metrics over time.
 Example: Inventory turnover ratio can be compared with industry averages to determine if a company is holding excessive stock or
if its processes need to be optimized.
6. Risk Management and Compliance
 Benefit: Monitoring metrics related to risk, such as supplier lead times and inventory levels, helps mitigate potential disruptions. It
also ensures compliance with regulations related to product quality, safety, and environmental standards.
 Example: Supplier performance metrics (e.g., delivery timeliness, quality defects) can be used to identify potential risks and take
preemptive actions to avoid supply chain disruptions.

2.2. How Often Should Metrics Be Calculated and Recorded?

The frequency at which metrics should be calculated and recorded depends on several factors, including the nature of the metric, the pace of
business operations, and the industry in which the company operates. Here's a general breakdown:

1. Daily or Real-Time Tracking

  Metrics: Metrics that track operational performance or customer satisfaction need to be monitored daily or in real-time.
 Examples:
o Order fulfillment (tracking how many orders are fulfilled per day).
o Inventory levels (especially in industries with high demand fluctuations or perishable goods).
o On-time delivery rate (particularly important in e-commerce or fast-moving industries).
 Why: These metrics directly impact day-to-day operations, and immediate action may be needed to prevent delays, stockouts, or
customer dissatisfaction.
2. Weekly or Monthly Tracking
 Metrics: Less volatile metrics that track broader performance trends or financial data can be recorded weekly or monthly.
 Examples:
o Inventory turnover (to monitor how frequently inventory is sold and replaced).
o Supplier lead times (assessing whether suppliers consistently meet deadlines).
o Production efficiency (measuring output vs. target).
 Why: These metrics give businesses a better understanding of longer-term trends, and adjustments can be made on a regular basis,
but not necessarily on a daily basis.
3. Quarterly or Annually
 Metrics: Strategic, long-term metrics that provide insights into the overall health and effectiveness of the supply chain can be
measured quarterly or annually.
 Examples:
o Cost per unit (evaluating cost efficiency over a longer period).
o Total supply chain cost (considering logistics, procurement, warehousing, etc.).
o Customer satisfaction surveys or Net Promoter Scores (measuring brand loyalty and satisfaction over the long term).
 Why: These metrics are more relevant to broader business strategy, financial forecasting, and long-term improvements.

2.3. Does the Frequency Depend on the Industry?

Yes, the frequency at which supply chain metrics are tracked often depends on the industry because the pace of business operations and the
type of products or services differ from one industry to another.

Industries with High Product Turnover (e.g., Retail, E-commerce)

 Metrics Frequency: These industries often require daily or real-time tracking of metrics because products move quickly, and supply
chain disruptions can lead to significant customer dissatisfaction or lost revenue.
 Examples:
o Walmart and Amazon track inventory levels, order fulfillment, and delivery performance daily to ensure products are
always available and delivered on time.
o Fashion Retailers need to track stock levels, sales velocity, and order accuracy on a daily basis, especially with seasonal
products that have short life cycles.
Industries with Perishable Goods (e.g., Food and Beverage)
 Metrics Frequency: In industries dealing with perishable goods, metrics like inventory turnover, stock levels, and spoilage rates need
to be tracked daily or even hourly to prevent waste and maintain product quality.
 Examples:
o Grocery Stores and Supermarkets must monitor shelf life and ensure fresh products are delivered on time and not
overstocked.
o Coca-Cola or Nestlé monitor supplier delivery times, product shelf life, and freshness regularly.
Manufacturing Industry
 Metrics Frequency: Weekly or monthly tracking of production efficiency, supplier performance, and lead times is common.
However, for companies practicing lean manufacturing or just-in-time (JIT) production, daily or real-time tracking may be necessary
to avoid production delays.
 Example: Automotive Manufacturers like Toyota monitor metrics like inventory levels, supplier quality, and on-time delivery every
day, but other operational metrics, such as overall equipment effectiveness (OEE), may be tracked weekly or monthly.
Service-Based Industries (e.g., Consulting, Legal)
 Metrics Frequency: In service industries, metrics like customer satisfaction, billable hours, or employee productivity may be tracked
on a monthly or quarterly basis. These metrics are more related to the performance of human resources rather than physical products.
 Example: Consulting Firms measure client satisfaction and project completion metrics less frequently than companies that handle
physical goods. They may evaluate performance metrics quarterly to assess business health.

2.4. Does the Frequency Depend on the Competitive Environment?

Yes, the frequency of tracking supply chain metrics can also be influenced by the competitive environment in which a business operates.
Here’s how:

Highly Competitive Markets

 Tracking Frequency: In industries with high competition, companies often need to track performance metrics more frequently to
maintain a competitive edge, avoid stockouts, and respond quickly to market changes.
 Example: In the e-commerce industry (e.g., Amazon vs. eBay), metrics like order fulfillment speed, inventory levels, and customer
satisfaction are tracked in real time to ensure fast response times and retain customers in a competitive market.
Low-Competition or Niche Markets
 Tracking Frequency: In industries or markets with lower competition, where customer loyalty is more easily maintained, businesses
might not need to track metrics as frequently. The focus may be more on strategic improvements rather than day-to-day
responsiveness.
 Example: In some luxury goods markets, where demand is steady and competition is less aggressive, companies might track
customer satisfaction and inventory turnover quarterly rather than daily.

Conclusion
Tracking metrics in supply chain management provides numerous benefits, including better decision-making, operational efficiency, cost
reduction, and enhanced customer satisfaction. The frequency of metric tracking depends on several factors, including the industry and
competitive environment. Industries with high product turnover, perishability, or intense competition tend to track metrics more frequently
(often daily or real-time), while industries with lower competitive pressures or longer product lifecycles may monitor metrics on a less
frequent basis (weekly, monthly, or quarterly). Adjusting the tracking frequency based on these factors helps companies optimize their
operations, respond to market dynamics, and maintain a competitive advantage.

3. Compare customer relationship management and supply chain management. How are they similar? How are they different? In
which functional areas do they have the most impact? In answering, consider the kinds of technologies used in each
3.1. How are they similar?

Aspect Customer Relationship Management (CRM) Supply Chain Management (SCM)

Goal of Both CRM and SCM aim to improve efficiency—CRM

SCM seeks to improve efficiency in sourcing, production,
Improving focuses on improving customer-facing processes, while SCM
and delivery processes.
Efficiency focuses on operational efficiency in delivering products.

Both rely on data to drive decision-making, whether it’s Both rely on data to optimize performance and inform
Data-Driven
analyzing customer behavior in CRM or optimizing supply strategic decisions (e.g., inventory levels, demand
Decision Making
chain operations based on demand data in SCM. forecasting).

Both use sophisticated software and technologies to improve Both CRM and SCM use enterprise software (ERP, cloud-
Technology
operations. CRM systems manage customer data, while SCM based solutions) for integration across different functions
Integration
systems manage the flow of goods and services. (sales, marketing, procurement, production).

SCM indirectly focuses on customer satisfaction by

Customer- CRM places emphasis on understanding and meeting customer
ensuring products are available, shipped on time, and
Centric Focus needs to enhance customer satisfaction.
delivered with quality.
3.2. How are they different?
3.2.1. Đầy đủ nhất

Criteria Customer Relationship Management (CRM) Supply Chain Management (SCM)

CRM refers to practices, strategies, and technologies used SCM refers to the management of the flow of goods and
by companies to manage and analyze customer services, including the movement and storage of raw
Definition
interactions and data. It aims to improve customer materials, work-in-process inventory, and finished goods,
relationships, customer retention, and sales growth. from the point of origin to the point of consumption.

Focuses on optimizing the flow of goods, services, and

Focuses on improving customer interactions, satisfaction,
Primary Focus information across the entire supply chain, from suppliers to
and retention.
customers.

The goal is to streamline and optimize the supply chain to

The goal is to enhance customer satisfaction, loyalty, and
Objective reduce costs, improve efficiency, and ensure timely delivery
long-term customer value.
of products and services.

- Procurement: Managing supplier relationships and sourcing

- Sales and Marketing: Targeted campaigns, customer raw materials.
segmentation, lead management. - Production: Optimizing production schedules and
Key Functional - Customer Service: Handling inquiries, complaints, and workflows.
Areas Impacted support. - Logistics and Distribution: Managing warehousing,
- Product Development: Feedback from customers transportation, and delivery.
influences product design. - Inventory Management: Maintaining optimal stock levels to
avoid overstock or stockouts.

Indirectly involves customers as the primary goal is to ensure

Customer Directly involves customers in the relationship by tracking timely and accurate product delivery to customers, but
Involvement their needs, preferences, feedback, and purchase history. customer-specific preferences are less emphasized in SCM
itself.

- Customer data (purchase history, preferences, feedback) - Transactional data (supply, demand, inventory levels, and
is tracked and analyzed to provide personalized service order history) is used to manage resources effectively, reduce
Data Usage and offers. costs, and optimize supply chain efficiency.
- Data is mainly used to predict future buying behaviors - Data helps in forecasting demand, managing lead times,
and enhance customer engagement. and improving logistics.

CRM directly impacts sales growth and customer retention SCM indirectly impacts revenue by ensuring that products
Impact on
by fostering long-term relationships with customers, thus are available for sale when needed, reducing downtime, and
Revenue
enhancing repeat business. ensuring timely deliveries to customers.

- Supply Chain Management Software (e.g., SAP SCM,

- CRM Software (e.g., Salesforce, HubSpot, Microsoft Oracle SCM Cloud)
Dynamics) - Enterprise Resource Planning (ERP) systems that integrate
- Marketing Automation (e.g., Marketo, Eloqua) SCM with finance and HR (e.g., SAP, Microsoft Dynamics
Technologies
- Customer Analytics tools (e.g., Google Analytics, 365)
Used
Tableau) - Logistics Management Software (e.g., Manhattan
- Chatbots and AI-based Personalization tools for customer Associates, JDA)
interactions - IoT (Internet of Things) and Blockchain for tracking goods
in real time.

Focused primarily on the customer-facing functions of the Focused on internal operations and the efficient flow of
Scope of Impact business, with an emphasis on communication, goods and services, from suppliers through production to the
satisfaction, and loyalty. end customer.
 CRM interacts primarily with Sales, Marketing, and SCM interacts with Procurement, Manufacturing, Logistics,
Relationship with
Customer Support departments to align strategies for and Finance departments to ensure smooth flow and efficient
Other Functions
customer engagement. management of the supply chain.

- Lead Management: Attract and convert potential

customers. - Inventory Management: Ensure optimal stock levels.
Processes - Customer Segmentation: Categorize customers based on - Procurement: Purchase raw materials and goods.
Involved behavior or demographics. - Logistics: Coordinate transportation, warehousing, and
- Customer Service: Post-sales support and handling distribution.
customer issues.

- Order Fulfillment Rate

- Customer Satisfaction (CSAT)
- Inventory Turnover Ratio
- Net Promoter Score (NPS)
Performance - Supply Chain Cost per Unit
- Customer Lifetime Value (CLTV)
Metrics - On-Time Delivery
- Customer Retention Rate
- Lead Time
- Sales Conversion Rate
- Stockout Rate

SCM has a more short-to-medium-term focus, optimizing

CRM is generally focused on long-term relationships and
Time Horizon day-to-day supply chain processes, although it also considers
sustained customer loyalty over time.
long-term supplier relationships and planning.

3.2.2. Tóm gọn ý

Aspect Customer Relationship Management (CRM) Supply Chain Management (SCM)

CRM focuses on managing relationships with

SCM focuses on optimizing the supply chain to ensure efficient
Primary Focus customers, aiming for satisfaction, loyalty, and
procurement, production, and delivery of products.
increased sales.

Customer Direct, customer-facing interactions (e.g., sales, Indirect interactions—focused on fulfilling customer demand
Interaction support, marketing campaigns). through logistics and production efficiency.

Functional Areas Primarily impacts Sales, Marketing, and Customer Primarily impacts Procurement, Manufacturing, Logistics, and
Impacted Service departments. Inventory Management.

SCM tools are more process-oriented technologies (e.g., ERP

CRM tools are often customer-facing technologies
Technology systems, inventory management tools, supply chain planning
(e.g., email marketing tools, chatbots, analytics).
software).

Summer - Chap 6 - ERP Systems: Production and Materials Management

2. Gather information about the best practices, which are associated with the Production Planning and Materials Management
modules within an ERP package. You can do this in one of four ways: (1) Conduct research on the web; (2) Interview a user of a
Production Planning/Materials Management module within an ERP package; (3) Use an on-line database to find an article in a trade
publication which describes the effective use of a Production Planning/Materials Management module; or (4) Use a Production and
Materials Management module within an ERP system.
2.1. What are the best practices you have discovered? (Chat)
Here are some best practices for Production Planning (PP) and Materials Management (MM) modules within an ERP system:
1. Accurate Demand Forecasting
 Practice: Utilize historical data, market trends, and customer feedback to predict future demand more accurately.
 ERP Benefit: ERP systems enable the use of advanced forecasting models (e.g., statistical forecasting) that integrate seamlessly
with sales and procurement data, leading to better alignment between production and actual market needs.
2. Real-Time Inventory Management
 Practice: Implement real-time tracking of inventory and materials, from raw materials to finished goods.
  ERP Benefit: ERP systems, such as SAP or Oracle, provide real-time updates on stock levels and materials availability, which
improves decision-making and reduces the risk of stockouts or excess inventory.
3. Production Scheduling Optimization
 Practice: Use ERP systems to generate optimal production schedules based on current capacity, demand forecasts, and material
availability.
 ERP Benefit: The integrated nature of ERP allows production planning to dynamically adjust schedules based on available
inventory, capacity, and external factors like supplier delays. This minimizes downtime and maximizes throughput.
4. Just-in-Time (JIT) Inventory
 Practice: Implement Just-in-Time inventory to minimize carrying costs and reduce waste.
 ERP Benefit: ERP systems allow real-time tracking and communication with suppliers, enabling better alignment with production
schedules and reducing the need for excess inventory.
5. Integrated Procurement and Supply Chain Management
 Practice: Ensure tight integration between materials management and procurement for efficient material flow.
 ERP Benefit: With ERP systems, procurement is directly linked with production planning. This ensures timely ordering of materials
based on actual demand and current inventory levels, which reduces the chances of stockouts.
6. Lean Manufacturing Practices
 Practice: Integrate lean principles into production, focusing on reducing waste, improving quality, and increasing productivity.
 ERP Benefit: ERP systems help identify inefficiencies by providing real-time data on production cycles, downtime, and quality
control, enabling continuous improvement and more efficient use of resources.
7. Automated Material Replenishment
 Practice: Set up automated material replenishment based on reorder points or Kanban systems.
 ERP Benefit: ERP systems can automatically trigger reorders when material levels fall below a certain threshold, ensuring
production is never delayed due to shortages.
8. Continuous Monitoring of KPIs
 Practice: Track and optimize key performance indicators (KPIs) like inventory turnover, order cycle time, and production yield.
 ERP Benefit: With an ERP system, organizations can monitor these KPIs in real-time and get instant alerts or reports on areas that
need attention, improving performance across the supply chain.
9. Collaboration with Suppliers and Customers
 Practice: Strengthen relationships with suppliers and customers through shared forecasts and real-time data exchange.
 ERP Benefit: ERP systems allow seamless collaboration with suppliers by providing them access to real-time inventory levels, sales
forecasts, and production schedules, ensuring the supply chain is more responsive and flexible.

2.2. How is the ERP system with Production and Materials Management modules superior to a non-integrated Manufacturing system
(i.e., where the Financial Systems and MRP systems are separate) (Chat)

Criteria Non-Integrated System ERP System

Integration of In a non-integrated system, Material Requirements In an ERP system, production data (from PP) and
Financial and Planning (MRP), inventory management, and inventory data (from MM) are tightly integrated with
Operational Data financial accounting are often separate systems, financial systems. This means that when raw materials
leading to inconsistencies and inefficiencies. For are ordered, produced, or consumed, the financial impact
example, if inventory data is entered manually or (costs, revenues, inventory valuation) is automatically
separately, there is a higher risk of errors in updated. This integration eliminates data discrepancies
accounting and production planning. and ensures better financial visibility.

Real-Time In a non-integrated environment, information flow ERP systems offer real-time visibility into all aspects of
Information between different departments (e.g., production, production and materials management. Changes in
procurement, finance) is often delayed, leading to inventory levels, production schedules, and procurement
decision-making based on outdated data. For example, orders are immediately updated across the system,
the production team may be unaware of an inventory allowing departments to make informed decisions
shortage until it's too late. quickly. This leads to faster response times and reduces
the risk of bottlenecks or supply chain disruptions.
 Improved Communication between departments is typically ERP systems centralize information and facilitate cross-
Communication and done manually, through emails, phone calls, or functional collaboration. Since the data is shared across
Collaboration spreadsheets. This can result in miscommunication or departments in real-time, all teams—from production to
delays in receiving key information (e.g., procurement procurement and finance—can access the same
teams may not be aware of urgent material information, ensuring that everyone is aligned on goals
requirements). and timelines.

Reduced With separate systems for different functions (MRP, With an integrated ERP system, data is entered once and
Duplication of Effort procurement, finance), there's often redundancy in then shared across all relevant modules (e.g., MM, PP,
data entry. For example, material orders might be and Finance). This reduces data duplication and
entered in one system, and inventory updates in minimizes errors in data entry, resulting in time savings
another, leading to duplicate work. and improved accuracy.

Better Forecasting In a non-integrated system, forecasting is often done ERP systems integrate demand forecasting with
and Planning in silos, with little coordination between sales, production planning and materials management,
production, and inventory teams. This can result in enabling a more accurate, data-driven forecast. This
misaligned production plans or stockouts. allows production schedules to align better with
customer demand, reducing inventory holding costs and
improving service levels.

Scalability and Non-integrated systems are often harder to scale ERP systems are designed to scale with business growth,
Flexibility because each function operates in isolation. As a supporting multiple locations, suppliers, and production
company grows, managing different systems for lines. As demand increases, the system can easily
production, materials, and finance becomes accommodate more transactions, suppliers, and products,
increasingly cumbersome. without a breakdown in performance or accuracy.

2.3. What information for decision-making does the integrated system provide? (Chat)
An integrated ERP system with Production Planning (PP) and Materials Management (MM) modules provides a wealth of real-time
information that aids decision-making across various functional areas. Key information provided includes:
1. Real-Time Inventory Data
 Decision-Making Benefit: Inventory levels, material consumption, and product availability are updated in real-time, enabling more
accurate decisions regarding procurement, production scheduling, and order fulfillment.
 Example: A procurement manager can immediately see if inventory levels are running low for a specific raw material, and can place
an order before stock runs out.
2. Production Performance Metrics
 Decision-Making Benefit: Information such as production output, machine utilization, and downtime can be used to make decisions
regarding capacity planning, workforce allocation, and equipment maintenance.
 Example: If a production line is underperforming, management can investigate the reasons (e.g., equipment failure or labor
shortages) and make adjustments to improve throughput.
3. Supplier and Vendor Data
 Decision-Making Benefit: Real-time data on supplier performance (delivery times, order accuracy) helps companies make informed
decisions when selecting or evaluating suppliers.
 Example: If a particular supplier has consistently delivered late, procurement teams can explore alternatives to avoid future delays.
4. Cost Tracking and Financial Integration
 Decision-Making Benefit: ERP integrates production costs (labor, materials, overhead) directly with financial modules. This gives
managers insight into production costs and profit margins.
 Example: A production manager can view the total cost of producing a batch and compare it with projected costs to ensure
profitability.
5. Demand and Forecasting Data
 Decision-Making Benefit: Demand forecasts, adjusted for seasonality and market trends, allow production teams to align production
schedules with anticipated demand, reducing overproduction or underproduction.
 Example: Based on updated sales forecasts, production planners can adjust schedules to avoid stockouts or excess inventory.
6. Lead Times and Delivery Schedules
 Decision-Making Benefit: By tracking supplier lead times and delivery schedules, ERP systems allow businesses to plan production
and procurement activities more effectively.
 Example: If a supplier is facing delays

3. The Production Planning and Materials Management modules within ERP have interfaces to other modules, including Human
Resources, Sales and Distribution, and Financial Accounting. Describe these interfaces (What information is shared with Production
Planning and Materials Management) (Chat + p96-97 + Slide 1.1-p29)
ERP Module Interface with Detailed Description Information Shared Benefits

HR provides data on employee availability, work - Efficient labor

1. Workforce Employee availability,
schedules, and skills, which is used by PP to plan allocation
Planning work schedules, skills
Human labor for production. - Optimized production
Resources (HR) scheduling
2. Payroll HR shares payroll data with MM to calculate labor
Labor cost, time worked - Accurate cost
Integration costs associated with production. allocation for labor

1. Order Management: SD sends confirmed

1. Order Order quantity, delivery
customer orders to PP for production planning and - Production aligned
Management date
to MM for material procurement. with demand
Sales and - Accurate materials
2. Sales SD shares forecasted sales data to help PP plan
Distribution Predicted sales trends procurement
Forecasting future production schedules.
(SD) - Timely order
MM provides SD with current inventory levels for fulfillment with real-
3. Inventory Data Stock levels, stock-out
order fulfillment, while SD alerts MM about time stock data
Exchange warnings
upcoming sales demand.

PP and MM provide data on production costs (e.g.,

1. Costing Materials, labor,
materials, labor, overhead), which FI uses for cost
analysis overhead costs - Accurate financial
accounting and financial reporting.
reporting
Financial Raw materials, semi- - Transparent cost
PP and MM's cost data feed into FI’s budgeting and
Accounting (FI) 2. Budgeting finished goods, finished analysis
financial forecasting.
goods - Effective budgeting
and cost control
3. Inventory MM shares inventory data with FI for valuation and Projected production and
Valuation reporting in the financial statements. material costs
Week 10 & 11: Accounting in ERP systems
Monk - Chap 5 - Accounting in ERP systems
1. Outline the way an ERP system’s handling of transactions affects a company’s general ledger. List three specific SAP modules and
how they cause changes to the general ledger. (p.121-122)
An ERP system is a software solution that integrates various business functions and processes to improve organizational efficiency
and decision-making. One key feature of an ERP system is its ability to handle transactions, which affects a company's general ledger. The
general ledger is the central repository for all financial transactions that occur in a company, and it is updated in real-time as transactions are
recorded in the ERP system.
In the SAP ERP system, input to the general ledger occurs simultaneously with the business transaction in the specific module. Many
SAP ERP modules cause transaction data to be entered into the general ledger, including:
 Sales and Distribution (SD): The SD module records a sale and then creates an accounts receivable entry (a general ledger
document that indicates a customer owes money for the goods received by the customer).
 Materials Management (MM): The MM module controls purchasing and records inventory changes. The receipt of goods from a
purchase order creates an accounts payable entry in the general ledger, which indicates the company has an obligation to pay for
goods it has received. Whenever material moves into or out of inventory (purchased materials arrive from the vendor, raw materials
are taken out of inventory to support production, or finished goods go from production to inventory), general ledger accounts are
affected.
 Financial Accounting (FI): The FI module manages the accounts receivable and accounts payable items created in the SD and MM
modules, respectively. The FI module is also where the general ledger accounts are closed at the end of a fiscal period (quarter or
year), and it is used to generate financial statements.
 Controlling (CO): The CO module tracks the costs associated with producing products. To make a profit, a company must have an
accurate picture of its product costs so it can make correct decisions about product pricing and promotions, as well as capital
investments.
 Human Resources (HR): The HR module manages the recruiting, hiring, compensation, termination, and severance of employees;
the HR module also manages benefits and generates the payroll.
 Asset Management (AM): The AM module manages fixed-asset purchases (plant and machinery) and the related depreciation.
Three Specific SAP Modules and Their Impact on the General Ledger:
1. SAP Financial Accounting (FI) Module:
o Impact on GL: This module is directly linked to the General Ledger and manages all accounting transactions, ensuring that
financial records are updated accurately. It posts transactions such as sales, purchases, payments, and receipts into the GL.
o Example: When a vendor invoice is processed in SAP, the system automatically debits the expense account and credits
Accounts Payable, updating the GL accordingly.
2. SAP Sales and Distribution (SD) Module:
o Impact on GL: The SD module manages sales processes, and every sale transaction impacts the GL by recognizing
revenue and updating receivables. Invoices generated in SD post entries to the GL, ensuring proper accounting of revenue.
o Example: When a customer purchase order is completed and billed, SAP posts revenue to the Sales Revenue account
(credit) and updates the Accounts Receivable account (debit) in the GL.
3. SAP Materials Management (MM) Module:
o Impact on GL: The MM module handles procurement and inventory management. Every purchase order, goods receipt,
and invoice receipt impacts the GL by updating asset and liability accounts, such as accounts payable and inventory.
o Example: When goods are received in MM and an invoice is processed, SAP will post a debit entry to Inventory (asset
account) and a credit entry to Accounts Payable (liability account), thereby updating the GL.

Summer - Chap 5 - ERP Systems: Accounting and Finance

2. Gather information about the best practices, which are associated with the Financial Accounting module within an ERP package.
You can do this by (1) conducting research on the web; (2) interviewing a user of a Financial Accounting module; (3) using an on-line
database to find an article in a trade publication that describes the effective use of an Financial Accounting module; or (4) using an Financial
Accounting module within an ERP system to identify best practices. (p.74-78)
2.1. What are the best practices you have discovered?
Integrated Database:
 All financial data is stored in a centralized database shared across modules, ensuring consistency and reducing redundancy.
 Allows seamless integration with other ERP modules like Sales, Materials Management, and Production Planning.
Automated Processes:
 Automation of routine tasks such as invoice generation, accounts payable/receivable management, and tax calculations.
 Automatic posting of journal entries from operational transactions, reducing errors and manual effort.
Audit Trails:
 The Financial Accounting module creates a comprehensive document flow, linking transactions (e.g., sales order to invoice to
payment) to maintain traceability and ensure compliance with international standards such as IFRS or GAAP.
Real-Time Financial Reporting:
 Provides up-to-date financial statements, profit-and-loss accounts, and balance sheets for better visibility into financial performance.
Regulatory Compliance Tools:
 Ensures adherence to accounting standards and tax regulations through built-in compliance checks.

2.2. How do they contribute to overall productivity?

Efficiency Improvement:
 Automation reduces the time spent on manual tasks like data entry, reconciliation, and report preparation.
 Financial close processes, such as month-end reporting, become faster, allowing teams to focus on strategic tasks rather than
operational bottlenecks.
Error Reduction:
 Integrated modules within the ERP system ensure that data is consistent across departments, reducing duplication and errors.
 Example: If a sales order in the Sales module is updated, the Financial Accounting module automatically reflects the changes,
eliminating discrepancies.
 Automated validation rules (e.g., ensuring correct tax codes are applied) prevent mistakes in financial entries.
Timely Decision-Making:
 Real-time access to financial dashboards and reports enables managers to monitor key metrics like revenue, expenses, and cash flow
instantly => allowing managers to respond swiftly to financial concerns.
Streamlined Operations:
 Integration between departments such as Procurement, Sales, and HR ensures that all financial transactions are recorded and
reconciled centrally.
 Example: When inventory is procured, the system automatically adjusts accounts payable and inventory levels, removing the need
for manual reconciliation.
 Coordinated workflows for approvals, such as expense claims or vendor payments, speed up processes and reduce delays.

2.3. What information for decision making do they provide?

Profitability Analysis: Provides insights into profit margins, revenue streams, and cost structures, aiding in strategic planning.
Cash Flow Management: Real-time visibility into cash inflows and outflows supports effective liquidity management.
Cost Variance Analysis: Enables managers to compare actual costs to standard or planned costs, identifying inefficiencies.
Forecasting and Budgeting: Supports future planning by offering accurate financial data and historical trends.
Regulatory Reporting: Ensures accurate and timely reporting for legal and compliance purposes, reducing risks of penalties or audits.
3. The Financial Accounting module is often the first module to be implemented within an ERP system. Why do many companies
start with the Financial Accounting module? (p.77)
Central Role: The Financial Accounting module integrates with other functional areas and is critical for generating required financial reports
.
Regulatory Compliance: Ensures companies meet legal and tax reporting obligations early in the implementation process.
Foundation for Other Modules: Financial accounting provides data to other modules like Management Accounting, ensuring a solid
financial baseline for the ERP system.
(GPT)
The Financial Accounting (FI) module is often the first module implemented in an ERP system because it serves as the backbone
of the organization’s operations, laying the groundwork for subsequent modules. Financial accounting is a universal requirement for all
businesses, regardless of size or industry, as it handles critical tasks like bookkeeping, accounts payable and receivable, tax reporting, and
compliance management. Implementing this module ensures that the company meets legal and regulatory obligations, such as generating
accurate tax filings and financial statements, which are essential for avoiding penalties and maintaining credibility with stakeholders.
Another reason the FI module is prioritized is its role as the central hub for data integration. Financial data is a common
denominator across various business functions, such as sales, procurement, inventory, and human resources. By implementing the FI module
first, companies can establish a centralized, consistent, and real-time financial database that ensures seamless communication between
departments. For example, when a purchase is made through the Procurement module, the FI module automatically records the transaction,
updating accounts payable and inventory costs without requiring manual intervention. This interconnected framework minimizes data errors,
ensures accuracy, and creates a solid foundation for implementing other modules.
The FI module also plays a critical role in supporting decision-making by providing real-time financial insights . It allows
businesses to generate comprehensive reports, such as income statements, balance sheets, and cash flow statements, which are essential for
evaluating the organization’s financial health. With this information, management can create accurate budgets, identify financial risks, and
make informed strategic decisions. Additionally, the module supports cost tracking and variance analysis, enabling companies to monitor
expenses against budgets and improve operational efficiency.
Compliance and audit readiness are other major reasons companies begin with the FI module. It creates a reliable audit trail
for all transactions, ensuring that businesses adhere to regional accounting standards such as GAAP or IFRS. For example, the module
automates VAT, GST, and other tax calculations, making regulatory reporting more accurate and less time-consuming. This helps mitigate
risks of non-compliance and avoids costly audits or fines.
Starting with the FI module also facilitates quicker returns on investment (ROI) for the ERP system. By automating processes like accounts
receivable, accounts payable, and financial closing, organizations can immediately reduce manual workloads, enhance productivity, and
improve cash flow management. For instance, automating accounts payable shortens payment cycles and strengthens vendor relationships
while freeing staff to focus on strategic initiatives.
In summary, implementing the Financial Accounting module first ensures that the company’s financial foundation is robust,
compliant, and interconnected with other business functions. This phased approach reduces implementation risks, streamlines operations, and
enables businesses to realize immediate benefits while paving the way for the successful rollout of additional ERP modules.
4. Many divisions of organizations seek decentralized financial control. How can an ERP system be implemented to ensure local
financial decision making and control? (p.78)
Role-Based Access: ERP systems allow role-specific access, enabling divisions to manage their own financial data while
maintaining oversight.
Decentralized Entries: Each division can input financial data locally, which is synchronized with the central database for
consistency.
Customizable Reporting: Divisions can generate specific reports for local decision-making while contributing to consolidated
company-wide reports.
(GPT)
By leveraging the advanced configurability and modular nature of modern ERP systems, organizations can strike a balance between
decentralized financial control and central oversight. This approach empowers local divisions to make timely and effective financial decisions
while ensuring that overall organizational goals and compliance standards are maintained.
a. Configurable Financial Structures
Multi-Entity Support: ERP systems should support multi-entity structures, allowing each division or business unit to operate its
own financial ledgers while integrating them into a unified corporate structure.
Example: Divisions can maintain their specific charts of accounts (COA) while the parent company consolidates financial data for reporting.
Regional Compliance Settings: ERP systems like SAP S/4HANA and Oracle ERP Cloud can be configured to adhere to local tax
laws, currencies, and accounting standards, enabling divisions to manage finances independently in compliance with regional requirements.
b. Role-Based Access Control (RBAC)
Assign specific roles and permissions to divisional finance teams, allowing them to control and manage local budgets, expenses, and
financial reporting without interference from other divisions.
Example: A local manager can approve expenses and budgets up to a predefined limit, while corporate finance retains oversight for larger
approvals.
c. Decentralized Budgeting and Forecasting
Enable divisions to create and manage their own budgets using modules that support decentralized budgeting processes.
Example: Microsoft Dynamics 365 allows each division to forecast its revenue and expenses while syncing with the organization’s central
financial plan for alignment.
Provide tools for variance analysis so that each division can compare actual performance against budgets and make data-driven
decisions.
d. Localized Reporting and Analytics
Provide divisional managers access to real-time financial data and dashboards tailored to their specific needs.
Example: Localized Profit and Loss (P&L) statements and cash flow reports can empower managers to assess divisional
performance without relying on the corporate office.
Use ERP tools like Power BI or Tableau integrated with the ERP system to enable advanced analytics for each division.
e. Workflow Automation for Approvals and Transactions
Configure workflows that allow divisions to process transactions, approve expenses, and manage accounts locally.
Example: Purchase requisitions can be approved at the divisional level up to a certain monetary threshold, while larger requests are
escalated to corporate.
f. Intercompany Transaction Management
Use the ERP system to facilitate intercompany transactions, ensuring accurate recording of transfers, cost allocations, and revenue
sharing between divisions.
Example: Oracle ERP Cloud provides automated reconciliation of intercompany transactions, reducing errors and administrative
overhead.
g. Decentralized Tax and Regulatory Compliance
Allow divisions to manage local tax filings and compliance independently while ensuring central oversight to maintain consistency
across the organization.
Example: Each division can use region-specific tax rules within the ERP while corporate ensures compliance with global
regulations.
h. Audit and Monitoring Capabilities
Implement audit trails and monitoring tools to ensure that while divisions have control over local financial decisions, the corporate
office retains visibility into all financial activities.
 Example: Corporate finance can review divisional spending patterns or flag anomalies using automated alerts in the ERP system.
i. Training and Change Management
Train divisional teams on how to use the ERP system effectively, ensuring they understand its capabilities for localized financial
control.
Provide clear guidelines on the boundaries of their financial authority and how it integrates with the organization’s broader financial
strategy.

5. The Management Accounting module within ERP has interfaces to many other modules, including Human Resources, Sales and
Distribution, Materials Management, Production Planning, and Financial Accounting. Describe the interfaces between the
Management Accounting module and each of these other modules (What Information Is Shared with Management Accounting?)
(p.82)

Module Interface Shared information

Human Resources Allocates labor costs to cost centers, activities, or Employee time and attendance data, payroll costs, and
(HR) internal orders. workforce planning data for cost allocation.

Sales and Distribution Tracks revenue and profitability by sales orders, Sales orders, revenue data, delivery costs, customer
(SD) products, or customers. profitability, and discounts or commissions.

Materials Monitors inventory and procurement costs and Material prices, purchase order data, inventory valuation, and
Management (MM) integrates material movements. goods issue/receipt data.

Production Planning Analyzes production costs and resource Production orders, work-in-progress (WIP) costs, material
(PP) utilization in manufacturing processes. consumption, and overhead rates.

Financial Accounting Provides financial data for cost control, General ledger postings, cost center accounting data, profit
(FI) budgeting, and profitability analysis. center allocations, and asset depreciation.
Week 12 & 13: Human resource processes with ERP
Summer - Chap 7 - ERP system: Human resources
1. Compensation for sales representatives is an important issue in many industries. If compensation packages are inadequate,
salespeople will move to other firms with more attractive compensation packages. What information can a HR module provide to
enable managers to develop compensation strategies to attract and retain successful sales representatives? (p.108)

The HR module provides valuable data for developing effective compensation strategies:
 Employee Compensation History: Maintains a detailed record of salary increases, bonuses, and other compensations, helping
managers identify trends and set competitive packages.
 Market Comparison Tools: Provides insights into industry compensation benchmarks, enabling the firm to offer competitive
salaries for roles like sales representatives.
 Retention Analysis: Tracks turnover rates and reasons for employee departures, highlighting areas to address with improved
benefits or salary adjustments.
 Skill Inventory and Performance Data: Links performance reviews to compensation, ensuring that high-performing sales
representatives are adequately rewarded.
(GPT)
Information Provided by HR Module

Category Details

Salary Benchmarks Industry standards and competitive salary data to compare compensation packages.

Performance Data Sales performance metrics, including revenue generated, customer acquisition rates, and target
achievements.

Turnover Analysis Data on employee turnover rates, reasons for leaving, and tenure of sales representatives.

Incentive and Benefits Insights into how existing incentives (e.g., bonuses, commissions) and benefits are utilized and perceived
Usage by employees.

Training and Development Information on training effectiveness and its impact on sales performance and retention.
 Demographics and Sales representatives' age, tenure, and preferences for benefits (e.g., work-life balance, career growth).
Preferences

Employee Satisfaction Survey data on satisfaction with current compensation and factors influencing retention decisions.

How This Data Helps

Competitive Analysis: Identify gaps in current compensation compared to industry standards and adjust accordingly.
Performance-Based Rewards: Align compensation with performance metrics to motivate top performers.
Retention Strategies: Develop tailored retention packages, including bonuses, career development opportunities, or flexible work
arrangements.
Customizable Benefits: Offer benefits aligned with employee preferences to increase job satisfaction.
Data-Driven Adjustments: Continuously monitor and refine compensation strategies based on real-time insights and feedback.
Leveraging this information, managers can create compensation strategies that not only attract top talent but also foster long-term retention
and satisfaction among sales representatives.

2. Collect information about the best practices, which are associated with the HR module within an ERP package. You can do this by
(1) conducting research on the web; (2) interviewing a user of an HR package; (3) using an on-line database to find an article in a
trade publication that describes the effective use of an HR module; or (4) using an HR module within an ERP.
2.1. What are the best practices which you have discovered?
Integration with Financial Data: HR modules integrate benefits, payroll, and compensation data with financial systems for holistic
decision-making. Why it’s a best practice: Provides a holistic view of employee performance, helps align individual goals with
organizational objectives, and supports data-driven decisions for promotions and compensation.
Employee Self-Service: Allows employees to manage their data (e.g., benefits enrollment) via web portals, reducing administrative
workload. Why it’s a best practice: Ensures employees are continuously improving, boosts engagement, and helps organizations develop a
skilled workforce in line with business needs.
Real-Time Analytics: Provides tools for tracking labor costs, employee attendance, and productivity in real time.
Compliance Reporting: Automates the generation of reports required for regulatory compliance (e.g., OSHA, Family Leave Act)

(GPT)
The best practices for the HR module in ERP focus on optimizing processes and leveraging technology for better workforce
management. These include streamlining recruitment using applicant tracking systems (ATS) to reduce time-to-hire and improve candidate
selection. Performance management systems are implemented to continuously track employee performance and align their goals with
organizational objectives. Learning Management Systems (LMS) offer tailored training programs to address skill gaps and enhance
workforce competencies. Automating payroll, benefits management, and compliance reporting ensures accuracy while reducing
administrative burdens. Additionally, self-service portals empower employees to access information and perform routine HR tasks
independently, while predictive analytics helps in workforce planning and forecasting. Finally, regular engagement surveys and feedback
mechanisms foster a positive work environment and enhance employee satisfaction.

2.2. How do they contribute to overall productivity?

Streamlined Operations: Automation reduces time spent on manual tasks like payroll processing and government reporting.
Enhanced Employee Engagement: Self-service portals empower employees, improving satisfaction and reducing HR inquiries.
Better Workforce Planning: Real-time data aids in forecasting workforce needs and aligning them with business goals.
(GPT)
Implementing these best practices significantly boosts organizational productivity. Automating routine HR processes minimizes
manual intervention, reducing errors and freeing up HR personnel to focus on strategic activities. Continuous performance tracking and
effective training programs improve employee engagement, skill levels, and overall output. By benchmarking compensation and offering
competitive benefits, companies can attract and retain top talent, reducing turnover rates. Employee self-service portals save time for both
employees and HR staff, increasing operational efficiency. Predictive analytics ensures that workforce availability aligns with business needs,
avoiding staffing shortages or inefficiencies. Together, these practices create a streamlined and proactive HR function that directly supports
business objectives.

2.3. What information for decision making do they provide?

Compensation Trends: Data on competitive salaries and benefits for specific job roles.
Turnover Analysis: Insights into turnover rates and associated costs.
Skills Gap Analysis: Identifies missing skills within the workforce for targeted training and recruitment.
(GPT)
The HR module provides critical information to support informed decision-making. Recruitment metrics, such as time-to-hire and
the quality of new hires, help refine hiring strategies. Performance data allows managers to identify high-performing employees and areas
requiring improvement. Skill gap analysis and training effectiveness data guide investments in employee development. Compensation trends
and benefits usage statistics inform adjustments to pay structures and benefits packages. Attrition rates and engagement survey results help
identify reasons for turnover and implement retention strategies. Workforce analytics, including headcount forecasts and demand planning,
ensure optimal resource allocation. Overall, these insights enable HR leaders to make data-driven decisions that enhance workforce
productivity and align with organizational goals.

3. Many organizations purchase the HR module from one ERP vendor (e.g., Peoplesoft) and the Financial Accounting modules from
another ERP vendor (e.g., SAP).
3.1. What do you see as the advantages of this approach? (p.113)
Specialized Features: Choosing vendors like PeopleSoft for HR and SAP for Financial Accounting allows access to specialized
functionalities tailored to specific needs.
Flexibility: Organizations can adopt the best-in-class solutions for each function rather than compromising on one vendor’s
integrated suite.
Cost Efficiency: Some mid-sized companies may save costs by mixing modules based on functionality and price

3.2. What do you see as the disadvantages of this approach? (p.113)

Integration Challenges: Linking data between modules from different vendors may require custom middleware, increasing
complexity and cost.
Training and Support Issues: Employees may need training for multiple systems, and obtaining vendor support for integrated
issues can be complicated.
Data Consistency Risks: Inconsistent data handling across systems may lead to inaccuracies and redundant data entry.

Aspect Advantages Disadvantages

Best-in-Class Organizations can select the best solution for each function, Integration challenges may arise, requiring custom
Solutions ensuring optimal functionality and performance. development or middleware to connect systems.

Cost Optimization Companies can negotiate better deals with multiple vendors Increased costs for integration, maintenance, and
and avoid overpaying for unnecessary features. potential licensing overlaps.

Flexibility Organizations can tailor systems to meet specific needs by Complexity in managing multiple vendor
choosing specialized modules from different vendors. relationships, contracts, and support agreements.

Scalability It allows incremental upgrades or replacements without Lack of seamless data flow between modules may
affecting other modules or systems. result in data silos or inconsistent reporting.

Vendor Reduces reliance on a single vendor, lowering risks Vendors may not fully support integration efforts,
Independence associated with vendor lock-in. leading to potential compatibility issues.

Enhanced Access to advanced or unique features in specific modules Users may face a steeper learning curve due to
Features that may not be available in a single-vendor ERP. differences in user interfaces and workflows.

Innovation Encourages the adoption of cutting-edge technologies as Ongoing updates or changes in one system may
organizations choose from multiple vendors. disrupt integrations with the other.