Assignment 1

Chapter No. 1

Q1. 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?

Ans. Business Processes are activities that take one or more input and produce an output such as a
report or forecast that is of value to the customer. Whereas, business functions are activities specific to
a functional area of business such as Marketing and Sales, Accounting and Finance etc. Business process
may involve data or inputs from multiple functional areas but a business function pertains to a single
operational area only. To explain how a business process can be inter-departmental let’s consider the
e.g. of a customer who sends a request for purchase.

- The Marketing and Sales department receives the sales order,

- Which then sends an inquiry to the Supply Chain Management department for the availability of
the product,
- If unavailable, the request is forwarded to Accounting and Finance department for the purchase
of the raw materials for manufacturing of the product.
- The Accounting and Finance department after allocating the budget for the ordering of raw
materials and manufacturing cost, prepares a summary of costs incurred in form of a purchase
order.
- Accounting and Finance department gives the SCM department go ahead for the production of
goods as well as, the Marketing and Sales department the purchase order, to be forwarded to
the customer.

Here, we can see how purchase order that was a business function of the Marketing and Sales
department was a result of a business process called the sales order process, involves almost all
functional areas of a business. Managers can organize their teams in terms of business processes in
which member belonging to any functional area would be designated to support one more of the
business functions for a particular business process, thus ensuring no ambiguity in terms of the roles of
particular people of a functional area as well as smooth running of business activities. This strategy may
also achieve better accountability and most fruitful utilization of resources as per the people’s expertise.

Q2. How could a university organize its business education around business processes rather than
business functions? What would be the benefits to students?

Ans. Business schools tend to teach the roles and responsibilities, the activities, inputs, and outputs of
each functional area separately i.e. in terms of business functions pertaining to individual areas of
operation. In the real world no area of operation works in seclusion. In fact, any major business
operation cannot work smoothly without sharing of information across all departments. Hence,
universities should be imparting knowledge about complete business processes and the contribution of
all operational areas and their particular business functions for the said business process. This helps
students have a better understanding of how things work in an actual business and they can contribute
to improving these processes rather than learning how to connect the dots which they in turn should
have learnt in theory.

Q3. Assume your uncle raises bees for honey on his farm. You help him package the honey and sell it on
the Internet. Reproduce Figure 1-1 for this small business example. Add a one-sentence description for
each function as it relates to selling this artisan honey online.

Ans.

Functional
Area of Marketing and Supply Chain Accounting and
Operation Sales Management Finance Human Resources
Business Financial
Functions Marketing the Accounting of
product - Purchasing goods Payments - Recruiting and
highlighting the and raw materials - maintaining records Hiring - Hiring
originality an purchasing bottles of signed receipts skilled people with
hygiene of the home and boxes to from customers expertise of honey
grown bees honey. dispatch honey and suppliers extraction
Receiving goods
and raw materials - Cost Allocation and Training - Training
to receive the Control - allocating the people on
Taking Sales Order - ordered bottles, money for farm boarded on the
entertaining online check for any maintenance, most efficient tips
sales order via the damaged bottles semiannual and tricks of honey
website, and social and ask for newer bonuses for farm extraction and
media platforms ones in case any. workers packaging.
Transportation and
Logistics -
Confirming Payroll - ensuring
Customer Support - customer delivery timely salary
entertaining user details and Planning and dispatch of
queries about the ensuring that the Budgeting - keeping permanent
available quantities right orders are aside money for employees as well
and pricing of the delivered to the farm extension or as delivery
honey right people. emergency funds personnel
Government
Cash-flow Compliance -
Customer Management - Ensuring honey
Relationship Scheduling keeping in check if quality and working
Management - Extraction Runs - all payments towards getting
offering the Scheduling Honey specially cash on industry wide
recurring customers extraction shifts delivery have been quality insurance
seasonal deals and and packaging received and certification such as
offers runs. logged in promptly. ISO2000
Sales Forecasting - Farm Maintenance    
Monitoring seasonal - Maintaining
sales specially hygiene at the
 farm premises and
avoid at all costs
during and planning any natural or
extension of honey unnatural cause
extraction for heavy that can affect
selling months. bees.
Advertising -
Planning sales
campaign and
launching them on
website and other
social media
platforms      

Chapter No. 2

Q1. Moore’s Law is said to be more of a trend, rather than a representation of the actual number of
transistors on a silicon chip. What is the current status of Moore’s Law? If it is not exactly holding true,
what does this mean for the future of the computing industry?

Ans. Moore’s law proposed that the number of transistors on a silicon chip doubles every two years, in
the year 1965. This law has played a huge contribution in the design of latest technology but is now
lagging behind in leading the way. The concept of single chip containing so many transistors was left
behind long ago with the introduction of multiple cores processors, then came nanometer transistors
which aren’t even visible to the naked eye. But as our need for faster, more powerful processors
continues to grow, the future of computing industry depends on molecular transistors which is, as per
experts known as the era of ‘quantum computing’. Some experts are of the opinion that Moore’s law
will once again see the light of the day with these spintronic transistors, as they will make discussions
about transistor limits irrelevant.

Q2. What are the main characteristics of an ERP system? What are some newly developed features of
ERP systems?

Ans. The most significant characteristics of an ERP systems are as follows

a. its suitability for large companies,

In the initial days, SAP ERP system was targeted for very large companies. Prior to that, it was best
that these industry giants operated with all their department running individual databases which
would only be accessible to the individuals of the particular department and was impossible to have
a centralized, integrated systems because of the sheer amount of computing power required to
integrate them. Increased computing speeds, however, meant that large companies in a variety of
industries, including manufacturing, gas and oil, airlines, and consulting, could have integrated
information systems, and that was made possible by the development of ERP systems.
 b. high cost

ERP implementation is an ongoing process, not a one-off project, which implies that the costs of
acquiring the hardware, software, trainings, continuous upgrades are ongoing as well. Although, it’s
a fruit that keeps on giving, the costs of an ERP solution with its multiple modules is time consuming
and costs millions of dollars. More often, the out-of-hand budgets and over consumption of time is
the reason for most ERP implementation failures. And even with successful implementation in one
location might not necessarily mean successful implementation in all locations i.e. of the companies
are multi-national, which is mostly the case

c. automation of data updates

The best thing about an integrated information system such as that of an ERP is that information
updates get propagated throughout all the related fields and columns in the central database
without any human intervention.

d. applicability of best practices

With its accumulated knowledge and experience of ERP solutions implementations SAP developed
models of how certain industries’ business processes should be managed. Thus, making it capable to
introduce and even correct some of a company’s business practices with that of possible practices.

New Features of the ERP Systems

Companies developing ERP Systems have developed ERP modules that cater to small scale companies
such as those with less than 500 employees. They have also introduced advance reporting tools capable
of performing forecasts far more accurate and faster. Another new functionality of the latest ERP
Systems is the pay-per-use of the ERP Systems i.e. subscription based use of ERP system through
browsers, which eliminates the acquiring of hardware and software resources but the cost of configuring
the software and training of employees still hold.

Q3. Much has been written in the news media about ERP systems, both in print and online. Using library
resources or the Internet, report on one company’s positive experience with implementing an ERP
system, and on another company’s disappointing experience.

Ans. The Nestle Success Story

The successful business case for implementing an ERP system can be seen by examining any one of
three Nestle stories.  Nestle SA is the and.  In 2000, Nestle SA, which is the parent company of the
candy-making giant and is headquartered in Switzerland, decided to roll out an ERP system to its
230,000 employees in 80 countries around the world. It signed a $200 million contract with SAP. In
addition to this sum, Nestle SA also committed to an additional $80 million to be spent on consulting,
maintenance, and upgrades.  Executives at Nestle SA realized that the company needed to standardize
its business processes if it wanted to be competitive.  The rollout was scheduled to take three years for
Nestle SA’s largest sites with the others to follow.  Included in the implementation were the mySAP.com
financials, accounts payable, accounts receivable, planning, production management, procurement,
direct procurement, supply-chain, demand planning, fulfillment, and business-intelligence modules.
This was then followed by ERP implementation in Nestle UK and Nestle USA.

Although there were bumps in the road for Nestlé USA’s ERP implementation, it certainly seems to be
paying for itself.  As of 2002, Nestle USA claimed they had already realized a savings of over $325
million. Most of these savings came in the area of supply chain improvements, specifically demand
forecasting.

Revlon: Messing up badly enough to enrage the investors

After acquiring Elizabeth Arden, Inc., in 2016, Cosmetics giant Revlon was another company that found
itself needing to integrate its processes across business units. Both companies had previously had
a positive experience with ERP rollouts in the past — Elizabeth Arden had implemented Oracle Fusion
Applications, whereas Revlon signed up with Microsoft Dynamics AX. But the one of the biggest changes
came with the implementation of SAP HANA.

The rollout was clearly disastrous enough to have resulted in millions of dollars of lost sales at Revlon’s
North Carolina manufacturing facility. The company put the blame on "lack of design and maintenance
of effective controls in connection with the ... implementation". The crisis dramatically decreased
Revlon’s stocks to the extent that the company's own stockholders sued the company.

Chapter No. 3

Q1. If Fitter installs an ERP system, how could they reorganize their sales division to be more efficient?
Be specific about how you would rearrange divisions, or consolidate them.

Ans. Both the Wholesale and Direct sales departments differ in order volumes and pricing terms, which
can easily be handled using an ERP, so the divisions can be consolidated. An efficient ERP system lets a
company configure sales prices specific to product as well as customer. This means that for Direct Sales
division clients such as small shops, vending machines operators the bulk discounts can be maintained
while for Wholesale division customers’ lower price products can be maintained for the particular
customers. The same information when lies in a central database can be updated for discounts when the
customer pays within the said day’s limit. Any other discounts that the sales people might offer
customers for better sales at the time of product inquiry will be known by sales clerks so when an order
is punched by a customer there will be no ambiguity in sales order placement.

Q2. Explain why unintegrated Marketing and Sales information systems lead to company-wide
inefficiency, higher costs, lost profits, and customer dissatisfaction?

Ans. When the marketing and Sales department has unintegrated information systems problems can
occur mostly in the sale order processing activity which is essentially at the heart of this functional area.
When the revised pricing information pitched by salespeople isn’t communicated throughout the sales
department any sales clerk entertaining customer orders might give out older product quotations to the
customers. If the updated prices are lower than the previous prices, then it’ll cause company profit but
the customer would be dissatisfied and like in most cases retaliate and not place the order at all. But in
case the customer was supposed to be charged on higher revised rates but instead got away with larger
order and smaller price then:
 - The company will obviously have to fulfill the order at a loss since each case would be produced
at dispatched at lower price than it actually costs.
- If the customer would have ordered a larger than expected order, the workers would have to
put in overtime to complete the production runs, if that still failed, the order will not be
dispatched on the said deadline thus leading to an unhappy customer.
- This overall loss incurred would be distributed within the company in terms of performance
appraisals. The marketing and sales team would suffer because of committing to such a bad deal
and the production people would be collateral damage for not having to manage the demand in
time, thus decreasing the overall employee morale.

Q3. Discuss sales and distribution in the SAP ERP system, and explain how integrated data sharing
increases company-wide efficiency

Ans. The sales and distribution module in SAP ERP manages the sales order process and manages as a
series of the following events:

1. Presales activities – In this phase the user can get information about the products either in form
of a quotation which guarantees the customer that the seller will get the product at a specified
rate for a given period of time, or in the form of an inquiry which is a simple rate list for
products that is subject to change upon seller’s discretion. This phase also includes marketing
activities such as sales calls to customers and other promotional activities.
2. Sales Order Processing – A series of activities takes place in this phase which include: firstly, any
information gathered from the user during inquiry or when placing an order is recorded in the
sales order. Next, the items to be purchased are recorded along with their selling price and
ordered quantities. Lastly, the system checks for the customer’s remaining balance limits against
the total bill, if the amount if sufficient the order is processed, else, the system prompts the
sales officer to either stop the order or to reach out to customer for pre-payment of the order.
3. Inventory Sourcing – Here the system checks the company’s inventory records and production
plans to determine if the order can be delivered to the customer on the given delivery date, if
not, it then recommends changes in the production plans so the required production can be
achieved.
4. Delivery – creating a delivery in the SAP ERP system means releasing the documents that the
warehouse uses to pick, pack, and ship orders, which are then transferred to the Materials
Management module, where the warehouse activities of picking, packing, and shipping are
carried out.
5. Billing – in this step the SAP ERP system generates invoices by copying in it the sales data and
then sending them to the customer. The accounting records are also updated by the system by
debiting the account receivables and crediting sales.
6. Payment – Any payment sent by the customer is recorded in the system. Any electronic
payment made is also processed by the SAP ERP system there by debiting the cash accounts and
crediting the customer credit. In case of payment through checks the sales clerk enter value
manually into the system at which point the system automatically updates all information
regarding the sale.

Q4. Describe the benefits of customer relationship management (CRM) software

Ans. CRM software can provide companies with the following benefits:

 Lower costs—Installing CRM alongside an ERP solution can help incur less costs by managing
the use of salesforce time, improve response times in call centers
 Higher revenue— CRM can help companies manage customers into various portfolios such as
key accounts that can help the Marketing and Sales departments to pitch the right selling
opportunities to the right customers thus increasing revenues.
 Improved strategy and performance measurement— With the installation of CRM along with
ERP system a company can look at successful operations of one department in coherence with
performance of other. This can help managers strategize on team formations and in rewarding
promising team performance rather than rewarding one department while completely ignoring
other.

Chapter No. 4

Q1.

Exercise 4.2

Following the format of the spreadsheet in Figure 4-3, develop a spreadsheet to forecast Fitter’s sales
for July through December. Calculate the base projection using the previous year’s values (shown in
Figure 4-4), and factor in the 3 percent estimated growth rate. Assume that the special marketing
promotion last year resulted in an increase in sales of 200 cases for July, and that a special marketing
promotion this year will result in an increase in sales for July of 400 cases.

 
Ans.

Septembe Octobe Novembe Decembe

Sales Forecasting July August r r r r
Previous Year 6702 6327 6215 6007 5954 5813
Promotion Sales 200          
Previous Year Base 6502 6327 6215 6007 5954 5813
Growth (3%) 195 190 186 180 179 174
Base Projection 6697 6517 6401 6187 6133 5987
Promotion Sales 400          
Sales Forecasting 7097 6517 6401 6187 6133 5987
Exercise 4.3

Using the Fitter sales forecast for July through December that you created in Exercise 4.2, develop a
spreadsheet for sales and operations planning for those same months. Use the format of the
spreadsheet shown in Figure 4-5. The number of working days for each month is shown in Figure 4-13.

For your production plan, try to keep the capacity utilization at 95 percent or less. To disaggregate the
plan for the group into plans for NRG-A and NRG-B bars, use 70 percent of sales for NRG-A bars and 30
percent for NRG-B bars.

Ans.

Sales and Operations Septembe Octobe Novembe Decembe

Planning   July August r r r r
1) Sales Forecast   7097 6517 6401 6187 6133 5987
2) Production Plan   7097 6517 6401 6187 6133 5987
3) Inventory   100 100 100 100 274 96
4) Working Days   20 23 21 21 20 21
5) Capacity   6666 7666 6999 6999 6666 6999
6)Utilization   106% 85% 91% 88% 92% 85%
7) NRG-A (cases) 70.00%            
8) NGR- B (cases) 30.00%