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Chapter 1

Introduction to Business Process

Magal and Word | Integrated Business Processes with ERP Systems | 2011

Learning Objectives
Explain the cross-functional nature of business

processes and the use of enterprise systems to effectively and efficiently complete business processes
1. 2. 3.

Organizational Structure and Silo Effect Business Processes Cross Functions (cross-functional) Enterprise Systems

Describe what a business process is, including steps

involved in processes related to creating and delivering goods and services - buy, make, and sell
1. 2. 3. 4. 5.

Business Processes Key business processes in an organization. Procurement (buy) Processes Production (make) Processes Fulfillment (sell) Processes

General understanding of a fictitious company used in

the course
2 Magal and Word Bicycle Inc. (GBI) Processes with ERP Systems | 2011 1. Global | Integrated Business

Organizational Structure & Silo Effect


Most common organizational structure is the

functional structure where a business is divided into functions or departments (e.g., sales, purchasing, accounting etc.)
What are some of the reasons for the use of the functional

structure?

Downside of the functional structure is the silo

effect where departments or functions operate in isolation:


Focusing on functional objectives without regard to process

objectives (or organizational objectives of overall efficiency and effectiveness) Individual departments developed systems to serve their Magal and Word | Integrated Business Processes with ERP Systems | 2011 needs (e.g., sales and marketing system, purchasing

Business Processes Cross Functions (cross-functional)

Think of the cross functional dependencies to make a sale.


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Enterprise Systems
Enterprise systems (ES) such as SAP support

end-to-end processes by:


Having capability to meet the needs of the different

functions or departments in a business Using a single integrated database


Impossible to manage processes that are

geographically dispersed without utilizing enterprise systems Enterprise systems are costly, but, justified by
Increased profitability Increased productivity
5 Magal and Word | Integrated Business Processes with ERP Systems | 2011 Competitive edge

Business Processes
Sequence of tasks or activities that produce

desired outcomes

Processes interrelated with other processes (see

next slide) In this Chapter we will focus on three key processes:


Procurement (buy) Production (make)
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Fulfillment (sell)

Magal and Word | Integrated Business Processes with ERP Systems | 2011

Key Business Processes

Magal and Word | Integrated Business Processes with ERP Systems | 2011

A Procurement Process

Magal and Word | Integrated Business Processes with ERP Systems | 2011

A Production Process

Magal and Word | Integrated Business Processes with ERP Systems | 2011

A Fulfillment Process

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Magal and Word | Integrated Business Processes with ERP Systems | 2011

Global Bicycle, Incorporated (GBI)


Fictional company that will be used to illustrate

key concepts and processes in:


Magal textbook SAP hands-on exercises

Background information on GBI is posted on

Moodle
Review the two GBI documents for general

understanding of the business In the future use these two documents as references for Magal textbook and SAP exercises
Magal and Word | Integrated Business Processes with ERP Systems | 2011

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