MGMT 659 SFSU Enterprise Resource Planning Questions

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Application Lesson 25

Part I (10 points each)

1. What are enterprise resource planning (ERP) systems, and how are they used?

Enterprise Resource Planning (ERP) systems are computer systems that integrate application

programs in accounting, sales, manufacturing, and the other functions in a firm. This integration

is accomplished through a database shared by all the application programs. Some of the popular

systems include Oracle, SAP and Microsoft Dynamics. ERP systems have to major capabilities,

transaction processing, which includes posting and tracking the detailed activities of the

company and decision support, this is the ability of the system to help a user make intelligent

judgements about how to run the business. Companies utilize these types of system to help

streamline their processes and create a more cohesive supply chain. In ERP systems, each action

done in the system triggers a task in another area of the system. For example, a customer order

comes into the system, this will trigger several tasks first it would notify the team that processes

the orders of a need, it would also notify the manufacturing team if inventory was low and

needed to be replenished. Once the order was delivered, it could notify the accounting

department that an invoice was ready to be paid/processed. ERP systems also provide the firm

with accurate numbers across all departments.

2. What is the “functional silo” approach and how is it used?

Functional Silo is when different functional groups in a firm, (ie: purchasing, accounting,

marketing and logistics) focus on the immediate performance of the group rather than the

objectives of the firm as a whole. When functioning independently, these teams with focus on

what is most important to their department and ignore the impact it may have on other areas of

the firm. When they are brought together in “functional silos” they devise a plan that

incorporates all aspects of the firm, thus contributing to the success of a firm on a wholistic level.

The use of “functional silos” also improves the overall efficiency because groups are easily

monitored, and accountability is improved. Some of the downsides to “functional silos” are the

fact that they are not focused on the objectives of the company as a whole, rather they are

concerned with the objectives of their team. The use of an ERP system would greatly improve

the coordination between each of the groups and assist with company objectives still being

reached.

3. What are qualitative techniques for forecasting and why are they important?

Qualitative forecasting techniques typically take advantage of the knowledge of experts and

require much judgement. Some of these techniques include market research, panel consensus,

historical analogy, and the Delphi Method. Market research is important because it provides an

idea of what people like, what was successful and how to be competitive when developing a new

product. Panel consensus, which is the idea that two heads are better than one, uses people from

a variety of positions to develop a forecast. Historical analogy provides a look back to see when

things are most popular, when sales have been slow and what have been the most successful

sales in the past. In some ways this technique can help to develop a trend to see potential for

future growth of a product. The Delphi Method is similar to the panel consensus; however, the

identities of the participants are concealed, and they are provided a questionnaire to answer. This

technique usually produces satisfactory results in 3 rounds. These techniques are important

because they provide data that gives an insight into the market, both past and current, provides

the opportunity for experts to weigh in and provides feedback to help with decision making.

4. Describe the three production planning strategies and describe pros and cons of each.

There are three production planning strategies: the chase strategy, the stable workforce-variable

work hours strategy and the level strategy. In the Chase Strategy the goal is to match the

production rate to the order rate by hiring and laying off employees as the order rate varies.

Some of the pros of this include the ability to keep inventory levels low and increase/decrease

production as demand fluctuates, this has the potential to be a huge cost saver for a firm because

inventory carrying costs are high. Disadvantages include the instability of day to day operations,

potential of having to continuously train new people if there isn’t a pool of highly trained people

ready for hire. The potential is there for employees to slow down production when the demand is

lower to keep their jobs. The Stable Workforce-variable work hours strategy varies the output by

varying the number of hours worked through flexible work schedules or overtime. The pros to

this include the ability to vary the work hours to directly support the demand, this strategy

provides workforce continuity. While it alleviates some of the “emotional and tangible” costs of

hiring and firing as seen in the Chase strategy, it is still possible that employees will be unhappy

because of the inconsistency of their hours and fluctuation of their pay checks as a result. Finally,

the Level Strategy maintains a stable workforce working at a constant output rate. Some of the

benefits of this strategy include stability for the workforce in terms of hours. However, this

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Application Lesson 25 Part I (10 points each) 1. What are enterprise resource planning (ERP) systems, and how are they used? Enterprise Resource Planning (ERP) systems are computer systems that integrate application programs in accounting, sales, manufacturing, and the other functions in a firm. This integration is accomplished through a database shared by all the application programs. Some of the popular systems include Oracle, SAP and Microsoft Dynamics. ERP systems have to major capabilities, transaction processing, which includes posting and tracking the detailed activities of the company and decision support, this is the ability of the system to help a user make intelligent judgements about how to run the business. Companies utilize these types of system to help streamline their processes and create a more cohesive supply chain. In ERP systems, each action done in the system triggers a task in another area of the system. For example, a customer order comes into the system, this will trigger several tasks first it would notify the team that processes the orders of a need, it would also notify the manufacturing team if inventory was low and needed to be replenished. Once the order was delivered, it could notify the accounting department that an invoice was ready to be paid/processed. ERP systems also provide the firm with accurate numbers across all departments. 2. What is the “functional silo” approach and how is it used? Functional Silo is when different functional ...
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