Case Solutions

The production planning system described earlier carried specific features ofproduction planning at EA Cakes Ltd. Standard software, on the other hand,by definition, comprises programmes developed for an anonymous market.The question is: Can a standard software system like SAP give adequatecomputer support to an individually designed business management system?A team from IT specialists and production planning personnel was formed fordesigning computer support for the new production planning system businessprocesses.Thinking in terms of business processes helps managers to look at theirorganisation from the customer’s perspective. Usually a business processinvolves several functional areas and functions within those areas. Thus, abusiness process is cross-functional. Definitely, this is the case of the produc-tion planning at EA Cakes Ltd.

Core Business Processes in Enterprise Planning

It was pointed out in Chapter VII that before implementation of an ERP systemin EA Cakes Ltd., it was necessary to completely reengineer the productionplanning process. To change the strategy from make-to-order to make-to-stock involves not only the company’s decision to invest money in accumulationand keeping stocks of finished goods. It requires a complete redesign of itsproduction planning system, because:•There is no forecasting for MTO, it is driven by customers’ orders, so aforecasting system had to be designed and implemented.•An inventory management system for finished goods had to be developed.•Under MTS, it is vital that the planning system preserves continuity; theplans produced by each level should be detailed plans of the top level.Also, there must be feedback continuity: feedback of the top levels is anaggregation of bottom level feedback — for more detail see McNair andVangermeersch (1998).

Case of ERP Implementation for Production Planning at EA Cakes Ltd.

This case details the implementation of Systems Applications & Products’(SAP) Production Planning module at EA Cakes Ltd. The market forced thecompany to change its sales and production strategy from “make-to-order”(MTO) to “make-to-stock” (MTS). The decision to change the strategyinvolved not only the company’s decision to invest much more money inaccumulation and keeping stocks of finished goods, it required a completeredesign of its production planning system, which was an integral part of an ERPsystem that used SAP software.

Enterprise Systems Implementation Phases

Markus and Tannis (2000) recognise four distinct phases in an enterprisesystems implementation as viewed from the adopter’s perspective. The veryfirst phase is called “chartering.” They suggest that even before the projectstarts, a business case is usually made whether to go ahead with the enterprisesystem implementation or not, and it is only after the business case has beenmade, and the constraints of the solution have been understood, that the projectactually starts. The project never starts if the constraints are too much, or thebusiness case is not strong enough. The second phase is the project phase inwhich the software is configured to suit the requirements of the organisation andimplemented in the organisation.

Modelling Business Processes

The modelling of business processes is vital not only for business processmanagement, but also for implementation of enterprise systems. For example,when we look at the process life cycle introduced earlier, three of the sevenphases involve business process modelling, to a large extent. But apart fromthat, the models that are generated in these three phases are used in all the sevenphases of the business process management life cycle. The phases where thesemodels are developed are in the second phase of process modelling; and it isused in the third phase, where we do the analysis; and is used in the fourth phase,where we improve upon the as-is models, come up with the to-be models, andmodel them, using whatever tools that are available. But then, the to-be modelsthat are developed in the fourth phase are used in the process implementationphase, in the execution phase, in the monitoring phase, and even in the processidentification phase, when you think of it as a life cycle.

Production Planning Redesign

For manufacturing companies, competitive advantage is ultimately measured interms of financial results, and the key financial result is usually a margin of profitfrom sales, which then translates into a margin of return on investment.How then does production planning and control (PPC) have a significantinfluence on this outcome? It is our contention that efficient production planningis one of the three crucial and vital driving factors that enables the otherfunctional areas to be effective. Figure 11.1 displays the driving position of PPCin a causal relationship layout.Efficient PPC has a direct and beneficial influence on both customer satisfac-tion and capacity utilisation. The first leads to greater sales volume, and thesecond to lower costs, both of which have a major impact on profits.

Capacity Management Business Processes

The company is always aware of what it wants to produce because it is definedby the market pressures or by demand. However, what the company wants tomake must be rationalised against what it can make. The issue of balancebetween requirements and capacity relates to a type of trade off. On one hand,the company wants to satisfy demand, but on the other hand, it may not havethe capital resources to do so. At the senior management strategic planninglevel, long-range investment decisions are made that can increase the company’scapacity resources. Commonly however, the additional capacity lags behindthe pressure to produce more product more quickly. In these cases, manage-ment must make choices. A company must select carefully how to manage itslimited asset of resources to achieve the greatest benefit to the company.

A Tutorial Case Study

This case study is intended as a tutorial. The case solution is given up to the endof the business process redesign stage. The SAP implementation (quite similarto that described for EA Cakes Ltd.) is left to the readers of the book (or tothe students, if the book is used in education). The main lesson of this case isthe following: though the company does not look like EA Cakes Ltd., and thegoals of the production planning systems are different, nevertheless, analogousSAP solutions can be used to give computer support to the production planningstaff.

Enterprise Systems

To support processes well, we need to have information systems and integratedinformation system support processes even better. There are a variety ofsystems that go towards supporting processes in an organisation (Scheer,1998). Figure 6.1 illustrates some of these systems.

Business Processes

In the previous chapter, we introduced a useful process management life cycle,and we explored the first step of the same. In this chapter, we delve into detailof the other steps of the life cycle: modelling, analysis, and implementation, andwe conclude the chapter by looking at a topic that has not had sufficientexposure in literature, namely mal-processes.