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Chapter 1
Introduction: Enterprise Resource
Planning
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Chapter 1 Learning Objectives
 Explain what a business is
 Name a business’s main functional areas of




operation
Differentiate a business process from a business
function
Identify the kinds of data that each main functional
area produces
Identify the kinds of data that each main functional
area needs
Define integrated information systems and state why
they are important
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Definition of a Business
 A business is an organization that sells goods
or services to customers (or clients) in
exchange for money or other things of value.
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Introduction: Enterprise
Resource Planning
 Manage company-wide business operations
 Uses a common database and shared
management reporting tools
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Functional areas of operation
 Marketing and Sales
 Production and Materials Management
 Accounting and Finance
 Human Resources
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Ex Procurement
 Cost
 Quality
 Availability
 Management
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Business Processes
 Managers now think in terms of business
process
 Take the customer’s perspective
1.
2.
Customer is always right
If not reread rule #1
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Business Process
 A business process is a collection of activities that
takes inputs and creates outputs that are a value to a
customer
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Business Processes Cut Across
Functional Lines
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Example: Buying a new
computer
 Information on products
available
 Place order quickly,
maybe obtain financing
 Quick delivery
 24 Hour help
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To do this, company needs to
 Make sure functional areas are integrated
 Information on customer configuration must
be up-to-date
 Manufacturing needs configuration from sales
 If financing is required, that information from
sales is needed in accounting
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Functional Areas and Business
Processes of a Very Small Business
 Marketing and Sales
 Production and Materials Management
 Accounting and Finance
 Human Resources
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Basic business process are the same in
large and small business
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Functional Area Information
Systems
 Potential inputs and outputs for each
functional area
 Different kinds of data and usage of data
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Marketing and Sales
 Determine pricing
 Take customer orders
 Create sales forecast
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Production and Materials
Management
 Planning
 Need accurate
forecasts from
Marketing and Sales
 Compare costs with
Accounting
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Production and Materials
Management Plan
 Long range
 More than one year
 Medium range
 Number of months
 Short range
 Individual products
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Accounting and Finance
 Record transactions
 Summarize data
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Human Resources
 Recruit
 Train
 Evaluate
 Compensate
 Dehire (retire or fire)
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Chapter Summary
 Companies that manufacture products to sell have these basic
functional areas:




Marketing and Sales
Production and Materials Management
Accounting and Finance
Human Resources
 Functional areas are served by information systems
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Chapter Summary Continued
 Employees in one functional area need information from another
to do their job
 Today, business managers think in terms of business processes
rather than functional areas. ERP software encourages this new
thinking
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