Report on Integration of Enterprise Information Systems for a Medium-Sized Manufacturer

Introduction

This report analyses and design solutions for integration of enterprises information systems based on the business case. In addition, it develops the key functions as a part of the enterprise system for the given business case by SAP. This report through the information of case and relevant concepts and approaches, academic interests and practical cases to analyse the issues and the suitable approaches for extended enterprise integration. Next, it explains the system functionalities and necessary illustration to design of solutions to the identified issues with selected enterprise integration approaches. Finally, there is a discussion and conclusion on implementation issues, achievement and limitations of the solutions.

1: A Description of the Business Case

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1.1: Background of Business Case

This company is a medium sized manufacturer which supplies car control panels with frames over 2000 different products for five car manufacturers. Based on different models of frames, the company produces various types of car control panels for five contracted car manufacturers. In order to improve the satisfaction of customer and quickly respond to fluctuations in demand for customer, the company aims a relatively lean manufacturer and reduce the delivery lead-time.

In product of the company, it assembles these control panels, inside components and the frames as customers’ required. In addition, it also simply purchases all the parts from a part of suppliers including overseas suppliers. There are six bought-in components which include vents, frame, glove box, meter/gauges, steering and heater& air conditioning control. Besides, in order to safeguard its supply chain, the company may purchase from more than one supplier.

In business model of this company, it through EDI to receive orders from each customer once a week and then it will input the orders into a sales management system automatically. It needs to check its stock when the sales order confirmed by account manager. If there is enough stock, the order will be produced directly. If not, the company is necessary to place a purchase order for the required components to complete the sales order. Next, the company receives the ordered components on a daily basis. When the components arrived, the components will be scanned into a stock management system by the duty purchasing manager. What’s more, it will update the stock record information of component. During the production processing, the production manager will check customer orders first and create a schedule for the assembly line to produce for the orders. There is a spreadsheet; the schedules are recorded in it and to calculate stock values. The process is the same at the end of assembly and then the stock level will be updated accordingly. Finally, it will package and ship the finished products to the customers. In general, the company provides the lead-time for domestic customers is four-week and the lead-time for overseas customers is six-week.

1.2: Issues & Objectives in Business Case

According to the case, there are three main issues. Firstly, it is a long consuming lead time for order processing, production scheduling, stock controlling and purchasing. Secondly, it is high possibility to make a mistake and low effective of update the current system. Finally, the company system is not efficient. Due to the current system is only updated on a weekly basis, it is not always accurate. As enterprise information system, the current company system is frequently delaying the processing information which could slow response to changes and increase of stocks and order lead-time.

Therefore, the objectives of this company are shown as follows, to reduce the lead-time and stock level, have an assembly planning to improve the effect of production, more effective coordination of components supply and to be an efficient production company.

2: Brief Review on Relevant Concepts & Approaches, Academic Interests & Practical Cases

With development of trade globalises, it increases competition and standardisation; strengthen the relationship of strategic partnering; more outsourcing and rises project complexity. Therefore, business and enterprise trends to become e-business and extended enterprise integration gradually. J Gunn (2004) analysed that extended enterprise integration or enterprise integration using American terminology has long been foreseen as the solution to a wide range of problems, enabling companies to reduce time to market, to improve quality, to increase supply chain efficiency and even to understand customers better. In extended enterprises, integrated framework enables sharing of information, services and applications beyond organizational boundary with suppliers and customers. In addition, computer network of internet-enabled system infrastructure acting as a networked service environment for supply chain management. In summary, there are three core meaning of extended enterprises; information integration, organizational relationship linkage and coordination and resource sharing.

This part of project report shows a brief review on relevant concepts and approaches, academic interests and practical cases. In e-business and extended enterprise context, the brief review is related to enterprise system selection and implementation issues and integrations approaches.

Firstly, it is a brief review on relevant concepts and approaches, academic interests for enterprise system selection and implementation issues. Laudon, K.C. (2000) mentioned that ERP- enterprise resources planning is a business management system. It integrates all facts of the business, including planning, manufacturing, sales and finance. That is the reason why ERP could become more effective coordinated by sharing information. In order to the target of integrating information, it through eliminating complex links between computer systems and different areas of the business by ERP software and business automate processes. As small and medium enterprises (SMEs), there are six critical selection factors (Reuther, D. & Chattopadhyay, G., 2004), including system functionality requirements; business drivers; cost drivers; flexibility; scalability and others. The factor of system functionality requirements is the highest critical selection criteria Bemroider, E. & Koch, S. (2000) oberved that the system functionality requirements factor supports the findings of specialty and simplicity required for small or medium enterprise. Business drivers focus on the financial benefit to the company of the selected system. The detail of cost drivers is direct cost of the implementation in terms of outlay and resources. Both factors of flexibility and scalability are significant levels of criticality. What’s more, the response to the flexibility is important as the current wisdom is to match the future (Brown, C., Vessey, I., Powell, A., 2000). Furthermore, the factor of others means specific factors critical to the target business.

Bingi, P., Sharma, M.K., Godla, J.K. (1999) stated that Implementation issues in general have been long explored. However, the complexity of ERP makes it challenging to implement. ERP systems have been widely used by companies in developed countries. Organizations in manufacturing, service and energy industries adopt ERP to automate the deployment and management of material, finance and human resources; streamline processes and achieve process improvement and achieve global competitiveness (Koh, C., et al, 2000).

In addition, there are some important factors affect the implementation of ERP; including economy and economic growth; infrastructure; IT maturity; computer culture; business size; BPR (Business Process Re-engineering) experience; manufacturing strengths; government regulations; management commitment and regional environment (Huang, Z & Palvia, P., 2001).

Next, it is a brief review on relevant concepts and approaches, academic interests for integration approaches. Parr, A.N. & Shanks, G. A. (2000) indicated that ERP implementation approaches have been categorized as comprehensive, vanilla and middle-road. Comprehensive favoured by multinational companies and involving a total effort to implement all modules of the ERP package with business proves reengineering. Vanilla means an approach favoured by less ambitious companies desiring less business process reengineering and requiring ERP functionalities in only one site. The third approach middle-road is an approach that falls between the other two extremes.

In figure 1, it shows the evolution of enterprise integration approaches as follow.

Figure 1: Evolution of Integration Approaches

According to the figure 1, data transport is the plinth of enterprise integration. Both data transport and data integration are the basal enterprise integration. With higher business value of integration and complexity of integration, the enterprise integrations are application integration, process integration, collaboration and ubiquitous integration one by one.

As a type of enterprise integration, process integration is to create new process and services to support the actual business needs; ubiquitous integration is anytime, anywhere and through any standard means. Ubiquitous integration is the top enterprise integration approach, which is the highest business value of integration and complexity of integration in figure 1.

Based on the resources of e-business enterprise (2011), there are four enterprise system integration approaches, including network/portal oriented integration, business process oriented integration, application oriented integration and data oriented integration. Firstly, data-oriented integration is a general and basal approach. It targets the purpose of transfer, transform, synchronize, mediate-connect and harmonize. Besides, the handouts of enterprise integration of e-business enterprise (2011) explain that data-oriented integration is a set of technologies that exchange and synchronizing data with transformed format between different applications within and between organizations. Thus the technical components are data connectivity, transformation, communications middleware.

Secondly, application oriented integration (API) is an approach which uses a common interface to integrate enterprise systems by information between applications cross an organisation or cross a network. It is difference from data oriented integration. The data oriented integration interface is created by database. Instead of database, the integration interface of application is created by application. In addition, the application oriented integration allows access data and business logics and application methods; it is more than data oriented integration.

Next, the third approach is business process-oriented integration (BPI). As workflow systems, it connects and automates business process. What’s more, it provides enterprises with process visibility. Integration of business processes across applications and it controls over distributed workflows via an event driven platform. Compared with data oriented integration and API, BPI through business process level integration and management, not database and application. Furthermore, BPI includes process control technology, which includes process control engine, triggers and software agents for task automation. One purpose of BPI is loose coupled architecture – back office application, which is communicated with front end applications indirectly. Therefore, the loose coupled connection with greater adaptability and scalability for business system. However, the integration type of loose coupling also has some problem on security and inefficiency in communication.

Finally, the last approach is portal oriented integration approach. As integrated business portal, it has a consistent web interface for all business information and application in a personalized way and a platform for application integration, component development and workflow coordination. In addition, portal oriented integration approach has four benefits. One is rapidly deploy a complete portal. It also allows for further extension. Next, both applications and data could be created for integration. It could be automated execution of business processes throughout distributed organisations.

3: Analysis of the Issues in the Case to Identify Suitable Approaches for Extended Enterprise Integration

According to the business case, the main three issues are long lead-time, high possibility to make a mistake and lower efficient production and effective coordination. The issue of lead-time should be considered for the area of order processing, production scheduling, stock controlling and purchasing. The company receives orders from five contracted car manufacturers over 2000 different products. On the other side, in order to make sure the safeguard of supply chain, the company also needs to purchase vents, frame, glove box, meter/gauges, steering and heater and air conditioning control from domestic suppliers and overseas suppliers. Next, due to the company receives order once a week and the system only update once a week, the speed of update information is very low effective. It is easy to make a mistake on purchase and stock level and slow response to changes. Furthermore, it increases the stocks and order lead-time. Therefore, it leads to the second and third issues in this situation.

A suitable approach for extended the extended enterprise in this business, it should be able to ameliorate t or solve the issues and more close to the objectives. This business case mentioned that the company is a medium sized manufacturer, which supplies over 2000 different products for five contracted car manufacturers. It receives orders from each customer once a week through EDI (electronic data interchange) and input automatically into a sales management system. The operation process is a long pull process. A suitable business system of this company should be more quick response and effective coordination to reduce the lead time for order processing, production scheduling, stock controlling and purchasing. According to the part 3 of this report-brief review on relevant concepts and approaches, data oriented integration approaches focus on translating data and business documents from formats used by one company into the formats used by another (Lynne, M. et al, 2002). Integration of business processes of data integration approaches across database. However, BPI connects and automates business processes, the interfaces of BPI for data integration, process integration and process communication in process model. Although data integration approaches is an approach of transaction formats and standardize the names of product data, process integration approaches standardize the sequences of transactions and activities that make up a business process. By allowing for the monitoring and management of related transactions, they adapt better to breakdowns and permit higher levels of automation (Lynne, M. et al, 2002). Furthermore, Net R. (2001) observed that process integration requires standardization or modification of source systems or the creation of a supportive IT infrastructure, process integration is costlier to set up than data integration. However, except the factor of cost, process integration provides opportunities for companies to reengineer business processes to achieve additional business benefits more than data integration approach. Besides, portal oriented integration approach is very good approach. The interface of portal integration approach is available across all business information and applications in a personalized way. However, due to the size of company is only a medium manufacturer and the cost of portal integration approach is expensive than others, it is not suitable for the situation currently. Therefore are more risks, challenges and issues if the company adopt portal integration approach. Therefore, business process-oriented integration is the suitable approaches for extended enterprise at present.

3.1: Illustration of Key Information Flows in the Extended Enterprise Which Includes the Supply Chain Partners

Figure 2: Information Flows in the Extended Enterprise

In figure 2, the company receives orders from customer by ERP and then finance department send the order information to BIP system when the sales order is confirmed by account manager. Stock management sends the requirement of parts and components information and t9he information of the quantities of finished products to the business system. The spreadsheet created by BPI for the production schedule and also through BPI to update new information.

3.2: Critical Analysis of the Suitability of SAP as an ERP Tool

There is a professional web site of SAP (2009) expressed that SAP means systems applications and products, it is a completely integrated, enterprise wide information system that replaces legacy systems with a series of software modules that communicate with each other seamlessly, replacing current business processes with best practices. SAP software also has some demerit. In SAP system, although it could changes the business process dramatically, it is a little customizable. However, SAP is also a very outstanding tool for ERP and E- business. In addition, there are a lot of advantages of SAP, such as online integrated graphics; functionality and integration; flexible structure; real-time information; lean implementation; individual solutions, etc (SAP Expertise, 2011). SAP makes the information of company more meaningful. The company can instantly see any change by type of graphics, if the data had any change. Furthermore, the controlled customizing procedures of system allows to create solution for satisfy individual requirements. In SAP of ERP, all business processes of the company are linked by data and functions and it is a software solution to cover all commercial processes and transactions commonly occurring of the company. The real-time information of SAP is a good visibility of distributed data sources and it can automatic data transfer. Therefore, the company could be more quick response to changes and more effective to avoid the mistake by SAP. Then it should be able to reduce the stock level and more effective coordination of customer and supplier.

4: Design of Solutions to the Identified Issues with Selected Enterprise Integration Approaches

Due to the selected suitable enterprise integration approach is BPI, this part explains the system functionalities and design the solutions for the issues. According to the background of the company, the integration design should be considered by application complexity, cost and time; business scale and nature; business relationships; business process dynamics and function distributions; demands on real-time information; technical standards and compatibility, etc.

Firstly, the company should add a materical resource planning (MRP) in BPI. Because safeground the supply chain for the company, the company purchases all parts from other domestic and overseas suppliers when the stock was insufficient. It is too long pull process to increase the delay of information. Consequently, MRP is a good tool to slove this problem and also sfaeground the supply chain of the company. What’s more, it could be ameliorate the long lead time in purchasing.

Next, the company should choose loose coupling and hub connection & spoke intergraiton technology. Types of integration and E-business includes loose coupling and tight coupling. The application of tight coupling are connected with agreed technical details. In contrast, Loose coupling does not need to know details of the ways to deal with interfaces of other applications and processes. Besides, it is an application send or receive to or from other applications. Loose coupling can support non-intrusive (loose) integration, sychronised business transactions; reusing and sharing business data and processes (Papazoglou M. P., 2006). loose coupling is flexibility, scalability and advanced security. It is also nearly real-time agile response to business events. Loose coupling could be avoid the delay of information issue and improve the lead time in order processing and stock controlling. Therefore, it is more suitable for the manufactory company in the business case.

Fingure 3: Features of Common Integration Technologies

In fingure 3, it shows the features of point-point integration, hub connection & spoke for SMEs, web form (extranet interfaces) and XMLmail / messages. It is obvious to analyse that both point-point integration and hub connection & spoke are better in the four common integration technologies. The integration knowledge requirement of hub connection & sopke is lower than point-point integration. Compared to point-point integraion, hub connection & spoke have lower set up and maintenance costs. However, the limitations of point-to-point topology consist of costly for maintain; limited reusability; invasive integration approach requiring modifications of source applications, not scalable, etc. On the other side, Lynne, M., et al (2002) mentioned that hub connection & spoke approaches to external integration represent an important alternative to one-to-one integration approaches. It also approaches come in two flavours – data integration only and process (plus data) integration. Hub connection & spoke intergraiton technology could be reduce the rate of high mistake and lead time in production scheduling. In summary, both loose coupling and hub connection & spoke intergraiton technology are effective solutions for these issues.

In order to become an effective business intelligence, the requirements of business integration are real-time or responsive data access; good quality data from all relevant sources and data of relevant business functions. There are some measures such as transform data into valuable information, identify risks and opportunities, monitor and assess business performance and support decision making for enhancement and optimisation. According to the background, the company receives orders from each customer once a week. It is very low efficient production. So the times of received orders should be increase. All in all, these solutions should solve the long lead time for order processing, production scheduling, stock controlling and purchasing and improve the speed of information processing to avoid the situation of low effective of update the system. All of them are more effective coordination of components supply and assembly planning in e-business.

5: Discussion and Conclusion

In this part of project, it discusses the implementation issues, achievements, limitation of solutions and conclusion. Based on the background, the company is a medium sized manufacturer and suppliers over 2000 different products for five contracted car manufacturers. The purchase model of the company is that places purchase order for the required components to complete the sales order, if there is out of stock or insufficient stock. In addition, the business processes of the company are receiving orders; purchasing components (out of stock / insufficient); checking customer orders by production manager; created a schedule for the assembly line to produce for the order ; updating the assembly line; packing and shipping finishes products. There are three main issues which mentioned before, including long consuming lead time for order processing, production scheduling, stock controlling and purchasing; low effective of update the current system and high possibility to make a mistake; the company system is not efficient. Through analysis of the issues, BPI is the suitable approaches for extended enterprise integration.

If the manufacturing company attempts to implement the suitable approaches and solutions, it should need a high costs in equipment investment and it is hard to change the old enterprise system and hard to operate the solutions in actuality. Furthermore, there are two limitations for hub & spoke topology when it runs on single serves. One is single points of failure exist in that a failure of one hub propagates throughout the system. The other is limited scalability across the enterprise. Loose coupling also has two disadvantages of security concerns and inefficiency in communication. In summary, the company should be aim to a lean manufacturing with a short lead time and effective communication persistently.

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