CU-BBA-SEM-III-Logistics & Supply Chain Management- Second Draft-converted

4. Perform business in multiple languages and currencies by providing multi-location functionality. 5. Eliminate limitation in legacy systems, such as: ● Century dating issues ● Fragmentation of data and processing. ● In-flexibility to change. ● In-supportable technologies. 6. Take advantage of untapped mid-market and increased functionality at a reasonable cost, like: ● Client-server, as an open system technology. ● Vertical market solutions. 7. Stay at par with the global technology trends by adapting to the latest technologies in the Information Technology (IT) industry. Implementation of ERP helps the Top Management to: ● Perform medium-term business planning. ● Enable change management. ● Monitor company resources. ● Identify trends and patterns. ● Identify constraints and bottlenecks. Implementation of ERP helps the users by: ● Providing one-time data entry at the point of origin. ● Providing automation of routine clerical activities. ● Providing optimization across departments. ● Enabling them to do short term business planning. 12.7 INTRODUCTION TO SAP ERP SYSTEM Systems Applications and Product in data processing usually referred to as SAP, is the most popular ERP software in the world. 201 CU IDOL SELF LEARNING MATERIAL (SLM)

It was started in 1972 by five people who came out from IBM with the objective of providing software for the core functions of an organization. In 1973, the company brought out the first financial accounting software called R1. The letter R was used for Real-Time Processing. Towards the end of the 1970s, SAP R/2 was rolled out with IBM’s database and a dialog- oriented business application. In the early eighties, the R/2 was enhanced with the capabilities of processing business transactions in multi-language, and multi-currency to meet its international clientele. SAP R/3 was introduced in the ’90s with the Client-Server architecture and a GUI that would run on almost any of the databases and on most of the operating systems. It denotes the beginning of a new era in enterprise computing with the movement from mainframe to 3-tier architecture. Towards the end of the ’90s, the e-commerce enabled mySAP suite of products was introduced for leveraging the ever-expanding web technology. The latest addition to SAP technology is the SAP NetWeaver based on Enterprise Services Architecture (ESS) with application integration across diverse platforms for providing a one-stop end-to-end business processing. The letter “R” was for “Real-time data processing: Real-Time Processing means that actions are immediately executed in the system and have an immediate effect on the processes concerned. SAP Features SAP’s software had the following three features from the outset: 1) Real-Time Processing: The Processing was supposed to be made in real-time i.e. the input is immediately available in the entire system. 2) Standard Software: The software was supposed to be standardized to a large extent. In other words, every enterprise obtains the same software, which is then customized based on the need. 3) Integrations: The various modules or components are supposed to be integrated i.e. the data from one application is also available to the other applications. For Example, the 202 CU IDOL SELF LEARNING MATERIAL (SLM)

settlement for a completed procurement process (the Materials Management(MM) component in SAP) is implemented in financial accounting (the Financial Accounting(FI) component in SAP). In this process, the relevant departments use the documents that were created or stored in the SAP system during the operation. SAP Methodology SAP uses Accelerated SAP (ASAP) methodology for faster and cost-effective implementation of SAP projects. ASAP helps to: ● Reduce the implementation time. ● Achieve quality implementations. ● Make effective and efficient use of the project resources. ASAP uses ASAP Roadmap, tools, and SAP services & training to effectively implement SAP projects. ASAP roadmap provides a concise project plan with different phases of the project lifecycle. 1) Project Preparation 203 It consists of activities like: ● Preparation of the initial scope. ● High-level timelines and plans. ● Project charter ● Identification of team members and project kick-off. 2) Business Blueprint It includes activities like: ● Business requirement gathering workshops. CU IDOL SELF LEARNING MATERIAL (SLM)

● Understanding existing business processes. ● Documenting business requirements and goals. ● Outlining the scope of the project and getting a sign-off. 3) Realization In this phase, the implementation team breaks down the business processes identified in Phase 2 and configures it with the SAP system. 4) Final Preparation It includes activities like: ● End to end testing of the configured system. ● Training of the end-users. ● System management activities. ● Cutover activities. 5) Go-live and Support: In this phase, the system is released for the day to day business transactions. All the issues faced by the users are resolved by the support team. Advantages Of SAP ERP System Enlisted below are some of the advantages of SAP. 1. There is no redundancy of data, due to the centralized database. 2. Business processes are standardized. 3. Planning, scheduling, management, and tracking have become an easier task in SAP as SAP uses Accelerated SAP (ASAP) methodology. 4. Flexible reporting and monitoring projects have been automated. 5. Customization and Version upgrade is easy in SAP. Hence it is a cost-effective solution for the industry. Architecture Of SAP R/3 204 CU IDOL SELF LEARNING MATERIAL (SLM)

SAP R/3 Architecture has been developed on 3-tier client-server architecture which has been made up of below three layers of data flow: ● Presentation Layer ● Application Layer ● Database layer 1) Presentation Layer The presentation layer comprises the user interface that enables you to interact with the SAP R/3 application. This layer passes the user input to the SAP R/3 system and displays the output. For example, you can specify the product details and view a Stock Overview report for the specified product using the graphical interface of the presentation layer. The presentation layer provides two types of user interfaces. SAP GUI: SAP GUI is an interactive graphical user interface that provides faster access than SAP GUI for HTML. SAP GUI for HTML: SAP GUI for HTML is an interactive graphical interface that uses a web browser to access the SAP R/3 system. 2) Application Layer The application layer in SAP R/3 consists of two main components: work processes and dispatcher. A work process is a program that performs a specific task. To perform any logical operation on data, the application layer uses a set of work processes. The dispatcher manages the work processes. It receives user requests from SAP GUI and stores them in a request queue. The dispatcher checks the availability of work processes and assigns the tasks to the available work processes for execution. 205 CU IDOL SELF LEARNING MATERIAL (SLM)

When a task is completed, the dispatcher passes the result to the presentation layer for display. A group of work processes controlled by a single dispatcher, using a common memory area, and accessing the same database is called an instance. 3) Database Layer The database layer stores system data and the new data that users input using the SAP GUI, and provides this data to the application layer for processing. The database layer contains the database and a Relational Database Management System (RDBMS). The database stores the data. The RDBMS helps the application layer interact with the database. SAP R/3 contains buffers in the shared memory of the application servers. Data that the application servers require frequently, is retrieved from the database and stored in buffers. When the application server requires the same data again, it accesses the data from the buffers instead of retrieving it again from the database. This improves the processing speed of the application servers and the performance of the SAP R/3 system. 12.8 SAP BUSINESS SUITE SAP Business suite is SAP’s core product and consists of various solutions. You can purchase (or License) these solutions individually or as a complete package. The SAP Business Suite consists of the following ERP Modules: ● SAP ECC ● SAP Customer Relationship Management (SAP CRM) ● SAP Supplier Relationship Management (SAP SRM) ● SAP Product Lifecycle Management (SAP PLM) ● SAP Supply Chain Management (SAP SCM) 206 CU IDOL SELF LEARNING MATERIAL (SLM)

Figure 12.4 – SAP business Suite SAP NetWeaver is the technical basis for these products. 1) SAP ECC SAP ECC forms the core component of the SAP Business Suite. We can use SAP ECC to map the operative and administrative business processes across departments. SAP ECC contains the following applications: ● Accounting (SAP Financials). ● Human Resources (SAP Human Capital Management). ● Logistics (SAP Operations and SAP Corporate Services). Within these applications, we can find the components (Formerly known as modules). The following figure shows the GUI of the SAP system directly after login, here we can clearly identify the enterprise areas covered by SAP ECC. 207 CU IDOL SELF LEARNING MATERIAL (SLM)

Figure 12.5 – SAP suite 2) SAP Customer Relationship Management (CRM) This provides more details on Customer Relationship management with respect to SAP. SAP CRM supports all phases in which the employees of business communicate and contact customers. ● Marketing ● Sales ● Service SAP CRM can also be used for scheduling and resource control. Reporting and analytical functions increase in importance. These functions are required to gain insight into customer behaviour which can then be used for future promotions. Mobile Applications in the CRM Area: CRM applications have been increasingly used in the last few years on mobile devices such as Blackberry or Apple iPhone. 3) SAP Supplier Relationship Management (SRM) The Purpose of SRM is to optimize business relationships with existing and potential suppliers. It strategically plans and controls relationships with these suppliers by integrating them closely with the purchasing process. 208 CU IDOL SELF LEARNING MATERIAL (SLM)

SAP SRM supports Contract and Supplier Management, Supplier selection, Supplier qualification, Purchase order, Source determination, Creation of invoice and Credit Memos. 4) SAP Product Lifecycle Management (PLM) SAP PLM supports the lifecycle of the product, from the initial product idea to drafts and alignment of production to the customer service. SAP PLM consists of all the functions associated with these tasks such as the management of plants, equipment, and product documentation SAP PLM is frequently used in the automotive industry. 5) SAP Supply Chain Management (SCM) SAP SCM includes functions for the entire supply chain from the supplier to the customer which include Warehouse Management, Transportation Management, Tracking of the logistics process, Supplier collaboration and Planning and Optimization of the supply chain. 12.9. SUPPLY CHAIN ANALYTICS Supply Chain is a tricky business. One missing entity or a lack of synchronisation can break the entire chain and mean millions in losses for a company. However, the use of analytics in this domain is resolving several pain points in supply chain management at the strategic, operational, and tactical levels. According to Capgemini Analytics, “Supply Chain Analytics brings data-driven intelligence to your business, reducing the overall cost to serve and improving service levels.” For supply chain professionals, it can only mean one thing – to upskill to be able to use advanced analytics to improve operational efficiency and make data-driven decisions. Analytics uses data to make predictions to help businesses take advantage of the widely available data in the supply chain industry. Data Visualization techniques ranging from charts, graphs and more help decision making, by uncovering patterns and generating insights. The different types of data analytics are: 209 CU IDOL SELF LEARNING MATERIAL (SLM)

• Predictive analytics: While predictive analytics doesn’t actually tell you what will happen in the future, it gets pretty close to that. This process unveils all the patterns and motifs from existing data to present a set of trends that are likely to occur in the future. • Descriptive Analytics: Descriptive analytics breaks down the insights gathered from any data sets to help businesses understand them better. In a way it summarises all the information gathered. • Prescriptive Analytics: Prescriptive analytics helps businesses take decisions based on analytical findings. Since it is based on data it is scalable and can provide businesses with direction. • Cognitive Analytics: Cognitive analytics tries to mimic the human brain by studying data and understanding patterns and interpreting them to draw conclusions. 12.10 SUMMARY • ERP software introduced by business for integration of various business activity. Market leader in ERP is SAP. • SAP software was originally developed for catering the needs of manufacturing sectors, but now it has introduced specific software for processes such as customer relationship management, supply chain management, product life cycle management and supplier relationship management. • SAP software does real time processing and is a standard software customized based on the needs of the customer, integrates various business components. • SAP R/3 architecture has 3 layers of data flow • Presentation layer • Application layer • Database layer • SAP business suite consists of SAP CRM , SAP SRM, SAP CLM, SAP SCM • SAP is the third largest software supplier in the world. 12.11 KEYWORDS • ERP - Enterprise resource and planning 210 • SAP – Systems application and products in data processing CU IDOL SELF LEARNING MATERIAL (SLM)

• SAPECC – SAP ERP Central Component 12.12 LEARNING ACTIVITIES 1. List out various module available in SAP ERP. ___________________________________________________________________________ _____________________________________________________________________ 12.13 UNIT END QUESTIONS A. Descriptive Questions Short Questions 1. Describe briefly about an ERP software. 2. List out few names of ERP modules. 3. Write short notes on ERP for Supply chain management. 4. What are the different types of analytics? 5. Brief about SAP Long Questions 1. Discuss about the steps involved in SAP implementation methodology 2. Explain in detail about architecture of SAPR/3. 3. Discuss in detail about various ERP modules in SAP business suite. 4. Discuss about supply chain analytics. 5. Discuss about the history of ERP. B. Multiple Choice Questions 211 1. Which of the following are the features of SAP a. Real time processing b. Standard software c. Integration of business component CU IDOL SELF LEARNING MATERIAL (SLM)

d. All of these 2. SAP was originally developed to suit __________ a. Small manufacturers b. Large manufacturers c. Large service industries d. None of these 3. ________ is software application that integrates multiple functional departments of a business. e. SAP f. ERP g. Both a and b h. None of these 4. Supply Chain Analytics brings __________ a. Data-driven intelligence to your business b. Reducing the overall cost to serve c. Improving service levels d. All of these 5. _________ supports the lifecycle of the product, from the initial product idea to drafts and alignment of production to the customer service. a. Sap b. SAP PLM c. ERP d. MIS Answer 1) d 2) b 3) c 4) d 5) b 212 CU IDOL SELF LEARNING MATERIAL (SLM)

12.14 REFERENCES Text Books ● Simchi-Levi, D., Kaminsky, P., &Simchi-Levi, E. (2003). Designing and managing the supply chain: Concepts, strategies, and case studies. Boston: McGraw-Hill/Irwin. ● Monczka, R. M. (2009). Purchasing and supply chain management. Mason, OH: South-Western. ● Stock & Lambert (2001) Strategic Logistics Management. 4th Edition, McGraw Hill, New York, 70-89. Reference Books ● Raghuram G. &Rangaraj. N.,Logistics (2012 ) Supply Chain Management, Macmillan Publication, ● K. ShridharaBhat,( 2008 ) Logistics Management, Himalaya Publishing House, Mumbai, ● Bowerson, Donald J., David J.Closs and Owner K. Helferich,( 1986) Logistical Management, Macmillan, New York, ● Alan E. Branch,(2009 )Global Supply Chain Management and International Logistics”, Routledge, New York, ● MARTIN CHRISTOPHER, Logistics and Supply Chain Management, Pearson Education Limited, New Delhi, 2016 ● Excel Books Private Limited, Neha Tikoo, Logistics And Supply Chain Management,New Delhi, 2017 CASE STUDIES 1. Logistics Operations ABC Ltd. is the country’s largest manufacturer of spun yarn with well-established market. ABC Ltd. has good reputation for quality and service. Their marketing department identified that the potential for global market is expanding rapidly and hence the company undertook exercise for expansion of the capacity for export market. The company formed team of Marketing and Materials department to study the global logistics possibilities. After extensive study, the team came up with a report on global logistics and submitted that global logistics is essentially same as domestic due to following similarities: • The conceptual logistics framework of linking supply sources, plants, warehouses and customers is the same. 213 CU IDOL SELF LEARNING MATERIAL (SLM)

• Both systems involve managing the movement and storage of products. • Information is critical to effective provision of customer service, management of inventory, vendor product and cost control. • The functional processes of inventory management, warehousing, order processing, carrier selection, procurement, and vendor payment are required for both. • Economic and safety regulations exist for transportation. The company had very economical and reliable transportation system in existence. For exports as well they decided to evaluate capabilities of their existing transporter and entrusted them with the job of transport till port. For customs formalities they engaged a good CHA after proper cost evaluation and entered into contract for freight with shipping company agent. The response for company’s export was very good and the company could get as many as 15 customers within first two months and reached to a level of USD 250,000 per month by the end of first half of the year. Based on this response the export volumes were expected to grow to a level of USD 400,000 per month by the end of the year. When the review was made at the end of the year, company found that export volumes had in fact come down to the level of USD 120,000 which was much lower than it had reached in the first half of the year. The managing committee had an emergency meeting to discuss this and the export manager was entrusted with the task of identifying the reasons for this decline. Mr. Ganesh decided to visit the customers for getting the first hand information. When he discussed the matter with the customers, the feedback on the quality and price were good but the customers were very upset on the logistic services due to delayed shipments, frequent changes in shipping schedules, improper documentation, improper identifications, package sizes, losses due to transit damages etc. After coming back, the export manager checked the dispatch schedules and found that production and ex-works schedules were all proper. Then he studied the logistics systems and found that the logistics cost was very high and all the logistics people were de motivated due to overwork and were complaining of total lack of co- ordination and the system had become totally disorganised. Questions 1. Explain the problems experienced by ABC Ltd. What is the main cause of these problems? 2. What logistics model should the company go for to ensure proper operations of the company? 214 CU IDOL SELF LEARNING MATERIAL (SLM)

Possible Solutions 1. Here in this case, the company has faced problem of dissatisfied customers. The company has faced this problem due to improper handling of their logistics operations. The employees of the company are feeling the pressure of overwork as well as are demotivated due to the inefficiency in their logistics. The problem has been faced by the company due to their inadequate understanding of international logistics. Although their analysis of similarities between domestic and global logistics is correct but they have overlooked the fact that there are basic operational differences between global and domestic logistics operations. The basic difference in the domestic and logistics operations are as follows: • Distance : Global supply chain is typically greater than the domestic supply chain • Language: In domestic supply chain, usually only one language is spoken; whereas in a global supply chain, multiple languages are utilised. • Meaning : In international trade, same word has different meaning in different countries. Ton ( Short= 2000, Metric=2205, Long=2240) • Cultural : Culture and work ethics vary across the countries. • Govt. Regulations : Country wise rules and regulations are different. • Currency : Exchange rate fluctuations are common in global chain. • Political Situation: Political instability in various parts of the world is a common factor for global supply chain. • Infrastructure : The infrastructure facilities vary in different countries. • Environment : Environmental regulations and compliances vary considerably in the global supply chain. • Labeling : Labeling laws differ among countries. • Customs: Each country has regulations controlling the exporting and importing of goods and services and can change overnight. 2. Keiretsu and Supply Chain Management (SCM) Supply chain management (SCM) aims at managing supply and demand optimizing resources, reducing cost and providing efficient customer service. ‘Keiretsu’ is a Japanese word that refers to powerful business group. It depicts how businesses share each other’s resources. Keiretsu is a relationship among suppliers, partners and customers who do business with each other. It is basically a vertically related group with sound manufacturing and a large network of suppliers and subcontractors. 215 CU IDOL SELF LEARNING MATERIAL (SLM)

Under the Keiretsu arrangement, major suppliers and subcontractors do business with only one of the producers. Keiretsu shares many of the goals of the SCM as the latter is based on the management of relationships both between corporate functions and across companies. SCM offers an opportunity for firms to enjoy many of the benefits of Keiretsu, such as stability and efficiency. In Japan, large companies act as the centre of Keiretsu. In Japan, there are six main business groups: Mitsui, Mitsubishi, Sumitomo, Fuyo, Sanwa and Dai-Ichi Kangyo. Toyota is a member of Mitsui group and has such as extensive network of suppliers and subcontractors that it has become a core company of its own Keiretsu. This ensures that there is no overlap between similar companies. Major suppliers do business with only one of the producers. A major Japanese manufacturer also uses a single source for its material requirement. This makes the supplier more responsive. As global competition continues to grow, firms need to re-examine their channel alternatives and assess which forms of channel relationships will fit best with their long term objectives. 3. Dabbawalas of Mumbai Dabbawalas of Mumbai offer a reliable fool proof logistics system of delivering lunch boxes to over 200,000 office employee every day without mix up of having the wrong tiffin going to the wrong office or arriving late, irrespective of conditions such as rains, strikes, and scorching heat. A team of around 5000 men and women, mostly illiterate, operate in assigned areas in Mumbai, each handling 25-30 dabbas, which is the optimum lot size as more could create confusion and affect promptness, which will lead to customer dissatisfaction. The dabbas are collected from the houses and put in tiffing racks at a network of 96 railway stations all over Mumbai to load into the train for further movement toward delivery points. They use a colour code system on the dabbas to identify the collection and delivery points. After the lunch hour, the system operates in reverse direction, again displaying accuracy with collection and quality of delivery closer to Six Sigma. This system gives a much cheaper alternative to office workers than having their food in restaurants and food joints. With this logistics system, 400,000 transactions are done daily with the precision of Six Sigma accuracy 216 CU IDOL SELF LEARNING MATERIAL (SLM)

4. Laundry Service in Five Star Hotels The laundry service in a five star hotel is a very simple service operation that does not use any sophisticated software tools. At 10 a.m. the housekeeping department collects the laundry from 210 rooms of a 300 room hotel operating at 70 percent occupancy. The laundry is divided into three parts; staff uniforms, room laundry (bed sheets, pillow covers) and guest clothes. Special attention is given to the guest's clothes for same day or express delivery. Every single piece of clothing is allotted an identification code, and the informing is punched into the computer for tracking, processing, and final delivery. The entire laundry is handed over to the laundry service supplier, who collects the laundry in the morning and delivers to the house keeping department in the evening as per the customers requirements. This is a simple but effective laundry logistics operation of a hotel housekeeping department that leads to customer satisfaction. 6. Indian Postal Service Indian Postal Service is one of the largest logistics networks in the world today that delivers the letters in the most cost-effective way. The Indian Postal Service operates through a network of 1,52,781 post offices covering 6, 09,030 villages, towns, and cities across the country, delivering 43 million letters every day. They use all transportation modes available in India for movement of postal cargo. The collection of letters from 542,781 letter boxes, followed by sorting, packing, moving, unpacking and again sorting for final delivery is mammoth logistical task that they have performed cost effectively for the past one and a half centuries. _____________________________________________________________________ Practical ___________________________________________________________________ 1Visit nearby railway station in your city / town and prepare a note on how goods carriage is done through multimodal transportation. 2. Contact a carrier company near by in your city / town to prepare a note on different documents used under multi-modal transportation Act, 1993. 217 CU IDOL SELF LEARNING MATERIAL (SLM)

3. Contact at least 10 car drivers and ask the basic driving rules to them mentioned in this chapter to prepare a chart of their knowledge to driving rules. 4. Visit a transport company in your city / town to know the kind of documents they are using for movements of cargoes and coverage of risks to discuss in the class. 5. Contact any general insurance company representation to prepare a note on claims procedure for any kind of risks under insurance policy to discuss in the class. 6. On the basis of Utility of following technology in different industries. a. GPRS b. Barcode c. RFT d. EDI Discuss it in the classroom 7. Visit a transport company in your city / town to collect the transport documents and discuss its uses in the classroom. 8. Prepare a case on export documentations and discuss the classification of following: a. Commercial b. Statutory c. Documents for claiming export benefits 9. Visit a packaging company in your city / town and prepare a note on material used in making different package to discuss in the classroom. 10. Collect pictures of different containers through various media and paste in a file. Discuss it in the classroom telling its utility. 11. Prepare a note on different types of packets found in home while buying goods and discuss the material used in making it. 12. Visit a warehouse of any product in your city / town and prepare a note on inventory cost involved in the product so that it can be discussed in the classroom. 13. Visit a Pharma Store and prepare a note on selective control technique like ABC & VED used by the store for its product to discuss in the classroom. 14. Visit a nearby company in your town / city and prepare a note on its customer information flow for its demand to be processed. 15. Visit a business unit / company nearest to your town / city and prepare a note on logistics system concept adoption activity. 218 CU IDOL SELF LEARNING MATERIAL (SLM)