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. Customer is always right
2. 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
 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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