Organizational Structure, ERP Systems, And Material Types: Exploring Key Concepts

What is the most common Organizational Structure?

Functional structure is considered as most common type of organizational structure, and under these structure organizations groups their workers by department and functions conducted by workers. Those organizations which use the functional structures divide their department in context of functions such as marketing, accounting, engineering and business development.

This structure mainly states the responsibility of each department in the organization and to whom such department reports, and it also clarify the duty and power of each individual in particular department (Morgan, 2015).

Advantages and disadvantages:

Advantages	Disadvantages Save Time On Research and Writing Hire a Pro to Write You a 100% Plagiarism-Free Paper. Get My Paper
It provides greater efficiency in the human resource.	Sometimes it becomes too efficient that it loose the sight of the organization as whole.
Makes the things easy and removes the confusion.	Create chaos between the departments of the organization which sometime results in project failure.
Saves time with efficient working system.	Working of one department depends on the working of other department (Suttle, n.d.).

Functional Information System: this information system is based on different functions of the business such as Production, Marketing, Finance and Personnel etc. these functions are considered as functional areas of the business, all these functions require the application for the purpose of conducting information processing. All these functions together form the Functional Information System.

This system provides the significant value to the organization by managing the information processing of all the functional areas in the organization (Ecomputer, n.d.).

Advantages	Disadvantages
Help the departments in taking the informed decision.	Risk related to information breakdown is also possessed on all the departments.
Helps in transferring the relevant information from one functional area to another.	Dos not help the department in differentiate between the important and waste information.

Enterprise Resource Planning: ERP is considered as business project management process which allowed the organization to use the system of integrated applications which help the organization in managing the business and various back office functions of the organization related to technology, services and human resources.

Advantages	Disadvantages
Flexibility in organization	Costly process
Support in decision making	Generic in nature (CSB, n.d.).

Difference between functional view and process view is stated below:

Functional view	Process view
It mainly focuses on conducting any specific task with excellence.	It mainly focuses on improving the collaboration between the various functions of the organization.
In this direction is clear and organization knows the exact goal they want to achieve.	In this requirements are more clear which means this process is more responsive in nature.
It mainly supports the cost leadership.	It supports the differentiation strategy of the organization.
Communication between the functions in this view is not good.	In this complexity is more as compared to functional area.

Presently, process view is considered as important process in the organizations because it is more responsive in nature as compared to functional view, and it helps the organization in collaborating between the functions (WIRC, n.d.). It is also considered important because clear the requirements of the organization which helps in reducing the confusions and make the things more clear.

Silo effect is considered as lack of flow of information between the groups or part of an organization. In other words, teams in the organization only work for achieving their goals and generally ignore the need of other organizations. This can be understood through example, Silo effects limit the flow of information between the members of different departments in the organization which ultimately results in reducing the productivity of the organization. ERP organizational strategies are stated below which help the organization in removing silos:

• Identifying the silos which hindered the organizational goals and through ERP ensure effective information flow system which helps in removing this hindered.
• Manage workshops to train the employees in organization (panorama, n.d.).

Invoice processing is the process which is used by the company to ensure that the validity related to the invoice is sent to them for payment, and this mechanism includes the following steps:

• Ensure that invoice received by department is sent to accounts department for payment.
• Ensure whether there is any requirement of Supplier Setup Request.
• Review the invoice before the submission.
• Submission of invoice to accounts payable.
• Ensure that payment is made related to the invoice (It’s your yale, 2017).

Define Functional information system and an Enterprise Resource Planning System (ERP)

Bill of material is considered as base of functionality for setting up the production module of an ERP system. Item of manufactured include the components, which are used for the purpose of building the product through production operation(s). The main aim of BOM is used to define the structure of the product of a manufactured end item.

Any process of manufacturing conduct through various stages of the production, and at each stage of the manufacturing cycle components is required. Detailed components of BOM required at different stages and level of operations such as either at single level or multiple level. In multiple level of BOM, relationship of parent or child between successive levels is formed. Example of BOM:

Routing is considered as another important base related to the production module which actually defines the method related to manufacturing, and also the method which must be followed for manufacturing a product. These factors are considered as important factors for the purpose of setting up production module. Example of Routing:

Some of the objectives of routing module are stated below:

• All the tasks required for manufacturing any products are determined in this.
• Work centers for conducted these tasks are determined.
• These sequences of the tasks are linked to the operations which must be carried out on work centers (MSG, n.d.).

Production order actually defines the material which is used in production, at which location it is manufactured, and at what time, and how much quantity is required and it also defines the components and sequence of operations which must be used and how the order cost of the process is settled.

On the other hand, planned orders are considered as result of running MRP, and shortages of material which are set to internal procurement will create planned orders and this is converted into production orders. Production orders are considered as hard copies which cannot be adjusted by MRP anymore.

Transfer of planned order into a production order is considered as critical process, and following factors must be considered into account while making this transfer:

• Organization must ensure that materials related to BOM and routing data are copied into the production order which mainly determines the list of components and operational data in the order.
• Organization must ensure that planned costs also gets updated related to the production order via component price and routing activity price.
• Organization can run an availability which keep check on production for the purpose of determining the missing components in the order (GURU, n.d.).

Difference between make to order and make to stock is stated below:

Make-to-Order: production order of the organization is caused by the sales order, and this means that ERP system of the organization must have a strong and intelligent relation between the sales order module and the production-planning module. Organization must able to monitor the progress related to individual production orders for the purpose of keeping the customers informed.

Advantages	Disadvantages
It keeps the customers informed about their sales order and also in tracking their order.	Inefficiency and more wastage
Organization can easily monitor the process.	Production planning and purchasing is complex in nature.

Make-in-Stock: in this planning of production is based on the forecast of sales for a particular time period a year, six months or a quarter.

Advantages	Disadvantages
Help the organization in spread the production evenly.	Customers are less informed about their orders.
Avoid the complex issues.	Less stable in nature (Zuyderduyn, 2011).

Explain the difference between the functional view and process view of Organizations

Globalization is defined as the integration of the people, firms, government, and societies in the world. In other words, globalization is usually considered as closer ties of international trade. Following are the impacts of globalization on business:

• Expansion of markets- the most important effect of globalization is the expanded markets. In other words, those businesses which only sold their goods at domestic level are now able to sell out their goods at international level and in different markets.
• Cheaper resources- another impact of globalization is the availability of cheaper resources in the market. For example- when China opened its market for the rest of the world at that time American companies were able to take advantage of the far cheaper labor.
• International development- development of business at international level is the consequence of globalization which results from the combination of both expanded markets as well as cheaper resources.

Business frequently responded to these changes by grabbing the opportunities available in the market (Green, n.d.).

Any product may have several views, because when the order is placed data is transferred to the procurement process, and in the process of procurement system verify the availability of the product in master data. It must be noted that process of production will also verify from the similar source to check with its vendor and finally at the process of fulfillment system again verify the product from the same source. Therefore master data check the history of the product from the three different processes and for different purposes. This view is considered as master data based view which are used for the purpose of correct the missing facts without affecting the other queries related to the product and it also help in avoiding the repetition of orders (Saravanavelu, 2017).

Difference between the master data, organizational data, and transactional data in SAP environment:

• Master data- it includes those information which is presented in in the system for its lifetime and it is considered as information from which reference and other derivations such as transactional data get its components. Master data is the top level data which is required by the system to run. For example- GL accounts, asset master records etc.
• Transactional data- it is considered as facts and other encoded information which is required during the process of transaction.
• Organizational data- organizational data is referred to that data which is gathered by the organization while conducted various operations of the organization (SAP, n.d.).

Following are the four common types of materials in SAP ERP are:

• Raw materials (ROH): in this raw material are mainly purchased from the vendors but they are not sold to the end consumers.
• Semi-Finished goods (HALB): these materials are produced from raw materials and used for the purpose of producing finished goods.
• Finished Goods- goods created by using the production process.
• Trading goods (HAWA): they are like raw materials purchased from vendors but sold to end users.

References:

CSB. Enterprise Resource Planning Systems. Available at: https://csbapp.uncw.edu/mis213/10/10-3.html. Accessed on 23^rd December 2017.

Ecomputer Notes. Different Functional Information Systems. Available at: https://ecomputernotes.com/mis/structure-and-classification/explain-briefly-the-different-functional-information-systems. Accessed on 23^rd December 2017.

Green, J. How Does Globalization Affect an Organization’s Business Approach?. Available at: https://smallbusiness.chron.com/globalization-affect-organizations-business-approach-20077.html. Accessed on 23^rd December 2017.

Guru. Production Order in SAP: CO01, MD16, CO02, CO15. Available at: https://www.guru99.com/production-order-sap-pp.html#2. Accessed on 23^rd December 2017.

It’s Your yale, (2017). 3401 PR.04 Submitting Invoices for Payment. Available at: https://your.yale.edu/policies-procedures/procedures/3401-pr04-submitting-invoices-payment. Accessed on 23^rd December 2017.

Morgan, J. (2015). The 5 Types Of Organizational Structures: Part 1, The Hierarchy. Available at: https://www.forbes.com/sites/jacobmorgan/2015/07/06/the-5-types-of-organizational-structures-part-1-the-hierarchy/#4d4aa2f85252. Accessed on 23^rd December 2017.

MSG. Production Module – BOM and Routing. Available at: https://www.managementstudyguide.com/production-module-bom-and-routing.htm. Accessed on 23^rd December 2017.

Panorama. How ERP Software Can Break Down Organizational Silos. Available at: https://www.panorama-consulting.com/how-erp-software-can-break-down-organizational-silos/. Accessed on 23^rd December 2017.

SAP. The difference between master data and transactional data. Available at: https://searchsap.techtarget.com/answer/The-difference-between-master-data-and-transactional-data. Accessed on 23^rd December 2017.

Saravanavelu, V. (2017). SAP PP Material Master. Available at: https://sap-certification.info/pp/sap-pp-training/sap-pp-material-master/. Accessed on 23^rd December 2017.

Suttle, R. What Are the Three Most Common Types of Organizational Structure?. Available at: https://smallbusiness.chron.com/three-common-types-organizational-structure-25969.html. Accessed on 23^rd December 2017.

WIRC. Difference between Functional organization and Process Organisation. Available at: https://www.wirc-icai.org/material/ipcc-IT-WIRC.pdf. Accessed on 23^rd December 2017.

Zuyderduyn, J. (2011). Make-to-order vs make-to-stock: implications for your ERP system. Available at: https://www.softwareshortlist.com/erp/articles/erp-applications/make-to-order-vs-make-to-stock-implications-for-your-erp-system/. Accessed on 23^rd December 2017.