The most common organisational structure widely used by the companies over industries is the functional structure, which divides the organisation according to the role of the employees within. The departments are divided according to the specialised functions they are assigned with. Organisations following the functional structure are divided into departments like marketing, accounting, customer service, manufacturing etc. (Cosh, Fu and Hughes 2012)
Functional organisational structure has evolved due to the increased need of high specialisation, high control framework of manufacturing within the organisations. Increased growth of the organisation facilitated the need of the specialisation for increasing the performance.
Benefits
Disadvantages
Functional Information System – This is a system that provides information related to specific activity in the organisation. It also offers summary of the information for the management control of such activities (Kuperman, Gardner and Pryor 2013).
Value
This particular system proposes value to the organisation by enabling it to easily store and acquire the data on need (Rainer et al 2013). This also adds value by assisting the management to formulate strategic plans and taking decision for the company’s longevity and prosperity.
Benefits
Pitfalls
Enterprise Resource Planning – This system, better known as EPR is the process that helps the organisation in integrating and managing different parts within organisation. This incorporate various departments like sales, marketing, planning, finance, HR and inventory without disrupting its autonomous operations (Rainer et al 2013).
Value
Value of ERP is in providing functionality to the organisation. It helps in coordinating resources, information and activities, as well as reduces the costs by improving business process and healthier risk management (Rainer et al 2013).
Benefits
Pitfalls
Difference between Business process and function
Business process as defined by Van Der Aalst (2013) focuses on the objective and directs the activities towards the attainment of the same. Business function on the other hand focuses on the end-result, where the function remains constant with the ever-changing purpose (Kemp and Owen 2013).
Business process dictates the flow of interrelated activities, which work together for the achievement of one single objective. Business function on the other hand implies discrete action, which produces results.
Organisations incorporating business process integrates various functions. Units of the functionally oriented organisations on the other hand focus on the particular function.
Coordination in functionally oriented organisation is significantly low compared to process oriented business.
Importance of Process View
Organisations can explore a number of benefits orienting their business form the process view. The primary benefit of it is the objective oriented viewpoint of this particular type as it identifies the attainment of objective as of primary importance (Van Der Aalst 2013). It further helps in increasing the business agility, revenue efficiency and safety of the business.
Silo Effect – The term is used for addressing the issue of lack in communication within a business organisation and the cross-departmental support. The large companies using functional division structure often face this issue in their operation due to the lack of communication and information sharing. The departments involved often focus on the specific tasks they are assigned with minimising their cooperation wit the other departments related (Tett 2015). Example USB in their policymaking is on e of the best examples of the silo effect in an organisation where the inadequate policy due to the lack of information lead the company to receive a shock of $30bn on mortgage-backed securities between 2007-09.
Elimination of Silo using ERP
The cross-functional association is the only possible way of eliminating the silo effect in the organisation that requires technological integration for linking the departments within the organisation. The ERP system helps the managers integrating the departments, process and data throughout the organisation. This requires updating the data into the ERP system through which it is communicated throughout the organisation and every single employee in the organisation has the access to explore the data uploaded in the ERP system (Shaul and Tauber 2013). For example, the marketing department of an organisation can gain access to the sales an operational data to analyse and modify the existing strategies in customer satisfaction.
Organisations prefer to use SAP for verifying the invoice they receive for payment. The SAP confirms the accuracy of the invoice sent by the vendor. However, SAP requires prior update on the purchase made by the company against the invoice (Štolfa et al 2014).
The invoice verification process involves the following steps:
Bill of Materials – Bill of materials is the list of materials or parts that are required to build particular product. This bill only communicates the products that will be used in building or assembling a product. Complex form of bill of material can hold information of the products that needs to be assembled before attaining its utility in the final product. These materials have their own bill of material (Kiepert 2013). For example, a bill of material can take form of a spreadsheet that holds the necessary information. However, the security level provided by spreadsheet is minimum.
Product Routing – Product routing on the other hand holds the information about the steps involved in the process of manufacturing a particular product. Both Bill of material and product routing hold the information on manufacturing products (Mjirda et al 2013). The main difference lies within these two is that the one holds the information about the product, whereas, the other holds the information about the steps incorporated.
Conversion of planned order into production order refers to the process of sending the raw materials for manufacturing the desired products. The manufacturer can take a number of process for converting planned order into production order. However, some consideration needs to be made before initiating the conversion. The master data accuracy needs to be verified along with the maintenance of needed status of the production order (Help.sap.com. 2018). Furthermore, it needs to be verified that the material requirements planning, routing and bills of material components have been implemented in the creation of planned order.
Made to Order
Products that are specifically made on the request of the customers are referred as “made to order”. This strategy involves the manufacturing of the products to a certain stage of development. The rest of the stages are remained untapped to keep the opportunity alive for customisation according to the customers’ desire (Tseng and Hu 2014). This strategy is extensively implemented in fast-food industry and to some extent in the garments industry.
Benefits
Disadvantages
Made to Stock
This strategy involves the manufacturing of the products based on the prior investigation of the customers’ Need. The product manufacturing organisation following this traditional strategy completely manufacture the products according to need of the target population leaving no scope of customisation or modification (Tseng and Hu 2014). The products are then stored in the inventory according to the consumer demand forecast.
Benefits
Disadvantages
IKEA is a furniture manufacturing company established in 1943 in Sweden. Globalisation brought positive benefits on the company as it provided opportunity to grow in the international market. Currently, the company has around 313 stores in over 38 countries around the world. IKEA is now known as world’s leading furniture manufacturing company in the international market (Sjögren 2015). The company had a positive respond towards globalisation. The notable changes in the organisation are the expansion of the company into the Chinese, Japanese and Australian market that provided great deal of support in the business growth.
The One can assume that perceived strategy accompanied IKEA in its globalisation venture is that one design suits all. The company is currently selling over 1200 types of products to its customers around the world (Sjögren 2015). Instead of focusing on the specialised market, the company held its originality in every market. Henceforth, they refused to adopt the specific cultural aspects of the international market and promoted Swedish culture in their international market. Moreover, they focused on environmental friendly cost effective products that can be both manufactured and sold in the market itself, which in turn contributing into reducing the distribution cost. The increased globalisation led the company to shift from centralised control to a more decentralised one that helped them in making quick decision depending on the changing environment (Sjögren 2015). Moreover, their IT support helped them in maintaining information flow within the organisation that resulted into the fast growth in the international market.
Several views of a product is SAP refers to the verification process of the details of the product from the single source of information that is stored in the master data. The placement of a product initiates the verification process on the availability of the product from different dimensions. The availability is first verified by the procurement process, which verifies the availability in the master data. Secondly, the data is verified by the production process from the same source to check with the vendor, which is lastly verified at the fulfilment process to make sure about the product history. This process views the product history several times before confirming the information.
The view mentioned here refers to the process or action of verification in the business operation. Information related to various operation is stored under the master data, which is later used for verification. For example, the procurement process is considered as view. Procurement process is the incorporates the purchasing of different materials and obtaining services from different vendors. The information related to this process is stored under master data. The view here is the verification of this data depending on the need. These views can be used on various purposes. Some of them are:
Organisational data under SAP environment are those that holds specific information of the organisation depending on the type of the organisation. It is important to customise the SAP software accordingly for serving the particular needs of the specific organisation. The data stored in the process are referred as organisational data in the SAP environmental term. Example of this kind of data can be the organisation specific information that varies over different types of organisation such as manufacturing organisation or dealership organisation or a combination of both.
Master data on the other hand are comparatively static data that remains constant over long period and considered as highly classified. Example of this data are customer, supplier, department, employee or accounts masters (Weissenberger et al 2013). Details stored under this data can be customer information, employee salary information and other classified information.
Transactional data on the other hand is considered as the hyper active data as the activity under this is relatively high when compared to the other types of data. Unlike the other data in SAP environment, this is used on the daily basis for operations like addition, modification or deletion act, which makes it dynamic, compared to the other types (Weissenberger et al 2013). Example of this data can be consumer order, stock, purchase order, invoice, payables etc.
The four most common types of material in an ERP system are raw material, semi-finished material, finished goods and trading goods (Shaul and Tauber 2013). The materials purchased from the external sources are referred as the raw materials. For example, raw materials in a car manufacturing company will be the frames, wheels, tires and tubes. The semi-finished materials on the other hand are the primary products made out of the raw materials. Wheels manufactured using the tires and tubes are considered as semi-finished materials. The final products manufactured using the raw materials and semi-finished materials are termed as finished materials. The sellable car can be considered as the finished materials. Lastly, the trading materials are considered as the products that are purchased and sold to the customers without any modification made on the materials.
References
Becker, J., Kugeler, M. and Rosemann, M. eds., 2013. Process management: a guide for the design of business processes. Springer Science & Business Media.
Cosh, A., Fu, X. and Hughes, A., 2012. Organisation structure and innovation performance in different environments. Small Business Economics, 39(2), pp.301-317.
Help.sap.com. 2018. SAP Library – Production Orders. [online] Available at: https://help.sap.com/saphelp_erp60_sp/helpdata/en/97/01b753128eb44ce10000000a174cb4/frameset.htm [Accessed 13 Jan. 2018].
Kemp, D. and Owen, J.R., 2013. Community relations and mining: core to business but not “core business”. Resources Policy, 38(4), pp.523-531.
Kiepert, J., 2013. Creating a raspberry pi-based beowulf cluster. Boise State University, pp.1-17.
Kuperman, G.J., Gardner, R.M. and Pryor, T.A., 2013. HELP: a dynamic hospital information system. Springer Science & Business Media.
Mjirda, A., Jarboui, B., Macedo, R., Hanafi, S. and Mladenovi?, N., 2014. A two phase variable neighborhood search for the multi-product inventory routing problem. Computers & Operations Research, 52, pp.291-299.
Rainer, R.K., Cegielski, C.G., Splettstoesser-Hogeterp, I. and Sanchez-Rodriguez, C., 2013. Introduction to information systems. John Wiley & Sons.
Shaul, L. and Tauber, D., 2013. Critical success factors in enterprise resource planning systems: Review of the last decade. ACM Computing Surveys (CSUR), 45(4), p.55.
Sjögren, H., 2015. Design by IKEA: A Cultural History. BySaraKristoffersson. London: Bloomsbury Academic, 2014. viii+ 148 pp. Illustrations, figures, references, notes, index. Cloth, $29.95. ISBN: 978-0-8578-5814-6. Business History Review, 89(2), pp.364-367.
Štolfa, J., Kopka, M., Štolfa, S., Kob?rský, O. and Snášel, V., 2014. An application of process mining to invoice verification process in SAP. In Innovations in Bio-inspired Computing and Applications (pp. 61-74). Springer, Cham.
Tett, G., 2015. The Silo Effect: Why putting everything in its place isn’t such a bright idea. Hachette UK.
Tseng, M.M. and Hu, S.J., 2014. Mass customization. In CIRP Encyclopedia of Production Engineering (pp. 836-843). Springer Berlin Heidelberg.
Van Der Aalst, W.M., 2013. Business process management: a comprehensive survey. ISRN Software Engineering, 2013.
Weissenberger, C., Lehner, C., Raman, G. and Nieswand, W., Sap Ag, 2013. Persistence of master data in a multi-tenant software delivery architecture. U.S. Patent 8,412,673.
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