Enterprise systems provide much valuable information for improving management decision making. Corporate headquarters has access to up-to-the-minute data on sales inventory, and production and uses this information to create more accurate sales and production forecasts. Enterprise software includes analytical tools for using data captured by the system to evaluate overall organizational performance. Enterprise system data have common standardized definitions and formats that are accepted by the entire organization. Performance figures mean the same thing across the company. Enterprise systems allow senior management to easily find out at any moment how a particular organizational unit is performing, determine which products are most or least profitable, and calculate costs for the company as a whole.
For example, Alcoa’s enterprise system includes functionality for global human resources management that show correlations between investment in employee training and quality measures the company-wide costs of delivering services to employee, and measures the effectiveness of employee recruitment, compensation, and training.
8.2 Supply Chain Management Systems
If you manage a small firm that makes a few products or sells a few services, chances are you will have a small number of suppers. You could coordinate your supplier orders and deliveries using a telephone and fax machine. But if you manage a firm that produces more complex products and services, then you will have hundreds of suppliers, and your suppliers will each have their own set of suppliers. Suddenly, you are in a situation where you will need to coordinate the activities of hundreds or even thousands of other firms in order to produce your products and services. Supply chain management (SCM) systems, which we introduced in Chapter2, are an answer to these problems of supply chain complexity and scale.
THE SUPPLY CHAIN
A firm’s supply chain is a network of organizations and business processes for procuring raw materials, transforming these materials into intermediate and finished products, and distributing the finished products to customers. It links suppliers, manufacturing plants, distribution centers, retail outlets, and customers to supply goods and services from source through consumption. Materials, information and payments flow through the supply chain in both directions.
Goods start out as raw materials and, as they move through the supply chain, are transformed into intermediate products (also referred to as components or parts), and finally, into finished products. The finished products are shipped to distribution centers and from there to retailers and customers. Returned items flow in the reverse direction from the buyer back to the seller