The traditional integration structure is Function-oriented organization structure. This Structure designs the individual software package for each of functionality. According Figure 1, different functions within this organization are not integrated but have its own data and some functions are duplicated. Different applications keep the key value which depends on the service supplier. Otherwise, the current integration has become a process-oriented structure which is the integration of different IT systems. This type of integration structure integrates the different applications and process and avoids the duplication. All applications exchange the information into a enterprise system and could quickly respond to the changes (Johannesson and Perjons, 2001).
Figure 1 Function-oriented organizations and Process-oriented organizations
(Johannesson and Perjons, 2001)
Figure 2 Data integration in an e-business context (Lecture slides, 2011)
There are mainly four Enterprise Integration Approaches. Firstly, Data-oriented Integration is the technologies that transferred the data between different applications within the organizations. This type of integration transports the information between two factors as well as interchanging the different data with different style in a fixed source. From the Figure 2, it can be seen that the software has been built by using the interface data and it is possible for communication between different systems, while information data are transferred between two points of business process applications with the same application codes (Lecture slides, 2011).
Secondly, the Application oriented integration approaches enquire a common interface in an enterprise system to exchange the information over the applications within an organization. This type of approach is different from the data oriented integration that applications create the interface and it passes both data and business logics. From Figure 3, it can be seen that in an application oriented integration approach, different systems could exchange the information to a common Application Programming Interface with a integration logic and business rules. While customer could also checks the account information through the common API. However, this type of integration is relative complicated and transparent and tends to be incursive for the business applications (Lecture slides, 2011).
Figure 3 Application Oriented Integration (Lecture slides, 2011)
Thirdly, Business Process-oriented integration create a common platform for the transparent and management of enterprise workflow. In this type of integration, enterprise can integrates the different business processes into a common workflow with different applications. Also, this business integration structure leads to a loose coupled connection between applications. That means the applications located in the back office have tighter connections with the applications in the front. One of the benefits of Process oriented integration approach is that it is business process integration which could be controlled with specific techniques rather than basic data application integration (Li, et al. 2010).
Figure 4 Process Oriented Integration-Process Model (Lecture slides, 2011)
The last approach of enterprise system is Portal Oriented Integration Approach. This type of oriented integration not only creates the basic platform for business control, integrate the different applications and design the common workflows, but also provide the business service from Virtual to be more realistic. From Figure 5, Portal-Oriented Application system combines the systems both from the internal and external with the same interface and keep the expansion of the data and application as well. It is not the integration of the applications but integrate them into a web browser (TEAM LIB, 2011).
Figure 5 Portal-Oriented Application Integration (TEAM LIB, 2011).
There are several types of Integration and e-business. Coupling e-business integration model indicates the disconnection between applications and business processes and interfaces. Loose coupled model is the model which just exchanges the information between different applications but do not show the details of transformation. It is beneficial to quickly respond to the customers’ demand but not the good way to communicate and not safety (Papazoglou, et al. 2006). Another type of integration model is tight coupling which applications have more agreements on the transformation details (Lecture slides, 2011).
In the enterprise integration of the organization perspective, there are two main features: the coordination of data and process of applications is based on the organizations of customers; computer network is considers as the network for the whole supply chain. In order to optimize the coordination of information sharing, the extended enterprise integration promotes the connection with partners and make the information be more accurate (Montreuil, et al. 2000).
Discussion
Issues
There are several issues within the current business model. Firstly, the company only receives the order from the customers once a week and updates the sales management system similarly. In this case, the system is only updated once a week. It will be a huge problem that the information about customers may not be always accurate and delayed; actually it is also an insufficient communication with the customers. It will cause a lack of coordination with customers and miss the changes of the customers’ demand. At the same time, the wrong data will lead to the inaccurate amount of production and affect the stock level. Moreover, the stock would be checked after the orders arrive, if it is out of stock or the stock is insufficient, company order the required components from the suppliers for producing the customer’s orders. This is time consuming processing for order and production processing.
In addition, each department has their own systems for inputting the relative data and information. For example, the order quantities which are sent by customers through EDI rely to the sales management system, while the components are scanned in a stock management system. It is a waste of time and labor and make the production be inefficiency. Otherwise, the production scheduling is complexity. Each day, manager should first check the confirmed customers’ orders by log in the sales system, after that, the schedule should be built, recorded and subtract from the total values. At the end of the production, the finished products quantities should be recorded as well to update the stock level. The time consuming process for ordering, stock controlling and the delay even inaccurate of information lead to fluctuate stock levels, long lead time and cannot satisfy the customers’ needs immediately.
Current Information flow for extended enterprise
As the extended enterprises provide the basic information sharing in an organizational way which covers the suppliers and customers in a supply chain with an entire network (Cooper, et al 1997), the information flow for the extended enterprise system should be draw as following. (See figure 6)
According to figure 6, it can be seen that all the supply chain characters which compose the extended enterprise information flow within an entire network called supply chain business process. The suppliers that located in the upstream of the whole supply chain consist of the two types of suppliers which are domestic suppliers and overseas suppliers. The company which assembly the components from the different
Figure 6 Current Information flow
suppliers locates in the middle of the chain. While the final customers of this supply chain are five car manufactures’ plants around the world. The whole production flow bases on the organizational boundary with suppliers and customers.
Within this information flow, firstly, any of the cars manufactures order the products from the company by EDI which bases on a weekly order. The orders are immediately input to the sales management system. Then the account manager confirms the order and set up the schedule for production after checking the current stock. If the stock is efficient, the products can be manufactured directly, while the order for the components should be placed to the suppliers for completing the production. The orders for the components are daily bases so the stock level of the components could be updated each day. After assembling the products, the finished goods will be shipped to the final customers.
SAP application
As the description of the current business model, it is a huge problem with the time consuming of order processing, production scheduling and stock controlling. The orders and stock are placed in different systems and has no information sharing with different partners. Take the example of production scheduling, each day the production manager have to check the customers’ orders first, create the schedule and record it by spreadsheet and subtract its value from the total stock. After finishing the producing, the quantities of finished goods also need be addressed for counting the stock level. All the record has to be input and placed humanly. However, by implementing the SAP system, these issues could be solved as well as having an efficient production line and effective coordination with suppliers.
SAP, which stead for Systems Applications and Products in data processing, is one of the lead software of ERP system. It is mainly applied for the management of the whole enterprise information to assist the company to make the effective decision. It could help the enterprises to integrate the business process and create an effective network for coordination and improve the operations (SAP Website). As the implement of the SAP, the order of products from customers, the components from suppliers and the manufacturing lines could be input into the SAP systems, and then the system will run a process of different segments with the cost and value, a workflow interface will also be built to manage the different tasks. In this way, it is easy to organize the different business tasks and receive the accurate information with efficiency. The segment of SAP system of current business model is shown as following (ibid).
Table 1 SAP segment lists
Solution
In order to solve the issues within the current business systems, there are several methods could be implemented. First, an accurate approach should be collected and adopted. A business process-oriented integration approach could be implemented to provide a transparent system and process controlling by adopting a platform. It could connect the different business processes as a visible workflow and integrated different applications (Li, et al. 2010). Within this type of integration approach, a loose coupled architecture is required. That means each part of the factors with the workflow is independent and the back applications do not directly communicate with the front applications but with business integration sever. In this way, there is the enough space for fluctuation with any changes and make the workflow more security (Papazoglou, et al. 2006). Moreover, a Hub and Spoke Architecture could also be adopted which is an indirect one to one model. In this type of model, there are a number of integrations of different applications (lecture Slides, 2011).
Secondly, because the stock just be checked when the orders from suppliers arrive, if it is out of stock or there is insufficient stock, it have to place the components orders immediately to components suppliers and could not carry on the manufacturing until the new components arrive. This will delay the production schedule and lead to the time consuming. Vendor managed inventory could solve this problem. Vendor managed inventory is a corporation strategy that suppliers reach a agreement with their customers on directly managing the inventory of their customers’ to save the time and cost on manufacturing process (Lee and Ren, 2011). Components suppliers check the company’s stock in a real time and replenish the stock on time. On the basis of this, company does not need to use the resources to manage the raw material stock and could achieve the lean production.
Thirdly, it is a good way to solve the current problems with creating the data warehousing for the entire business process. The current business model has different systems for different departments. For instance, the orders from the car manufactures are input into the sales management system while the data of components from the suppliers are gathered in the stock management system by the purchasing manager. Different systems are just built for individual functions and are charged by specific managers. Meanwhile, there are no connections between different systems. The information between different parts may not always be accurate and it is more possible to make mistakes. An integrated data warehousing would collect the information from different parts of supply chain and integrated into a network. Different applications could uploads and check the data and process information from this data warehousing with a specific interface. This is a good way to reduce the processing time and have more opportunity to quickly respond to the changes (lecture slides).
Another way for solving the current issues is the implement of lean production. A lean production requires the manufacturing process without the waste of time and space, no extra production lines and flows with no interruption. This means a production line should try to avoid the seven wastes: the cost on defects like stops and rework, the time for waiting, the unnecessary transportation, over inventory like raw materials and finished goods, over-production and over-processing and the movements for motion (McBride, 2011). In order to solve these wastes which exist in the current system, the products should be manufactured just-in-time to reduce the stock level. This means the manufacturing only starts when the customers’ orders arrive. This would save the time and reduce the unnecessary wastes (Yasin, et al. 2003). On the basis of this, a Kanban should be placed between different functional machines. When the customer order the products, the products are took out from the final buffers, and then each factors of downstream just get the products from upstream operations. This could assist the workers to identify the time for producing and reduce the stock level (Junior and Filho, 2010).
The last way of solving the issues within the current business model is implementing the suitable ERP system to integrate the current complex systems and business processes. The current system is only built by different departments for the individual information demand. The current systems exist with a lot of complexity and invisibility which may lead to the delay of information and cause the reduction of production ability. ERP system is supplied for the customers to integrate the current business processes and built an integrated network for information sharing. Such as, the implement of SAP could integrate the order information by software, create the orders online and manage the production processes of different operation tasks (SAP Lab slides).
Conclusion
There are several issues with the current business models. Firstly, the sales management system can only be updated once a week. It limits the information changes and coordination with customers. Thus it may cause the high possibility to make mistakes. In the mean time, the delay of information would also lead to the slow response for the task changes. Secondly, the company just checks the stock after the orders arrive, if it is out of stock or the stock is insufficient, the orders of components have to be purchased to the components suppliers and waste the time for producing and influence the efficiency of lean manufacturing. In addition, current systems are complex and invisible for information sharing, it would raise the stock level and increase the products lead time.
Therefore, some measures should be adopted to overcome the company’s business problems. Firstly, a data warehousing should be built for the information integration. In this case, each applications of the business process could share the information with each other and save the time and have more opportunity to face to the fluctuations of customers’ demand. Secondly, in order to reduce the stock level and save the time on inventory to focus on the core production line, Vendor Managed Inventory is implemented to allow the suppliers to manage the customers’ stock. Otherwise, the ERP system is built for the integration of business applications. SAP system which is one of the most vital ERP systems is adopted for data sharing under a workflow network between applications.
By taking these solutions, it is helpful for company to integrate the current business systems and process, the proposed system tends to be more stable and information sharing would be more efficient. Applications could obtain the required information the proposed system and quick response to any task changes. However, there are also some limits in implementing the measures. In order to make sure the safety of individual information, the setting of the interface tends to be more important. The ERP systems are very expensive so it is vital to leverage the value for implementing this type of the systems. Meanwhile, the adoption of new system needs the extra training course for the stuff that uses the ERP system. Therefore, it is also a problem that how to overcome these problems and implement the solutions in a better way to solve the systems issues for the company’s further development.
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