Page 651 - Introduction to Business

CHAPTER 18 The Digital Enterprise 625

look back and yields a commitment to the ERP system that might not oth-
erwise be possible. At the same time, the big-bang strategy may end up
being riskier than the phased strategy because if the system fails, the
whole company could get paralyzed. For example, this is what happened
to Cisco Systems, Inc. when it implemented its ERP system.
Time. Because the big-bang strategy handles design, development, testing,
and implementation of all modules simultaneously, it generally takes less
time.
Cost. If all goes well, the big-bang strategy costs less because there is limited
if any work on legacy systems and temporary interfaces.
Resources. Whereas the big-bang strategy requires substantial one-time
resource use, the phased strategy can spread those peak resource require-
ments over multiple phases.
Learning. In a phased implementation, knowledge gained in one phase can
be transferred to other phases. As a result, modules can be implemented
by increasingly more experienced people as design, development, and
testing issues are fed back to the project team.
Results. In the phased strategy, the successful implementation of one mod-
ule can be used to show the rest of the organization that the ERP system
works. In this scenario, the “easiest” modules should be implemented first.
Lag. With the big-bang strategy, there can be a very long period of time
between when the system is being designed, developed, and tested and
when the system can be used in production. Consequently, some team
members may grow restless, and this may have an impact on the team’s
morale and productivity. 8

reality Do you think that the phased implementation strategy is better for
CH ECK certain types of business organization? Which types, and why?

Supply Chain Management

LEARNING OBJECTIVE 6
Illustrate supply chain management.

A supply chain encompasses all the activities associated with the flow and trans- supply chain All activities associated
formation of finished goods from the raw material stage through to the end user, with the flow and transformation of
finished goods from the raw material
together with the corresponding flows of monetary funds and information. These
stage through to the end user, together
activities are typically performed by different business organizations identified as with the corresponding flows of
suppliers, manufacturers, distributors, and retailers. An example of a simple supply monetary funds and information
chain is presented in Exhibit 18.2 (on p. 626).
Supply chain management is the management of all the activities in the supply supply chain management (SCM) The
chain, in order to minimize the total costs of the chain and to maximize the value management of all activities in the
supply chain, in order to minimize the
to the end user. Supply chain management cuts through most business functions
total costs of the chain and to maximize
and across several business organizations. Consequently, it leads to the integration the value to the end user
of various business processes in the business organizations that are members of the
supply chain. ERP systems have been used with enormous success to integrate
most business processes within a company, and have become the backbone of
most supply chain management efforts. Therefore, ERP systems, in combination
with supply chain management, are leading to firms that are digitally enabling their
business processes and relationships with other members of the supply chain.

Copyright 2010 Cengage Learning, Inc. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part.