So one of the best ways to understand why ERP systems are useful and how companies use it is to first of all understand the concept of a business process. A business process is nothing more than the activities that companies do in a daily business. So, I have here prepared for you an example of a typical business process and I'm sure many of you would have been able to imagine this in your minds how a iPhone gets ordered and shipped to a retail store. So, here's a very typical conversation that a store manager might be having with a sales associate. So Best Buy is one of the largest retail stores in the US that sells electronic goods. In anticipation of a holiday season that there will be more demand for iPhones, the store manager from Best Buy might be contacting a sales associate at Apple to order some iPhones. The conversation might go somewhere like this, " We need 5,000 iPhones at the Minnesota, Roseville Best Buy store hopefully by October 31st and if you could cut me a good deal." All right. So, before the sales associate at Apple can say yes to the store manager at Best Buy, he has to think through a couple of questions. Alright. Questions on, do we have enough iPhones sitting in our warehouse? Can we ship these iPhones on time to the Minnesota Roseville outlet? Is Best Buy a good customer? Did they pay up on time previously? Should we give any discount to Best Buy if they are a good customer? If the answer to this set of questions is yes, then these are the next few things that Apple would have to do on their end. First of all, there will be a step known as material staging. This is a step that involves moving and counting the right number of iPhones and storing them in a certain segment of the warehouse so that they will be ready to be loaded and shipped out. At the same time, there has to be a call made to a logistics company such as UPS or FedEx to arrange for a delivery truck to come pick up these goods at Apple's warehouse. So once that is done and when the truck does come into the warehouse, there's a step of loading the goods onto the delivery truck. This is the point where the warehouse manager would have to make a statement saying that, "We have fulfilled our responsibility as a company. We have packed the goods, counted the goods, loaded them out to be shipped to a client, right." Next, the truck would be on its way to the Minnesota Roseville outlet. Once it gets there the staff in the Best Buy store would be inspecting and counting if they get the right set of iPhones. Finally, this is the conversation that the store manager might be having with the sales associate from Apple saying that, "We have checked and receive 5,000 units of iPhones. Thank you for making this sales." Then at this point in time the client, Best Buy, will be paying for the iPhones. Alright. So, what you've seen over here, a very simple process. It's actually known as the order fulfillment process. If you could, take a quick moment to think through; what are some of the business functions that are involved in this episode? What are some of the internal departments involved and what are some of the external departments involved? What are things that could potentially go wrong in the short exchange? Alright. You might want to take a moment to pause your video before going on to the next slide. So, I trust that you have thought through some of this things that are going through in the order fulfillment process. Let us quickly see a summary of the activities and steps and the people and department involved in this process. So what we have here on screen is known as a swim lane diagram simply because it represents and looks like a swimming pool. On the left side of this diagram, we have the names of the departments, all the person involved and on the right side details the different processes and activities that each of this party's partaken. So, the way to look at this diagram is to go from the top left corner. We see that the customer from Best Buy makes a call to the sales associate in Apple and makes an order. The salesperson from Apple will start to process this order by making a few checks. First of all by checking with the accounting and finance department people to see if Best Buy is indeed having good credit and should they be giving this discount to Best Buy. At the same time, they will be checking with their warehouse manager to see if there are enough iPhones to be delivered to Best Buy. If the answer to this two are yes, they will actually move on to the next step of counting and packing the right number of iPhones and putting them aside in the warehouse to be shipped out. The last thing that the sales or customer representative would need to do would be to initiate this process of arranging for logistic transportation from a company such as UPS or FedEx. The next thing that we would see in this process is the warehouse manager or inventory management personnel will be personally foreseeing or overseeing the whole process of loading the goods and issuing the goods out of the company. So we are now at the fourth row of this swim lane diagram. So, the truck then brings this set of iPhones out to Best Buy in Minnesota. At this point in time, the customers would get to see and count that everything is in place. Once that is done and if everything is good, they will be given an invoice and then they would pay up. This is where the entire process would be done. So as you can see in this very short episode of order fulfillment, even though it's pretty seamless activity from outside, there are several different departments and personnel's involved. There could be people involved from internally such as people who are looking at sales, accounting and inventory management. At the same time we're dealing with also personnel's outside Apple itself. For instance, the customer coming from Best Buy is external party. At the same time the logistics and transportation that is in charge of the delivery is also an external department. So, if we were to think about this more deeply, there are several things that could actually mess up this simple process. For instance, Apple might not have enough goods in store. So, this could be due to several reasons. For instance, because of the holiday season, they might be getting several orders from different companies. At the same time, they might not have produced enough iPhones simply because there could be a strike that occurred unexpectedly in the previous quarter or they might have a bad run into production resulting in many defective units from the past production. Even outside of Apple, there could be other issues happening. For instance, the logistics company might also be unable to make the shipment simply because they have too many requests from other clients as well during this busy period. Finally, the order might not be a profitable one for Apple if the client is not a good customer. For instance, if they did not pay the bill from the previous order, then the sales associate from Apple have the reconsider whether it's a good deal to have this sales order. So in short we see that there are various steps involve in this very simple process. Different departments and function areas have come together in order for the sales process to take place. There is a requirement of having good communication and collaboration between the departments in order for this business process to execute smoothly. For instance we see in the very first step, the sales associate from Apple would have to be talking and coordinating very tightly with the logistics manager that is handling the counting of the goods. So, we see that in this episode of sales order, the take away point that we need to know here is that information needs to flow seamlessly between the business units effectively. At the same time, different personnel from different departments have to coordinate their work tightly.
