industry solutions assignment 2
TRANSCRIPT
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Texas Southern University
Jesse H. Jones School of Business
Management Information Systems
MIS 678: SAP Applications in SCM
INSTRUCTOR: DR MAYUR DESAI
A REPORT ON THE ANALYSIS OF
SAP SOLUTIONS IN TWO INDUSTRIES
Aerospace/Defense and Public Sector
Prepared By
ABAYOMI ODUTOLA
Fall 2010
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1.0A DESCRIPTION OF THE INDUSTRIESFor this report, these two industries have been chosen to see the impact of the SAP
Enterprise Resource Planning (ERP) system in their respective sectors. There will be similarities
as well as differences in the ERP functions designed for each industry and the major companies
in each industry will be highlighted.
1.1AEROSPACE & DEFENSEIt is also broken down into two sectors described as Aerospace & Defense
Manufacturers (A&D) as well as Maintenance, Repair and Overhaul (MRO) service providers.
The US aerospace products and parts manufacturing industry includes about 1,300 companies
with combined annual revenue of about $170 billion. Major companies include Boeing,
Northrop Grumman, Lockheed Martin, Raytheon, and General Dynamics. The industry is highly
concentrated and the 20 largest companies account for about 90 percent of industry revenue.
Many other companies work primarily as subcontractors to the five largest manufacturers.
The industry is dependent in large part on federal government spending and the
aerospace industry is cyclical by nature and unpredictable, due to uncertainty of the annual
government budgeting. The Demand in the United State is driven by the US military budget and
the overall economic climate, which affects airline traffic and demand for new commercial
aircraft. The profitability of individual companies depends on technical expertise and the ability
to accurately price long-term contracts. Large companies enjoy economies of scale in design,
manufacturing, and purchasing. Small companies can compete effectively by concentrating on
selected components and parts manufacturing for particular prime contractors. Increasingly,
small companies are developing system integration capabilities as large firms outsource more
aspects of contracts.
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US Aerospace & Defense Spending
Source: http://www.aerospacedefenseindustry.com
1.1.1 Primary Demand Drivers
Domestic military budget Domestic economic climate, affecting airline travel and demand for new commercial
traffic
Threat of international warfare Upward mobility in the population, creating demand for air travel
1.1.2 Profitability Drivers
Technical expertise
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Accurately pricing long-term contracts
1.1.3 Major companies in Aerospace & Defense
In the United States, Boeing, the worlds largest aerospace company, is the primary
military aircraft and space shuttle contractor. Boeing is the number two manufacturer of
commercial airplanes, behind Airbus, and second largest collector of defense contracts,
behind Lockheed Martin, in the world. They make two-thirds of their sales in the U.S.
Airbus, which is a division of EADS, the European Aeronautic Defense and Space Company,
is the primary producer of airplanes for countries in the European Union, and also
manufactures products such as satellites or space rockets. In the United Kingdom, BAE
SYSTEMS is the leading defense contractor and is also the largest foreign company in the
U.S. defense market.
Top 7 Companies in Aerospace & Defense Industry 2002)
Company (Ranked by Sales) 2002 Sales (Mil) Estimated of
Employees
#1 The Boeing Company
www.boeing.com
$54,069.00 166000
#2 European Aeronautic Defense
and Space Company EADS N.V.
www.eads-nv.com
$31,339.20 103,967
#3 Lockheed Martin Corporation
www.lockheedmartin.com
$26,578.0 125,000
#4 Airbus S.A.S.
www.airbus.com
$20,333.1 46,000
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#5 Northrop Grumman Corporation
www.northgrum.com
$17,206.0 117,300
#6 Bombardier, Inc.
www.bombardier.com
$15,481.6 70,411
#7 BAE SYSTEMS
www.baesystems.com
$12,953.1 68,100
Source:
http://www.worldtrademag.com/Articles/Feature_Article/f076e14ca8af7010VgnVCM100000
f932a8c0____
1.2Public SectorThe US government services sector consists of about 150,000 federal, state, and local
government entities with combined budgets of nearly $6 trillion that administer and manage a
variety of public (taxpayer supported) programs. The federal government is the largest single
employer in the US, with about 2.8 million employees, including armed services employees. The
largest government agencies by employment are the federal Department of Defense (DOD)
(including all branches of the armed forces), Department of Veterans Affairs (VA), Department
of Homeland Security (DHS), Treasury Department, and Department of Justice (DOJ).
The federal government manages a budget in excess of $3 trillion. State and local government
budgets are much smaller - collectively, expenditures for the over 19,000 US municipalities,
16,500 towns and townships, and 3,000 county governments are approximately $1.5 trillion.The 50 states spend a combined $1.6 trillion.
Other companies considered in the public sector but not included in this report are publicly
owned corporations and companies providing services for the government. My main focus for
this report is Federal, state and local government agencies.
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1.2.1 Demand and Profitability Drivers
With a growing and aging population, critical environmental issues and security threats,
federal and state agencies have to change the way they work. Governments worldwide are
working to become more responsive, efficient, and accountable as they modernize operations
and enhance services. A public agency has to conduct business transparently to gain the trust of
citizens, business partners, employees, and other agencies all while operating in a global
economy.
There is a constant clamor for the reduction in the amount of tax paid to the Government
which will mean less revenue with a growing need to cut cost and be more efficient in their use
of the scarce resources.
1.2.2 Major Agencies in the Public Sector The US Federal Government
1) Department Of Defense2) Department of Homeland Security
FEMA Naval Criminal Investigative Service State Of North Carolina The United Kingdom Department of Works and Pensions. Gobierno De La Republica De Colombia
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2.0 SAP FUNCTIONS IN BOTH INDUSTRIES
Aerospace & Defense
SAP for Aerospace & Defense supports manufacturers in a broad range of critical businessactivities, including:
y Program management With SAP solutions, you can plan, set up, execute, and monitorlarge programs or projects and ensure the fulfillment of contractual obligations such as
agreed-upon costs and schedules.
y Life-cycle data management SAP solutions enables you to manage and maintain theproduct data and master data that designers, work schedulers, and project managers
need for making sound decisions. The solutions provide immediate access to relevant,
up-to-date information for project and program management, document management,
CAD integration, engineering change management, and master data management.
y Contract manufacturing SAP solutions support contract manufacturing that requires acompletely new design for an end product for the customer. You can integrate product
and process design, adhere to extremely rigorous documentation standards, and use
program management methods such as earned value to capture and control costs
accurately.
y Make-to-order manufacturing With SAP solutions, you can manufacture configurableend products driven by customer orders and perform minor engineering during
production of the end product. You can also produce subassemblies and components
based on forecasts of customer demand.
y Operational procurement With SAP solutions, you can automate plan-drivenprocurement of materials used in core business processes by integrating purchasing
with supply chain management. You can also provide self-service functions for
employees to purchase their own materials in compliance with corporate policies. Plus,
you can automate the procurement of services, including consulting and contract labor
[1].
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SAP for Aerospace & Defense supports MRO providers in key business activities, including:
y Asset life-cycle management SAP solutions enable maintenance engineers to managephysical assets and equipment, from the initial investment idea to the end of operation
and replacement of assets. They can manage physical assets, equipment, and
engineering changes over the complete life cycle to optimize equipment performance
and availability.
y Maintenance and service planning With SAP solutions, you can perform midterm tolong-term forecasting and scheduling of major service for aircraft and components, and
you can schedule service areas such as hangar bays. You can also simulate business
alternatives and the resulting effect on service schedules and resources.
y Line maintenance With SAP solutions, you can plan and execute maintenance serviceswhile an aircraft is assigned to the revenue schedule. Our solutions enable you to view
all new, deferred, and cleared work items for an aircraft, which provides a longer time
window for planning and assigning the work items.
y Heavy maintenance SAP solutions enables you to manage maintenance in aircrafthangars, including the majority of scheduled inspections, checking and alignment tasks,
engineering orders, deferred work items, and additional work that arises during the
aircraft's visit. You can plan, package, schedule, and monitor maintenance tasks, and
you can track the real progress of inspection results, production data, and configuration
changes on the shop floor.
y Component maintenance With SAP solutions, you can repair, overhaul, or refurbishcomponents or major assemblies, running component maintenance as a separate line of
business or in support of the airframe maintenance and engine maintenance business
[2].
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Public Sector
The shared services deliver model is the framework for leveraging economies of scale through
standardization and automation of various public administrations.
SAP for Public Sector supports the following business processes:
y Human capital management SAP for Public Sector helps the sector meet the demandsof today's knowledge-based economy by maximizing the potential and productivity of
your employees and integrating employee processes and information with your
organization's overall priorities and strategies.
y Government procurement SAP for Public Sector supports both ad hoc and strategicprocurement, so you can manage purchase order, inventory, and invoice verification
processes. The solutions allow you to automate buying and requisitioning transactions
over the Internet.
y Public sector accounting With SAP for Public Sector, you can receive and handlemoney from constituents and monitor the flow of funds from the source to those
receiving the service.
y Social services and social security SAP solutions enable you to deliver social services,including a wide range of prevention, intervention, and treatment services, to
individuals and families in a highly efficient manner.
y Government programs SAP for Public Sector supports your ability to deliver programsand services to citizens, businesses, and other recipients.
y Tax and revenue management SAP for Public Sector enables efficient public tax andrevenue administration while addressing the customer service requirements of
taxpayers. The solutions support a range of customer service activities, including
registration and account maintenance, return filing and remittance processing,
correspondence and contact management, as well as billing, auditing, and compliance.
y Public security With SAP for Public Sector, you can consolidate data, shareinformation, and ensure that resources are available to support critical activities in
detecting, preventing, responding to, and recovering from attacks. Plus, you can deploy
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advanced technologies in a way that keeps information secure, controls access to
information, and supports diverse missions and functions.
y Organization management and support SAP for Public Sector supports all coreactivities in analytics, financials, human capital management, and corporate services [3].
3.0 COMMON FUNCTIONS OF SAP R/3 IN BOTH INDUSTRIES
Procurement Management Human Capital Management Human Resource Management Quality Management Supply Chain Management Asset Management Finance and Controlling
4.0 UNIQUE FUNCTIONS AND BUSINESS PROCESSES
AEROSPACE & DEFENSE INDUSTRY PUBLIC INDUSTRY
Program Management Enhanced Grants Management
Life-Cycle Data Management Government Procurement
Contract Manufacturing Public Sector Accounting
Operational Procurement Management Social Services and Social Security
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Make to Order Manufacturing Government Programs
Asset life-cycle management Tax and Revenue Management
Maintenance and service planning Public Security
Line maintenance Organization Management and Support
Heavy maintenance
Component maintenance
5.0 UNIQUE CAPABILITIES SAP OFFERS THE INDUSTRY
Faster realization of service revenues Public ROI
Invoice based on consumed resources within
days of maintenance execution, rather than
months.
This initiative will help governments fully
demonstrate the value of government
programs and services across both
quantitative and qualitative dimensions
Reduced waste and faster time to value Protected IT Investments
Take an enterprise approach to implementing
best manufacturing practices such as lean
manufacturing.
This allows governments to incorporate
specialized systems and leverage past IT
investments while providing a framework for
adding solutions in the future.
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Improved maintenance management Improved Collaboration
Integrate maintenance requirements with
supply chain management to reduce parts
shortages, speed maintenance execution, and
increase asset availability.
This reduces agency stovepipes by
consolidating basic systems such as payroll
and procurement across divisions and
agencies.
6.0 MISSING CAPABILITIES IN BOTH INDUSTRIES
Most of the essential capabilities are available in both industries except SAP Mobile
applications, platforms, and services designed for both core mobile users in the field and
business users who want anytime access, mobile applications extend your business processes
to any device for anytime, anywhere access.
7.0 SAP INDUSTRY SOLUTIONS BENEFIT
Increased Sustainability - A performance based logistics solution from SAP serves as an
integrated IT system and the foundation for a future-oriented business model, supporting all
aspects of system sustainability.
Increased Compliance - SAP BusinessObjects GRC solutions, helps to address risk management,
access management, continuous controls testing and data monitoring issues, and compliance
management and reporting.
Improved maintenance management - It improves the ability to track and manage
maintenance requirements and eliminate redundant maintenance tasks.
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Reduced costs - Streamline processes and simplify complex system landscapes.
Improved Customer Satisfaction - The CRM function enables better interaction with the
internal and external Customers.
8.0 SOLUTIONS FROM OTHER ERP PROVIDERS
Oracle offers a unique set of solutions for the Aerospace Industry. Oracles industry solutions
leverage its best-in-class portfolio of products to address complex business processes relevant
to your industry. These solutions enable you to speed time to market, reduce costs, and gain a
competitive edge.
Microsoft Dynamics does not offer any unique solutions for the industry at this time.
Microsoft Dynamics ERP and CRM solutions help you manage finances, human resources,
citizen relationships, funds and grants, and service delivery, all with a low total cost of
ownership
9.0 OTHER PUBLIC SECTOR ERP FUNCTIONS BY OTHER ERP PROVIDERS
Oracle Microsoft Dynamics
Content Management Business Intelligence
Business Process Management Case Management
Financial Management Contact Center 311
Human Capital Management Constituent Management
Procurement Management Field Inspection
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Contracts Management Funds Management
Governance, Risk & Compliance Grants Management
Case Management and CRM Solutions Personnel Management
Enterprise Performance Management Task Management
Business Intelligence Correspondence Management
10.0 CONCLUSION
Each ERP solution provider tries to provide unique solutions for integrating systems in both
Industries discussed. It has been shown that Sap ERP has an important role in the
Aerospace/Defense and the Public Sector (Government). It has been a pioneer and in the
forefront of the solutions industry. The company believes that generic solutions can't address
industry specific challenges. It has combined its popular packages with unique functions to form
solutions for every industry.
Despite its higher cost of implementation, it is still one of the best options for industries looking
for integration packages to enhance productivity. All functionality is in one place and over time
the benefits outweighs the cost. Oracle solutions for industries are its closest competitor in the
market and it offers a strong suite of functions that are designed for each industry. As the
worlds largest business software company, it is able to market its industry solutions with
database solutions and it is very popular in several countries.
Oracle as a company has grown so large by its acquisition of smaller software companies which
enables it to offer several products. This initial benefit might on the long run cause problems
with issues of integrating all the different platforms for smoother operations.
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It can be debated which ERP brings better value to both industries. Both industries have a wide
range of solutions to choose from and their services will be improved for the 21st Century.
References
1. http://www.sap.com/industries/aero-defense/businessprocesses/manufacturers/index.epx
2. http://www.sap.com/industries/aero-defense/businessprocesses/mro/index.epx3. http://www.sap.com/industries/publicsector/public/businessprocesses/index.epx4. http://www.oracle.com/us/industries/aerospace/018740.htm5. http://www.oracle.com/us/industries/public-sector/index.html6. http://www.microsoft.com/en-us/dynamics/industries/government.aspx7. http://globaledge.msu.edu/industries/aerospace-and-defense/background/