Chapter 1

1) Describe the functional organizational structure. Why do you think this structure is so widely used?

a) A structure that splits functions into different relating departments such as purchasing, warehouse sale,
research, marketing etc. It’s most likely used so much because of how efficient each department can be by
having specialized roles.

2) What is the silo effect? Why does it exist? What problems does it create? How can an organization reduce or
eliminate the silo effect?

a) The silo effect is when a business processes is completed without thinking of the consequences it could
have on the next process. It exists due to workers being in different functional areas and can be reduced by
coordination amongst the areas and by having workers think beyond their functional boundaries. This is
also eliminated through Enterprise Systems, which can efficiently monitor the business process from start
to finish.

3) What is a business process? Why is adopting a process view of organizations essential to becoming a successful
manager?

a) The business process is a set of tasks that produce desired outcomes. The process view is essential to have
effective communication and collaborations. Without this a customer’s order may be shipped late because
there was a lack of communication to the warehouse.

4) Briefly describe the key business processes included in this chapter in terms of their key steps.

a) Buy, make and sell:

i) procurement process: buying or acquiring materials to make products.

ii) production process: creating the materials.

iii) fulfillment process: selling and delivering the products to customers.

b) Design, plan, store and service:

i) lifecycle data management process: supports the design and development of a product throughout it’s
lifecycle.

ii) material planning process: uses data and sales forecasts to decide which materials are procured,
produced and how many.

iii) Inventory and warehouse management process: used to store and track materials.
 iv) Asset management and customer service process: maintain internal assets and provide post-sale service
such as repairs.

c) People and projects:

i) Human capital management process: focusses on the people inside the organization and functions such
as recruiting, hiring, training and benefits.

ii) Project management process: plan and execute large projects like factory construction or complex
products like airplanes.

d) External and internal finance tracking (external):

i) Financial accounting process: track financial impact of process steps while meeting legal reporting
requirements like the IRS and SEC.

ii) Management accounting process (internal): focus on internal reporting to manage costs and revenues.

5) Explain the interrelationships among the key processes included in this chapter. Why are these interrelationships
important?

a) Each interrelationship for the key processes involve different steps that correlate with each other. Without
one process, the other cannot be complete. In the buy, make and sell process you have to complete all 3
processes to get the desired outcome. You can buy but if you aren’t making you can’t sell. The processes
for these work hand in hand to create an outcome for the business and in some cases such as buy, make,
sell, for the consumer.

Chapter 2

1) Describe client-server and services-oriented architectures. What are the advantages and disadvantages of each
architecture?

a) The client-server architecture would be like desktop applications such as the Microsoft Office suite (Word,
PowerPoint, Excel). It involves interactions with the program, it’s uses and where it stores your files. These
are the presentation, application and data layers, respectively.

b) The services-oriented architecture allows users to connect with each other through web services and
integrate multiple client-server applications. The web services send and receive data between enterprise
systems and lowers cost.

2) What is an enterprise system application suite? Describe the capabilities of the individual components of the
application suite.

a) An enterprise system application suite is a collection of inter-company systems. These include supply chain
management, which connect the company’s system to their suppliers. This helps companies plan for
production and keep track of transport and production. ES applications suites also include customer
relationship management which manage marketing, sales and customer service and product lifecycle
management which deal with research, design and project management.
3) Discuss the three types of data in an enterprise system and how they are related.

a) Organizational data represent the structure of an enterprise. This could be factories, warehouses, storage
areas etc.

b) Master data: represents entities associated with various processes. Buying materials from a vendor and
selling it to customers would be a process. Material master is the most commonly used master data. Master
data are only relevant to certain processes such as customer master data being relevant only to fulfillment.

4) Explain the relationship among client, company code, and plant in SAP ERP. What are these organizational
levels typically used to represent?

a) Client: the highest organizational level in SAP ERP and represents an enterprise consisting of many
companies.

b) Company code: represented by each company in an enterprise. This represents a separate legal entity and
also maintains the legal process for financial reporting. A client can have multiple company codes but only
on company code per client.

c) Plant: organizational element that performs multiple functions. Products and services are created here,
materials are stored, planning is done and service and maintenance is performed. Plants can be a
warehouse, factory or an office building. A company code can have many plants but a plant can only belong
to one company code.

5) Why is material master one of the most complex types of data in an ERP system? Provide some examples of
data typically included in a material master.

a) The complexity of the master material is based on how it’s used. Because the materials are used differently
and data for these may or may not be used by the different processes. Some examples of data included is
quantity ordered, who ordered it, shipping conditions, material descriptions, etc.

6) What are material types? Identify the four common material types in SAP ERP, and provide an example of each.

a) Raw materials: purchased from an external source ad used in production. These aren’t sold to customers
and material master will have data related to production but not fulfillment. Tires, tubes and wheels are
examples of a raw materials.

b) Semi-finished goods: these are produced in-house from other materials and used in the production of a
finished good. A wheel assembly is an example of this.

c) Finished goods: made from raw materials and semi-finished goods and aren’t purchased. Material master
will contain data for production and fulfillment. A bicycle is an example of this.
 d) Trading goods: These are also purchased from a vendor but these are resold to customers, and the material
master contains data for selling and purchasing but not production since the item goes untouched. An
example of this would be a helmet, since it can be purchased and resold with no additional steps needed.

7) What are material groups? How are they different from material types?

a) Material groups are materials with similar characteristics. Both raw materials and semi-finished goods can
be grouped together into one material group called production. Bicycles can be grouped based on their uses
such as touring and off-road. Another example would be footwear or clothes. These are different from
material types because they group material types together.

8) How are transaction data created in an ERP system?

a) Transaction data is created by combining organizational, master and situational data together and is specific
to the task being executed.

9) Explain the document concept in SAP ERP. What are the functions of the four types of documents in SAP ERP?

a) Documents record transactions data either during execution or after a process is completed.

b) Financial accounting documents and management accounting documents record financial impact of process
steps while material documents record materials movements, like when materials are received.

10) Discuss the typical structure of documents in SAP ERP.

a) Typical documents have a header and a detail item. The header includes data like PO numbers, dates and
payment terms and the detail item can contain quantity and price data. There can be multiple line items in a
document.