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IS3102 Enterprise Systems Development Project Academic Year 2011/12 Semester 1 Project Specification (Part 2B Manufacturing Track) PREAMBLE
1. This document is an academic project specification written for the module IS3102. It is intended to be used exclusively by students taking IS3102 in Academic Year 2011/12 Semester 1. 2. Any publication, reference or distribution of this project specification is explicitly prohibited without the written permission of the course instructor. Any third parties using this project specification for any other purposes shall assume full responsibility and risk for its usage. 3. This project specification is embargoed until Monday, 8 August 2011, 9:00 AM. Any unauthorized and unreported possession of this projection specification before this date and time shall be deemed as an act of academic dishonesty. 4. Any references made to real world entities and events are solely for academic purposes in order to increase the realism of the project specification. These references may be factual or fictitious in nature. Regardless, they do not represent the official position of the University and are merely used by the course instructor for pedagogical reasons. Whenever appropriate and possible, citations and references are made to authoritative sources. 5. The University takes a serious view of plagiarism or any other forms of academic dishonesty. This includes seeking assistance from third parties outside your project team and IS3102 teaching staffs (e.g. from your friends or industry practitioners). Students caught cheating, copying works done by someone else or engaging third parties to participate in any aspects of the project will be severely dealt with. You can be certain that you will be given a FAIL grade for this module. Please take this warning seriously as there had been teams and/or individuals who were penalized for plagiarism and cheating in previous semesters. 6. To report an act of academic dishonesty, please contact the course instructor Mr. Tan Wee Kek at (65) 6516 6731 or tanwk@comp.nus.edu.sg.

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A.

DETAILED OPENING NARRATIVE

Merlion Food Limited (Merlion) is the worlds leading nutrition, health and wellness company. Merlions mission of "Healthy Food, Healthy Life" is to provide consumers with the best tasting, most nutritious choices in a wide range of food and beverage (F&B) categories and eating occasions, from morning to night. Merlion is a multinational Fortune Global 500 company headquartered in Singapore but with research and development (R&D), manufacturing, and marketing and sales facilities in more than 80 countries. It is listed on the Mainboard of Singapore Exchange with an annual revenue well in excess of SGD $2 billion. Merlion has recently established a new division in its Singapores headquarter to manufacture health and wellness (H&W) snack bars. Recognizing busy professionals desire for healthy snacks that could double up as a quick and wholesome meal, Merlion believes that its new H&W snack bars division will produce the winning formula to capture a slice of this lucrative market. Already, Merlion has secured a 10 years long-term contract to supply its H&W snack bars to the Singapore Armed Forces as part of the combat rations issued to soldiers. Merlion has recently completed the research and development works for two H&W snack bar product lines, namely the Classic Nutri Bar and the Premium Power Bar. It is in the process of building a SGD $10 million state-of-the-arts factory in the Tuas Bay Walk food industry estate managed by the Jurong Town Corporation.

19 20 21 22 23 24 25 26

Figure A.1 - Merlion's H&W product images.

As part of the startup effort, the management of the H&W snack bars division has decided to develop a customized Enterprise Resource Planning (ERP) system to automate marketing and sales as well as supply chain management. An open tender exercise for the first phase of the ERP system was conducted earlier in July and the SGD $1 million turnkey contract was awarded to Kent Ridge Technology (KRT). Your KRT project team has been assigned to this challenging yet exciting project.

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B.

PROJECT TRACK DOMAINS

B.1. Business Domain

Manufacturing is a secondary industrial activity that continues to form a key pillar of Singapores economy. In 2010, manufacturing contributed 20.9% of Singapores Gross Domestic Product (GDP) amounting to more than SGD $63 billion (SGD $54 billion in 2009) 1 . Specifically, F&B manufacturing contributed a significant chunk of this amount (almost $6 billion in 2009 although this figure includes tobacco) 2. Some of the leading F&B companies in Singapore include Super Coffee Corporation Pte Ltd, YHS (Singapore) Pte Ltd and Nestl Singapore (Pte) Ltd. Merlion Food Limited tops the table with its comprehensive full suite of F&B products. In late 2009, Merlions senior management commenced feasibility study into the H&W snack bars sector. A firm decision was made in early 2010 to introduce them into its already diversified portfolio of F&B products. The key catalyst first came about when senior management noticed that the global sales for H&W snack bars in 2007 hit USD $5.3 billion, which accounted for 71% of the total snack bars market 3 .The two most popular H&W categories were fortified/functional products and naturally healthy products, which together represented almost 80% of global H&W sales. But some market researchers have observed that consumers preference has shifted towards naturally healthy bars 4. Other market sources have also indicated that sales of H&W snack bars might have peaked since 2007 5 . Most recently, market intelligence leader Mintel International also suggested that while H&W snack bars sales in 2010 had recovered, 2011 could be a challenging year 6. Despite this rather gloomy forecast, the same report predicted that H&W snack bars would continue to be popular among health-conscious consumers. Against this backdrop, Merlion has decided to venture into the H&W snack bars sector by introducing the Classic Nutri Bar and Premium Power Bar product lines. Each product line has one fortified/functional bar and another naturally healthy bar.

Department of Statistics Singapore GDP at Current Market Prices (http://www.singstat.gov.sg/stats/themes/economy/ess/essa11.pdf).

Department of Statistics Singapore Yearbook of Statistics Singapore 2010 Manufacturing (http://www.singstat.gov.sg/pubn/reference/yos10/statsT-manufacturing.pdf).

3

BSIMagazine.com Naturally Functional, 2 August 2007 (http://www.bsimagazine.com/Features/Ingredient%20Features/2007/8/Naturally%20Functional.aspx?LoggedIn =true&EmailKey=w_k_tan@hotmail.com).

4

Scientist Live Soaring Growth of Healthy and Nutritional Bars (http://www.scientistlive.com/EuropeanFood-Scientist/Ingredients/Soaring_growth_of_healthy_and_nutritional_bars/24209).

5

Specialityfood.com The Cereal and Snack Bar Market (http://www.specialtyfood.com/news-trends/featuredarticles/market-trends/cereal-and-snack-bar-market).

6

Convenience Store Decisions Forecasting Snack Bar Sales (http://www.csdecisions.com/2011/05/27/forecasting-snack-bar-sales). 3

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As H&W snack bars must be manufactured fresh without the use of preservative, their shelf life is severely limited. As such, sales and manufacturing processes must be tightly integrated to minimize wastage yet at the same time maximize sales opportunities, e.g., catering for sudden demand surge. Merlion has thus decided to develop a customized ERP system that will fit its exact business and operation requirements. The ultimate objective is to ensure that the entire sale and manufacturing process can be made most effective and efficient.

B.2. System Domain

B.2.1. Enterprise Resource Planning System
Enterprise Resource Planning (ERP) system is a large-scale information system that is used to coordinate the information generated and used in every functional department of an organization and at the same time to manage and automate organization-wide business processes. A business process is a collection of activities that takes in some input and creates an output. At the micro level, business processes lead to the creation of document artifacts such as orders or reports. These are typically used by internal employees. At the macro level, business processes lead to the creation of products and services for the organizations external customers, i.e., the organizations value chain. In a typical organization, these products and services generate revenue and, hopefully, profit. Most modern organizations adopt a matrix organizational structure in which business processes cutting vertically across hierarchical levels and horizontally across functional departments are the norm. This results in highly complex information processing requirements that can be address with the implementation of a suitable ERP system. A typical ERP system consists of five major sub-systems: 1. Customer relationship management For sales and marketing, and customer related functions. 2. Finance resource management For finance and accounting functions, including billings.

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Figure B.1 - Diagrammatic overview of ERP system.

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3. Supply chain management For logistic and raw materials purchasing functions. 4. Manufacturing resource planning For manufacturing planning and operation functions. 5. Human resource management For employee, payroll and training functions. Since an ERP system must cater to almost every single business functions in an organization, it is a very complex and costly system to implement. But when successfully implemented, it can derive numerous benefits for the organization such as productivity improvement, inventory reduction, order management improvement and revenue/profit increase. More importantly, ERP allows an organization to tightly integrate electronic commerce with its internal sales and marketing, and manufacturing processes.

B.2.2. Process View of Business Organization

In a typical business organization, once products and/or services are sold to a customer, a credit check will be performed before the order is confirmed. Thereafter, an availability check is conducted to verify whether the customers order can be fulfilled. If the order can be filled by available inventory; the required picking, packing and shipping orders will be generated for processing. Otherwise, a back order will need to be created and production run scheduled to fill the back order. The customer will also need to be billed for the order. Production tasks will require raw material or intermediate parts as input. If there is insufficient input, it will be necessary to purchase the shortfall amount and pay the suppliers accordingly. This generic process is depicted in Figure B.2. Customer Order Process Logistic Function Sales Function Accounting Function

Purchasing Function

Material Order Process 21 22 23 24 25 26 27 28 29 30

Figure B.2 - Generic process view of a typical business organization.

An ERP system helps to integrate and automate all these functions ensuring that they are performed with maximum efficiency and effectiveness. For instance, it is often difficult to forecast future sales and thus production scheduling can be a headache. This problem also implicates the stocking of raw materials. An ERP system can improve sales forecast by channeling historical sales information into the forecast function and also enabling incoming sales order to be updated in production scheduling, demand management and material purchasing. These improvements maximize production efficiency and minimize material wastage.

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B.2.3. Customer Relationship, Finance Resource and Outbound Supply Chain Management in Enterprise Resource Planning
The entire sales order process typically involves customer relationship, finance resource and outbound supply chain management tightly integrated in an ERP system. A high-level view of the process is depicted in Figure B.3. Start Pre-Sales Activities Sales Order Processing Inventory Sourcing

Inventory Shortfall No

Yes

Able to Schedule Production Yes Create Backorder

No

Amend Order

Delivery

Billing Payment

End 6 7 8 9 10 11 12 13
Figure B.3 - High-level view of a typical sales order process in an ERP system.

Pre-sales activities involve either sales inquiry or price quotation. A sales inquiry provides the customer with a price list for the requested items without any guarantee. A price quotation guarantees that the buyer will be able to purchase the requested items at the quoted price within a specified period of time. The quotation usually does not guarantee availability until the customer has issued a purchase order to convert the quotation into an actual sales order. However, it is possible to provide an indicative lead time for the customers consideration.

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Sales order processing involve confirming the requested items and the associated quantities. It is possible to provide further price discount at this stage. For instance, if the customer has ordered a larger quantity of a specific item, a higher volume discount might be given such that the actual price is lower than the original quoted price. The credit control department will also check customers currently available credit and take the appropriate action. For instance, if the customer does not have sufficient available credit, the customer might be asked to 1) pay off existing invoices first; 2) reduce new order amount; or 3) pay partial/full amount in advance for the new order. Inventory sourcing typically involves an available-to-promise (ATP) check. Inventory balance currently in the warehouse that has not been reserved is always used to fulfill a new order first. If there is any shortfall, it will be necessary to determine whether planned production schedule is able to meet the demand. Alternatively, it might be necessary to increase planned production subject to availability of all required raw materials and manpower. When current inventory balance is insufficient to fulfill a new order but planned production is able to meet the shortfall, a backorder will be created and customer will be advised of the confirmed lead time. In the event that current inventory balance is insufficient and planned production is not expected to meet the demand in a timely fashion, customer should be allowed to amend or cancel the order without penalty. If a backorder is indeed created, current inventory balance that have been used to partially fulfill a new order must be held in reserve and cannot be used to fulfill other new orders. If it is necessary to divert these reserved inventory balance to fulfill urgent new orders, the organization must ensure that planned production are still able to meet the confirmed lead time provided to customer. Delivery involves the generation and release of the picking order, packing order and shipping order so that the relevant outbound logistic tasks may be performed. Sometime, a new order involving backorder might be shipped separately. In this case, those items available in current inventory balance will be shipped to the customer immediately. Those backorder items will be shipped separately after production. It is also possible to pack and ship items from the same order separately and differently. Sometime a customer might place a large order to be shipped to different destinations. Once the items have been physically shipped, i.e., the relevant shipping documentation has been obtained, the accounts receivable department will create an invoice and send it to the customer. This is the billing process. The credit term will typically provide a certain percent of discount if customer settles the invoice within a specified duration. For instance, a credit term of 2-10/net-30 means customer will receive 2% discount if they pay within 10 days or thereafter must pay the full amount within 30 days of the invoice date. Payment involves recording the receipt of actual payments made by customers. If a customer fails to make payment within the credit term, the account receivable department should commence dunning action and inform the credit control department to reject new orders from the customer. It is clear that the entire sales order process involves the entire organization from the salesperson in the front office all the way to the store man and production worker in the warehouse and factory floor. Without an ERP system, timely and accurate communication of the various sales order information would be almost impossible.

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B.2.4. Manufacturing Resource Planning and Inbound Supply Chain Management in Enterprise Resource Planning
Closely related to the sales order process is the manufacturing resource planning and inbound supply chain management process. This is an elaborate set of business processes that ensures the optimal use of the organizations production capacity. A high-level view is depicted in Figure B.4. Start

Sales Forecasting

Starting Inventory

Sales and Operations Planning

Demand Management

Detailed Scheduling

Materials Requirements Planning Purchasing

Production 7 8 9 10 11 12 13 14 15 End

Figure B.4 - High-level view of a typical production planning process in an ERP system.

A fictitious H&W snack bars manufacturer known as HBar will be used to illustrate each step of the process in an ERP system. HBar produces only two types of H&W snack bars namely Alpha and Beta. HBar has a factory with only one production line working on a single shift of 8 hours in 5 days work weeks excluding public holidays. The production and packing parameters of HBar products are listed in Table B.1.
Parameter Weight (per bar) Capacity (per minute) Capacity (per hour) Packing Alpha 50 g 200 bars 600 kg or 12000 bars 24 bars per display box 10 display boxes per shipping case 240 bars per case 50 cases 30 minutes Beta

Capacity (per hour in shipping case) Production Line Changeover

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Table B.1 - Production and packing parameters of HBar products.

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The bill of material (BOM) for each 200 kg batch of snack bars is listed in Table B.2. This BOM will be used to illustrate the materials requirements planning process.
Ingredients Alpha Beta

Oats (kg) Wheat Germ (kg) Cinnamon (kg) Nutmeg (kg) Cloves (kg) Honey (l) Canola Oil (l) Vitamin/Mineral Powder (kg) Carob Chips (kg) Rasins (kg) Protein Powder (kg) Hazenuts (kg) Dates (kg) 3 4 5 6 7 8 9 10 11 12 13

100 20 2 1 0.5 5 3 2 20
10 10 15 10

Table B.2 Bill of material for each 200 kg batch of HBar products.

A simple and commonly used sales forecasting technique is to use a prior periods sales figures as the baseline and then adjust these baseline figures for current market condition. For instance, if we are forecasting the sales from July to December 2011, we will use the corresponding sales figure from July to December 2010 as a baseline. Sometime, it is desirable to take into consideration the prevailing sales trend by looking at the moving average sales figures for quarterly (short term), half yearly (medium term) and yearly (long term). A short term moving average more closely reflects demand changes but might be sensitive to sudden or one-off demand surge or plunge. A longer term moving average can help to smoothen out these surges and plunges. A sample sales forecast for HBar is shown in Table B.3. Note that all sales figures are in number of shipping cases.
Sales Forecasting Previous Year Promotion Sales Previous Year Base YoY Growth 3% Base Projection Promotion Sales Forecast July 7000 7000 210 7210 7210 August 7300 7300 219 7519 7519 September 7000 7000 210 7210 7210 October 6900 6900 207 7107 7107 November December 6500 7500 500 500 6000 7000 180 210 6180 7210 600 6180 7810

14 15 16 17 18 19 20 21 22 23 24

Table B.3 HBar sales forecast for July to December 2011.

Whenever there are promotion sales in the previous year, the additional sales figures will be deducted from the overall sales figures to derive the base figures for the previous year. We use these figures to derive the base project. Thereafter, we will add in any planned promotion figures to derive the final sales forecast figures. Once the sales figures have been forecasted, we can proceed to use these figures for sales and operations planning. The output of this step is a production plan designed to balance market demand with production capacity. That is, how the factory floor can efficiently produce enough bars to meet the forecasted sales. A sample sales and operation plan is shown in Table B.4. This plan assumes that HBar has a daily production capacity of 400 cases per working day. Note that all sales figures are in number of shipping cases.
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Sales and Operation Planning Sales Forecast Production Plan Inventory Working Days Capacity Utilization 70% Alpha 30% Beta

June

July

August

September

October

November

December

100

7210 7210 100 20 8000 90% 5047 2163

7519 7519 100 21 8400 90% 5263 2255

7210 7210 100 22 8800 82% 5047 2163

7107 7107 100 20 8000 89% 4974 2132

6180 6580 500 22 8800 75% 4606 1974

7810 7360 50 22 8800 84% 5152 2208

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24

Table B.4 HBar sales and operation plan for July to December 2011.

At the beginning of July 2011, the projected beginning inventory level is 100 cases. The sales forecast figures are taken from Table B.3. The production plan is typically entered by the planner base on his or her experience, observing the effect of different production figures on the inventory level and capacity utilization. The general goal is to develop a production plan that meets demand without exceeding capacity and maintaining a reasonable inventory level. The inventory level at the end of each month is calculated as the difference between the sales forecast figure and the production plan figures (including the beginning inventory level). In this example, the planner has maintained a month end inventory level of 100 cases from July to October as the safety stock to meet demand surge without altering the production plan. In November, the safety stock is increased to 500 in anticipation of a year-end demand surge in December. The capacity utilization for a particular month can be calculated by dividing the production plan by the available capacity. In general, capacity utilization is kept below 100% to cater for production losses in case of product changeover, equipment breakdown or other unexpected problems. Finally, the sales and operation plan needs to be disaggregated into plans for individual products base on the breakdown percent specified by the planner. In this case, the breakdown for Alpha and Beta is 70%/30%. The sales and operation plan will then be used as input to the demand management step, which involves detailed scheduling and materials requirements planning processes. The output of demand management is the master production schedule (MPS) for all finished goods. This schedule is actually derived from the monthly production planning figures in Table B.4 by splitting them into finer time periods by week and by day. A sample production plan by week for August 2011 is shown in Table B.5.
Demand Management Monthly Demand Alpha Beta Working Days in Week Working Days in Month MPS Alpha Weekly Demand Beta Week 1 1/8-5/8 5263 2255 5 21 1254 537 Week 2 8/8-12/8 5263 2255 4 21 1003 430 Week 3 15/8-19/8 5263 2255 5 21 1254 537 Week 4 22/8-26/8 5263 2255 5 21 1254 537 Week 5 29/8-31/8 1/9-2/9 5263 5047 2255 2163 2 2 21 22 502 459 215 197

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Table B.5 HBar weekly production plan for August 2011.

The monthly demand input is taken from the production plan figures in Table B.4. The MPS weekly demand for individual products is calculated by dividing the respective monthly
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demand figures by the number of working days in the month. This intermediate figure is then multiplied by the number of working days in the week. Once we have derived the MPS weekly demand, we can split the figures further by week. This will provide the MPS daily demand. A sample production plan by day for Week 1 of August 2011 is shown in Table B.6.
Demand Management Monthly Demand Alpha Beta Working Days in Month MPS Alpha Daily Demand Beta Aug 1 5263 2255 21 251 108 Aug 2 5263 2255 21 251 108 Aug 3 5263 2255 21 251 108 Aug 4 5263 2255 21 251 108 Aug 5 5263 2255 21 251 108

6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39

Table B.6 HBar daily production plan for Week 1 of August 2011.

The MPS daily demand for individual products is calculated by dividing the respective monthly demand figures by the number of working days in the month. Note that due to rounding errors when performing arithmetic divisions, the MPS weekly and daily demand figures may not always sum up correctly when compared against each other and the monthly demand figures. This is typically not a major concern since the excess cases can be kept as inventory balance. Otherwise, manual adjustment can be made to the MPS demand figures. If a manual adjustment is necessary, the easier approach is to make a one-time adjustment on the last working day of the month. For instance, in Table B.5, we would adjust the MPS weekly demand for Alpha in Week 5 (29/8-31/8) from 502 to 498. We would also adjust the MPS daily demand for Alpha in the last working day of August 2011, i.e., 31 August, from 251 to 243. After these adjustments, the MPS weekly demand figures and MPS daily demand figures would all sum up properly to 5263. Now that we have the MPS monthly demand figures, we can proceed to perform materials requirements planning (MRP). This process determines the required quantity and timing of the purchase of raw materials needed to support the MPS. In order to prepare the MRP record, we need to know the lead time and lot size for each type of raw materials. Lead time is the cumulative time required from the point the purchase order is received by the supplier until the point the raw materials have been moved into the manufacturers warehouse ready for production use. Lot size is the unit bulk quantity in which the manufacturer must purchase the raw materials from the supplier. In other words, the purchase order for raw materials must be in broad lot size. For instance, the lead time for oats is 2 weeks and the lot size is 8000 kg. The manufacturer must order oats in multiple broad lot size of 8000 kg and the oats will be ready for use in 2 week time after the supplier has received the purchase order. Each shipping case of HBar bars weights 12 kg and the given BOM is for 200 kg batch (see Table B.1 and B.2 respectively). A sample MPR record for oats to produce Alpha and Beta bars in August 2011 is shown in Table B.7. The MPS (cases) figures are taken from the weekly production plan in Table B.5. We need to convert these figures into the MPS (kg batches) by taking the cases figure and multiplying it by 12 kg and then dividing the intermediate figure by 200 kg. Since the oats requirement is the same for both Alpha and Beta, i.e., 100 kg of oats for every 200 kg batch of bars, calculating the gross requirements (kg) figures is easy. To derive the gross requirements (kg) figures, we simply sum the MPS (kg batches) for both Alpha and Beta and then multiply this intermediate figure by 100 kg.

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Oats Lead Time = 2 Weeks MPS (cases) Alpha Beta MPS Alpha (kg batches) Beta Gross Requirements (kg) Scheduled Receipts (kg) Planned Receipts (kg) 3700 On Hand (kg) Planned orders (kg) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23

Week 1
1254 537

Week 2
1003 430

Week 3
1254 537

Week 4
1254 537

75 32 10700 8000 1000 16000

60 25 8500 8000 500 8000

75 32 10700 16000 5800 8000

75 32 10700 8000 3100

Week 5 961 412 57 24 10700 8000 400

Table B.7 HBar MPR record for oats for August 2011.

The scheduled receipts (kg) figures show the amount of oats that have already been ordered previously and the expected arrival dates. Since the lead time for oats is 2 weeks, the scheduled receipts of oats in Week 1 and Week 2 of August would have been ordered in Week 3 and Week 4 of July respectively. The planned receipts (kg) figures show the amount of oats that have been planned for ordering in August, i.e., the orders have NOT been placed yet. Since the lead time for oats is always 2 weeks, the planned receipts for Week 3, Week 4 and Week 5 of August would have to be ordered in Week 1, Week 2 and Week 3 of August, respectively, on plan. The on hand (kg) figures show the amount of oats that is available at the start of the next working week. The first number 3700 kg in this row means that at the start of Week 1, there are 3700 kg of oats available for production. To determine the amount of oats that is available at the start of Week 2, we will add the amount of oats available at the start of Week 1 to the amount of oats that are in receipt in Week 1. The gross requirements (kg) figure for Week 1 is then subtracted from the total amount of oats giving 1000 kg. Thus, the amount of oats available at the end of Week 1 or correspondingly at the start of Week 2 is 1000 kg. The planned orders (kg) figures are recommended by the MPR calculation and are the output from the entire MPR process. These figures tell the planner what to order to produce the MPS planned output and when to order it. The planner may make manual adjustments to ensure that there are sufficient raw materials on hand in case of delayed deliveries. An ERP system can also automate the scheduling of the production lines based on the MPS, scheduling of the required manpower for the production lines, accounting of the production cost and much more. But these are not required for the first phase of Merlions ERP system.

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C.

REQUIREMENTS SPECIFICATION

C.1. General Requirements

The management of Merlions H&W snack bars division had earlier asked its information technology (IT) department to draft a preliminary requirements specification for the ERP system, which are narrated in the remaining of this section (sub-sections C.2 to C.9). Sketches of the major business processes are also briefly outlined in the requirement specifications. Your KRT project team has just taken over the specification document. Your team is required to make reference to this requirement specification and work closely with the other stakeholders in Merlion to analyze the business and system requirements. It is expected that your team may need to propose some changes to the business processes initially designed by Merlion in order to achieve better efficiency and effectiveness. Your team has been asked to put forth a detailed system proposal to the management of Merlions H&W snack bars division in 5 weeks time. In addition, your team is to concurrently work on the system design and development tasks. The managements intention is to have a prototype of the system to be ready for testing by the end of the year. The high-level architecture of the proposed ERP system is shown in Figure C.1. However, your team is free to re-architect them as appropriate. The organizational structure of Merlions H&W snack bars division is shown in Figure C.2. Customer Relationship Management Manufacturing Resource Planning Production Planning Module

21 Sales Lead and Customer Module Sales Order Processing Module

Finance Resource Management Credit Control Module Billing and Payment Module

Supply Chain Management Inventory Control Module Raw Material Purchasing Module

Common Infrastructure
Figure C.1 - High-level architecture of the proposed ERP system.

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President H&W Snack Bars Division Vice President Sales Vice President Marketing Senior Vice President Production and Operation
Sales Planning Department

Vice President Supply Chain

Vice President Finance

Vice President Technology

Technical Support Department Application Development Department

Wholesales Department

Marketing Campaign Department Mass Media Advertising Department New and Social Media Advertising Department

Warehouse Department

Accounts Receivable Department Accounts Payable Department Internal Audit Department

Direct Sales Department

Production Planning Department

Shipping Department

Factory Floor

Purchasing Department

1
Figure C.2 Organizational structure of Merlions H&W snack bars division.

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C.2. Common Infrastructure

C.2.1. Overall System Security
The entire system will be used by internal users only. It is nonetheless important to provide a high level of security to protect the confidentiality and integrity of all data handled by the system. Security is required at both the transport and application layers. For transport layer security, the systems should provide Secure Socket Layer (SSL) to encrypt any sensitive data sent between the users web browser and the application server. For instance, SSL should be used for login credential and electronic payment information. For application layer security, the systems should provide multiple overlapping layers of security measures including but not limited to the followings: a. Login protection such as account activation, initial password change, account lock out, secure password reset and Captcha mechanism. b. A robust role-based and need-based access control mechanism for controlling users access to various resources in the ERP system. Security mechanism should model the organizational structure or at least allow access rights inheritance. Additionally, each user could have multiple user roles. A basic grant/deny policy is acceptable although more sophisticated access rights policy might be needed for some resources. c. Automatic session inactivity logout to prevent account hijacking on the ERP system. d. Appropriate use of cryptographic techniques such as encryption and hashing to protect sensitive information. e. Logging to ensure user accountability and traceability for financially material transactions or sensitive user actions.

C.2.2. System User Workspace

The ERP system should adopt a user-centered design principle as much as possible. System users who login with a specific role should have easy access to system functionalities supporting their job tasks. The systems should also provide some basic tools to help system users to manage their workspace efficiently and effectively. System users should have access to some form of internal communication system independent of the normal electronic mail system. Additionally, integration between the former and the latter is important.

C.2.3. System User Account Management

The Technical Support Department personnel should be able to create system user accounts for different individuals and also to configure the necessary access rights based on the security policy outlined in sub-section C.2.1.

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C.3. Customer Relationship Management Sales Lead and Customer Module

This module should allow the two sales departments to create and manage sales leads in the ERP system. It should be possible to convert a sales lead into a customer or directly create a customer record. A new customer should be assigned to a dedicated customer executive from the appropriate sales department. Wholesales customers are mostly downstream distribution partners of Merlion. They can be either distributors, wholesalers or retailers. Major distributors could be given sole distributorship in a particular geographical regions and help Merlion to undertake local marketing campaigns. Direct sales customers are mostly end consumers of Merlions products such as caterers, outdoor training centers, gyms, etc. Direct sales customers typically place orders that are of smaller quantities compared to wholesales customers. Merlion currently does not have any plan to sell its H&W snack bars directly to retail consumers as it is not cost effective.

C.4. Customer Relationship Management Sales Order Processing Module

The module should be able to support two types of pre-sales activities for both sales leads and full customers. First, the system should be able to create a sales inquiry that lists the required products, quantities and the indicative prices. Second, the system should be able to create a formal quotation that lists the guaranteed prices within the quotation validity period. An indicative lead time must also be provided in the quotation. The system should be able to convert a sales inquiry into a quotation or to create a quotation directly. Purchase orders received from customers must always be matched to a valid quotation. Otherwise, they should be rejected. If a quotation is issued to a sales lead, the sales lead should be converted to a full customer upon receipt of a purchase order. Valid purchase orders are then used to create sales orders in the ERP system and tracked until payment has been completed. All sales orders must first undergo a credit check. Sales orders that fail credit check must be handled as exceptional cases and appropriate actions taken. Sales orders whose payment viability has been ascertained will then move on to inventory sourcing, in particularly the ATP check. If the sales order cannot be fulfilled by current inventory balance, a confirmed lead time must be obtained from the production planning department and then forward to the customer for approval. If the confirmed lead time is much longer than the indicative lead time stated in the quotation, the customer should be allowed to cancel the sales order without penalty. Once inventory sourcing is completed, including lead time approval from customer if applicable: 1. The sales order will be forwarded to the warehouse department for picking and packing if necessary. 2. A back order will be created and forwarded to the production planning department to adjust the MPS to fulfill the original sales order if necessary.

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3. Forwarded to the accounts receivable department to prepare for billing.

C.5. Finance Resource Management Credit Control Module

This module should allow Merlion to manage the credit of its customers. New customers are assessed for their credit worthiness and given a credit limit and default credit term. The system should also allow the accounts receivable department to monitor the credit limit, current balance and available credit for the customers. When cash-in-advance payments are received from customers, the system must track them carefully and update the respective customers current balance accordingly. Cash-in-advance payment should be recognized as actual payment only after the sales order has been delivered. If the sales order is cancelled, the cash-in-advancement payment should be refunded through the accounts payable department.

C.6. Finance Resource Management Billing and Payment Module

This module should allow the account receivable department to create the invoice for billing the customers after the sales order has been delivered. The system should also be able to support partial billing. For instance, a sales order might be fulfilled partially by current inventory balance and shipped to the customer first, while the outstanding quantities are being scheduled for production and to be shipped separately. In this case, the customer should be billed for the goods in the initial shipment. The system should also allow the account receivable department to record payments received from customers and to issue the receipts accordingly upon final clearance from the financial institutions. If an invoice has not been fully paid after the credit period, the system should inform the account receivable department and commence dunning actions.

C.7. Manufacturing Resource Planning Production Planning Module

This is a very complex module that should allow the production planning department to perform the entire production planning process depicted in Figure B.4. This module should be tightly integrated with the sales order processing module. For instance, the sales forecasting should be performed using historical sales figures obtained from the sales order processing module. In addition, demand management must also take into consideration any back orders created in the sales order processing module. The ATP check should also be well integrated with the sales order processing module. Merlions H&W snack bars division has a total of two production lines in its factory floor. The two production lines are capable of producing any types of snack bars. However, there is

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a 30 minutes changeover time to switch from producing one type of snack bars to another. The factory operates on two shifts: Daily normal shift is 9 hours 30 minutes with 1 hour lunch break and a 30 minutes end-of-shift clean up from 8:00 AM to 5:30 PM. o Each production line operates for 8 hours during the normal shift. Optional overtime shift is 4 hours 30 minutes with a 30 minutes end-of-shift clean up from 6:00 pm to 10:30 pm. o Each production line operates for 4 hours during the normal shift. If the production line changeover is done at the end of each shift, there will not be any loss in capacity. This is because the 30 minutes clean up time allocated at the end of each shift can be used to perform changeover. Merlions factory will operate on a 5 working days week starting on Monday. All official public holidays are considered as non-working days. The production and packing parameters of Merlions snack bars are listed in Table C.1.
Parameter Premium Power Bar Chocolate Redcurrant Nuts Fruits 50 g 66.6 g 200 bars 150 bars 600 kg or 12000 bars 600 kg or 9000 bars 24 bars per display box 20 bars per display box 10 display boxes per shipping 10 display boxes per shipping case case 240 bars per case 200 bars per case 50 cases 45 cases Nuts 30 minutes Classic Nutri Bar Fruits

Weight (per bar) Capacity (per minute) Capacity (per hour) Packing

Capacity (per hour in shipping case) Production Line Changeover

17 18 19 20 21 22 23 24 25 26 27 28 29

Table C.1 - Production and packing parameters of Merlions snack bars.

Merlions snack bars have a maximum shelf life of 12 months from the manufacturing date: It has a display until date that is 10 months from the manufacturing date. Retailers are required to remove any unsold snack bars after the display until date. It has an expiry date that is 11 months from the manufacturing date. The 1 month of shelf life between the display until date and the expiry date allows consumers sufficient time to consume the snack bars fresh. The final 1 months of shelf life after the expiry date provides a buffer for consumers to consume the snack bars safely.

To ensure that its downstream supply chain partners have sufficient time to distributes its snack bars and display them on shop shelves, Merlion ensures that all manufactured snack bars are kept in its warehouse for not more than 4 months. This policy gives its downstream supply chain partners a distribution and sales period of at least 6 months before the display until date is reached.

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The BOM for each 200 kg batch of snack bars is listed in Table C.2. The lead time (in weeks), shelf life (in months) and lot size (in respective unit) of the raw materials are listed in Table C.3. Ingredient Oats (kg) Wheat Germ (kg) Cinnamon (kg) Nutmeg (kg) Cloves (kg) Honey (l) Canola Oil (l) Vitamin/Mineral Powder (kg) Carob Chips (kg) Protein Powder (kg) Cocoa Powder (kg) Hazenuts (kg) Cashew Nuts (kg) Walnuts (kg) Almonds (kg) Macadamias (kg) Redcurrants (kg) Rasins (kg) Dates (kg) Apricots (kg) Kiwis (kg) Apples (kg) Peaches (kg)
Classic Nutri Bar Nuts Fruits Premium Power Bar Chocolate Nuts Redcurrant Fruits

100 20 2 1 0.5 5 3 2 20 15 15 15 10 10 Lead Time Shelf Life

100 20 2 1 0.5 5 3 2 10 5 5 20 15 10 10 10 10 Lot Size Ingredient

120 25 4 1.5 1 7 5 5 25 25 30 20 20 20 15 15 Lead Time

120 25 4 1.5 1 7 5 5 15 25 5 7 30 15 15 10 15 10 15
Shelf Life Lot Size

4 Ingredient

Table C.2 Bill of material for each 200 kg batch of Merlions snack bars.

Oats (kg) 2 12 100 Cashew Nuts (kg) 2 24 50 Wheat Germ (kg) 2 12 20 Walnuts (kg) 2 24 50 Cinnamon (kg) 2 12 20 Almonds (kg) 2 24 50 Nutmeg (kg) 2 12 20 Macadamias (kg) 2 24 50 Cloves (kg) 2 12 20 Redcurrants (kg) 3 6 50 Honey (l) 2 12 20 Rasins (kg) 1 12 50 Canola Oil (l) 2 12 20 Dates (kg) 1 12 50 Vitamin/Mineral 2 12 10 Apricots (kg) 3 6 50 Powder (kg) Carob Chips (kg) 2 12 20 Kiwis (kg) 3 6 50 Protein Powder (kg) 2 12 10 Apples (kg) 1 6 50 Cocoa Powder (kg) 1 24 20 Peaches (kg) 1 6 50 Hazenuts (kg) 2 24 50 Cashew Nuts (kg) 2 12 50 Table C.3 Lead time (in weeks), shelf life (in months) and lot size (in respective unit) of raw materials.

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C.8. Supply Chain Management Inventory Control Module

This module should allow the warehouse department to record inbound and outbound movements of completed goods and raw materials. Movement of raw materials from the warehouse to the production lines must also be properly accounted for. At any point in time, the warehouse department should be able to obtain real-time inventory information. This module needs to be tightly integrated with the sales order processing module to facilitate inventory sourcing and ATP check. The system should also allow the warehouse department to generate the required picking order, packing order and shipping order based on the sales order prepared by the sales departments. The shipping order will be used by the shipping department but arrangement of actual shipping may be assumed to be done offline.

C.9. Supply Chain Management Raw Material Purchasing Module

This module should be tightly integrated with the materials requirements planning process in the production planning module. The purchasing department should be able to retrieve the required MPR records and then generate the corresponding purchase orders. For the purpose of creating the purchase orders, this module should allow the purchasing department to maintain a list of raw materials suppliers.

D.

ATOMIC ASSESSMENT UNITS LIST

The list of AAUs and the credits assigned to each AAU are listed in table D.1 below. AAUs, whose numerical identifier (ID) is asterisked, are basic requirements that must be attempted. AAU ID AAU Name 1* Common Infrastructure Customer Relationship Management 2* Sales Lead and Customer Module 3* Sales Order Processing Module Finance Resource Management 4* Credit Control Module 5* Billing and Payment Module Manufacturing Resource Planning 6 Production Planning Module Supply Chain Management 7* Inventory Control Module 8 Raw Material Purchasing Module Grand Total AAU Credits 4 10 4 6 10 4 6 12 12 10 6 4 46

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Table D.1 List of AAUs.

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E.

REFERENCES

1. Monk, E. and Wagner, B., Concepts in Enterprise Resource Planning, Course Technology, Boston, MA, 2008. 2. Motiwalla, L. F. and Thompson, J., Enterprise Systems for Management, Prentice Hall, Upper Saddle River, NJ, 2009. 3. Summer, M., Enterprise Resource Planning, Prentice Hall, Upper Saddle River, NJ, 2005.

-- End of Project Specification (Part 2B) --

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