Data processing: financial – business practice – management – or co – Automated electrical financial or business practice or... – Operations research or analysis
Reexamination Certificate
2000-03-24
2003-12-30
Hafiz, Tariq R. (Department: 3623)
Data processing: financial, business practice, management, or co
Automated electrical financial or business practice or...
Operations research or analysis
Reexamination Certificate
active
06671673
ABSTRACT:
BACKGROUND OF THE INVENTION
1. Field of the Invention
The present invention generally relates to a method to assist senior management decision-making, and to closely monitor various performance measures of an entire enterprise. Specifically, the method relates to extending Supply Chain Management (SCM) using Financial Management (FM) considerations, as well as extending FM using SCM considerations. This is accomplished by employing a more comprehensive approach to maximizing profitability, and increasing revenue, and explicitly considering risk.
2. Background Description
Current methods for supply chain management (SCM) and financial management (FM) practice are incomplete. Supply chain management solutions focus on the goods and information flows, but neglect financial requirements. Financial management solutions focus on financial flows, but do not adequately incorporate supply chain management needs.
Businesses require complete solutions that integrate the supply chain and finance functions. Financial management considerations such as international taxes, foreign exchange risk management expense, and financing choices can be critical to supply chain decisions. Although they have no impact on traditional of supply chain performance measures such as logistics costs and cycle time, these financial management factors go straight to the bottom line, and can have a dramatic impact on a firm's financial performance. In some cases, companies have developed ad hoc systems linking supply chain management and financial planning activities. However, the effectiveness of these solutions has been constrained by limited sharing of information, and locally optimized decision-making.
The current state of the Supply Chain Management and Financial Management marketplace, the nature of existing software solutions, and the competitive position of key vendors is discussed below. Many academics and practitioners have attempted to bridge the gap between Supply Chain Management and Financial Management, but they have only been partially successful.
The Supply Chain Management and Financial Management Solutions Marketplace
Supply Chain solutions operate at three levels:
Execution level—Enterprise Resources Planning (ERP);
Planning level—Supply Chain Management (SCM); and
Strategic level—Strategic Enterprise, Systems (SES).
FIG. 1
shows the evolution of these solutions in the marketplace. Earlier solutions, i.e., circa 1985-1993, consisted of in-house solutions or material requirement planning and distribution requirement planning. These previous methods have failed to use information technology to integrate Supply Chain Management and Financial Management. They have also failed to exploit significant opportunities to improve financial performances by integrating Supply Chain Management and Financial Management. The early to mid-1990's saw a move to enterprise resource planning consisting of bookkeeping, automating traditional functional activities, and data integration. The late-1990's saw a further move toward advanced planning systems, or supply chain management which uses sophisticated and “intelligent” decision-support systems for different enterprise functions. A Strategic Enterprise Systems (SES), which is the subject of the present invention, does not yet exist in state of the art systems.
The degree of integration in current offerings is very good at the execution level. It spans a wide range of functions, from human resources (HR) to plant operations. However, only sparse integration at the planning level exists, today.
The current trends in business application software development are toward custom software, developed in-house; commercial products marketed by function (scheduling software, accounting software, etc.); integrated suites and niche product. However, a complete integrated solution does not yet exist. Key industry trends include:
De facto linkages between enterprise resource planning (ERP) and SCM where SCM vendors have aligned their applications with dominant ERP systems to facilitate integration;
Vertical Focus where product and marketing strategies focus on market segments and niches;
Increasing industry consolidation through mergers and acquisitions; key ERP vendors are acquiring new expertise and product offerings to enter the lucrative SCM market; but the market is still fragmented; and
Increasing solution integration where ERP vendors are pursuing a product bundling strategy, linking planning and decision support tools with their ERP products, and current industry strategy, according to AMR Research, Inc. of Boston, Mass., calls for vendors to integrate their product suites to serve as backbones to support real-time supply chain decision-making.
ERP systems are currently available from SAP AG of Walldorf, Germany (R/3™); Oracle Corporation of Redwood City, Calif. (Oracle Discrete Manufacturing, Oracle Flow Manufacturing); Baan Company NV of Hemdon, Va. (BaanERP, Baan Supply Chain Solutions), PeopleSoft, Inc. of Pleasonton, Calif. (PeopleSoft Supply Chain Planning, PeopleSoft Production Management), and J. D. Edwards and Company of Denver Colo. (J. D. Edwards Manufacturing Suite, J. D. Edwards Logistics/Distribution Suite, J. D. Edwards Financial Suite).
SCM systems are currently available from I
2
technologies of Irving, Tex. (Rhythm™), Manugistics Group, Inc. of Rockville, Md. (The NetWORKS™ Solution Set), SAP AG, Oracle Corp. (Oracle Applications Release Financials), Baan Company NV, and ILOG SA of Mountain View, Calif. (ILOG Optimization Suite).
ERP products for Financial Management are available from SAP, Oracle, PeopleSoft, J. D. Edwards, and Baan.
Current accounting solutions are capable of the following:
General Ledger—Central repository of accounting transactions;
Accounts Receivable and Payable—Tracks customer sales and receipts, and vendor purchases and payments;
Asset Accounting—Tracks fixed assets;
Funds Management—Tool for planning, managing and monitoring a firm's funds; and
Activity-based costing—Monitors and controls costs of cross-departmental business processes, functions and products.
Current financial management solutions are capable of the following:
Profitability analysis—Analyzes sources of profits. Revenues are matched with costs by market segment, or other business rules. Critical decision support tool for product pricing, customer selection, targeting distribution channels, etc.;
Corporate-wide budgeting—Investment planning and budgeting for the entire enterprise. Tracks available budgets, and compares planned and incurred costs;
Cash Management—Provides information on sources and uses of funds to ensure liquidity to meet payment obligations. Supplies data for managing short-term investments and borrowing;
Treasury Management—Manages the treasury function, including foreign exchange and electronic funds transfers;
Loan Management—Automates loan-manage process, and tracks interest and repayment terms; and
Risk Management—A set of tools to monitor and assess risk, usually using value-at-risk measures.
Academic research to date has tended to focus on highly specialized or niche subjects. A vast literature exists on specific supply chain management subjects such as optimizing inventory policies, network design, routing schemes, and resource allocation. There has been an accelerating trend towards applying academic research results to the practice of corporate management. Researchers and practitioners, in particular in the Operations Management/Operations Research (OM/OR) community, have developed a framework, under the rubric of SCM, to link these various fields. Historically, they have focused on the operational side of a company's activities. From a theoretical standpoint, integration of different aspects of SCM, even on the operations side, is still in its infancy. This is due mainly to a legacy problem: many well known and widely used results would have to be revised to support integration. Furthermore, the mathematical difficulties involved in integration can be non-trivial.
On the finance side, there is a large body
Baseman Robert
Grey William
Hafiz Tariq R.
Kaufman Stephen C.
Meinecke-Díaz Susanna
Whitham Curtis & Christofferson, P.C.
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