CHAPTER 9

Process Integration

LEARNING OBJECTIVES

After completing this chapter you will be able to:

  1. Define process integration, and explain why this concept is fundamental to modern business operations.
  2. Explain how the procurement, fulfillment, and IWM processes interact when a company fills a customer order for trading goods.
  3. Identify and discuss the various integration points among the procurement, fulfillment, production, and warehouse management processes.
  4. Analyze the financial and material impacts of the various steps in the integrated processes.

In Chapter 1 we introduced the key processes in organizations in simple terms. In Chapters 38 we examined six processes in detail:

  • Financial accounting
  • Procurement
  • Fulfillment
  • Production
  • Inventory and warehouse management
  • Material planning.

In addition, we briefly discussed management accounting concepts in several chapters. At this point, then, you should have a clear understanding of the triggers, data, tasks, and outcomes of these processes.

In Chapter 1 we also introduced the concept of process integration, which posits that the various processes are interdependent, so that steps in one process almost inevitably impact steps in other processes. For example, the material planning process generates planned orders and purchase requisitions, which in turn trigger the production and procurement processes, respectively. We illustrated process integration in Figure 1-3, which is reproduced in Figure 9-1.

Figure 9-1: Integrated ...

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