1 EVOLUTION OF MANAGEMENT AND ENTERPRISE SYSTEMS

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EVOLUTION OF EVOLUTION OF MANAGEMENT AND MANAGEMENT AND

ENTERPRISE ENTERPRISE SYSTEMSSYSTEMS

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17761776Adam Smith publishedAdam Smith published““The Wealth of NationsThe Wealth of Nations”.”.In this, he suggested the In this, he suggested the specialization of labor as a way specialization of labor as a way for workers to achieve greater for workers to achieve greater productivity. Smith's ideas productivity. Smith's ideas suggested efficiency could best suggested efficiency could best be achieved by breaking large be achieved by breaking large jobs down into small tasks which jobs down into small tasks which could be performed repetitively.could be performed repetitively.

Adam SmithAdam Smith(1(1723723 – – 11790790))

http://upload.wikimedia.org/http://upload.wikimedia.org/

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1820s1820sThe railroad companies The railroad companies introduced bureaucracies to introduced bureaucracies to avoid collisions on single-avoid collisions on single-track lines – formal operating track lines – formal operating procedures, centralized procedures, centralized management and a rule for management and a rule for every contingency.every contingency.

This was the forerunner of This was the forerunner of the command-and-control the command-and-control system still in use today – system still in use today – where there are workers and where there are workers and supervisors to keep things supervisors to keep things organized.organized.

http://www.thedailyrecruiter.com/http://www.thedailyrecruiter.com/

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EARLY XX CENTURYEARLY XX CENTURYTaylor was a mechanical engineer Taylor was a mechanical engineer who sought to improve industrial who sought to improve industrial efficiency. efficiency. He He is regarded as the father is regarded as the father of scientific management, and was of scientific management, and was one of the first management one of the first management consultants.consultants.

““It is onlyIt is only t throughhrough enforcedenforced standardizationstandardization of methods,of methods, enforcedenforced adoptionadoption ofof thethe bestbest implementsimplements and and workingworking conditions,conditions, andand enforcedenforced cooperationcooperation thatthat thisthis faster work can faster work can be assured. And the duty of enforcing be assured. And the duty of enforcing the adoption of standards and the adoption of standards and enforcing this cooperation rests withenforcing this cooperation rests with managementmanagement alone alone””

Frederick Winslow TaylorFrederick Winslow Taylor(1856 (1856 – – 1915)1915)

http://www.stevens.edu/http://www.stevens.edu/

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SCIENTIFIC MANAGEMENTSCIENTIFIC MANAGEMENTThe main elements of the Scientific Management are:The main elements of the Scientific Management are: Time studiesTime studies Functional or specialized supervisionFunctional or specialized supervision Standardization of tools and implementsStandardization of tools and implements Standardization of work methodsStandardization of work methods SeparateSeparate Planning functionPlanning function Management by exception principleManagement by exception principle The use of The use of ““slide-rules and similar time-saving devicesslide-rules and similar time-saving devices”” Instruction cards for workmenInstruction cards for workmen Task allocation and large bonus for successful performanceTask allocation and large bonus for successful performance The use of the The use of the ““differential ratedifferential rate”” Mnemonic systems for classifying products and implementsMnemonic systems for classifying products and implements A routing systemA routing system A modern costing systemA modern costing system

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SCIENTIFIC MANAGEMENTSCIENTIFIC MANAGEMENTTaylor called these elements Taylor called these elements ““merely the elements or details of merely the elements or details of the mechanisms of managementthe mechanisms of management”.”. He saw them as extensions of He saw them as extensions of the four principles of management.the four principles of management.

1.1. The development of a true scienceThe development of a true science

2.2. The scientific selection of the workmanThe scientific selection of the workman

3.3. The scientific education and development of the workmanThe scientific education and development of the workman

4.4. Intimate and friendly cooperation between the management Intimate and friendly cooperation between the management and the menand the men

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EARLY XX CENTURYEARLY XX CENTURYHenry Gantt's legacy to production Henry Gantt's legacy to production management:management: The Gantt chartThe Gantt chart sstill accepted as till accepted as

an important management tool, it an important management tool, it provides a graphic schedule for provides a graphic schedule for the planning and controlling of the planning and controlling of work, and recording progress work, and recording progress towards stages of a projecttowards stages of a project..

Industrial efficiencyIndustrial efficiency can only be can only be produced by the application of produced by the application of scientific analysis to all aspects of scientific analysis to all aspects of the work in progress.the work in progress.The industrial management role is The industrial management role is to improve the system by to improve the system by eliminating chanceeliminating chance of of accidents. accidents.

Henry Laurence Gantt Henry Laurence Gantt (18(186161 – – 19119199))

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EARLY XX CENTURYEARLY XX CENTURY The Task And Bonus SystemThe Task And Bonus System –– hhe e

linked the bonus paid to managers linked the bonus paid to managers to how well they taught their to how well they taught their employees to improve employees to improve performanceperformance..

The social responsibility of The social responsibility of businessbusiness –– hhe believed that e believed that businesses have obligations to the businesses have obligations to the welfare of the society in which welfare of the society in which they operatethey operate..

Henry Laurence Gantt Henry Laurence Gantt (18(186161 – – 19119199))

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GANTT CHART SAMPLEGANTT CHART SAMPLE

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EARLY XX CENTURYEARLY XX CENTURYHenry FordHenry Ford introduced the assembly line – workers performed one introduced the assembly line – workers performed one tiny step in a complex process where the work is brought to the tiny step in a complex process where the work is brought to the worker rather than the other way around – while Alfred Sloan worker rather than the other way around – while Alfred Sloan created small, decentralized management teams for GM so that created small, decentralized management teams for GM so that huge, sprawling operations could be managed efficiently.huge, sprawling operations could be managed efficiently.

http://omega.kz/http://omega.kz/

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MIDDLE OF XX CENTURYMIDDLE OF XX CENTURYIndustrial engineeringIndustrial engineering is a branch of engineering dealing with the is a branch of engineering dealing with the optimization of complex processes or systems. It is concerned optimization of complex processes or systems. It is concerned with the development, improvement, implementation and with the development, improvement, implementation and evaluation of integrated systems of people, money, knowledge, evaluation of integrated systems of people, money, knowledge, information, equipment, energy, materials, analysis and synthesis, information, equipment, energy, materials, analysis and synthesis, as well as the mathematical, physical and social sciences together as well as the mathematical, physical and social sciences together with the principles and methods of engineering design to specify, with the principles and methods of engineering design to specify, predict, and evaluate the results to be obtained from such predict, and evaluate the results to be obtained from such systems or processes.systems or processes.

Its underlying concepts overlap considerably with certain Its underlying concepts overlap considerably with certain business-oriented disciplines such as operations management.business-oriented disciplines such as operations management.

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MIDDLE OF XX CENTURYMIDDLE OF XX CENTURYOperational researchOperational research encompasses a wide range of problem- encompasses a wide range of problem-solving techniques and methods applied in the pursuit of improved solving techniques and methods applied in the pursuit of improved decision-making and efficiency, such as simulation, mathematical decision-making and efficiency, such as simulation, mathematical optimization, queueing theory and other stochastic-optimization, queueing theory and other stochastic-pprocessrocess models, Markov decision processes, econometric methods, data models, Markov decision processes, econometric methods, data envelopment analysis, neural networks, expert systems, decision envelopment analysis, neural networks, expert systems, decision analysis, and the analytic hierarchy process. Nearly all of these analysis, and the analytic hierarchy process. Nearly all of these techniques involve the construction of mathematical models that techniques involve the construction of mathematical models that attempt to describe the system.attempt to describe the system.

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6060S OF XX CENTURYS OF XX CENTURY

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MAINFRAME OF 1960sMAINFRAME OF 1960s

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191960s60sMATERIAL REQUIREMENTS PLANNINGMATERIAL REQUIREMENTS PLANNING

Material Requirements Planning Material Requirements Planning (MRP)(MRP) is a time phased priority-is a time phased priority-planning technique that calculates material requirements and planning technique that calculates material requirements and schedules supply to meet demand across all products and partsschedules supply to meet demand across all products and partsin one or more plants.in one or more plants.

MRP techniques focus on optimizing inventory.MRP techniques focus on optimizing inventory.

MRP techniques are used to explode bills of material, to calculate MRP techniques are used to explode bills of material, to calculate net material requirements and plan future production.net material requirements and plan future production.

Information Technology plays a major role in designing and Information Technology plays a major role in designing and implementing implementing MRP MRP systems and processes as it provides systems and processes as it provides information about manufacturing needs (linked with customer information about manufacturing needs (linked with customer demand) as well as information about inventory levels.demand) as well as information about inventory levels.

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MATERIAL REQUIREMENTS MATERIAL REQUIREMENTS PLANNINGPLANNING

MRP systems provide answers for several questions:MRP systems provide answers for several questions: WhatWhat items are required? items are required? How manyHow many are required? are required? WhenWhen are they required? are they required?

The main theme of MRP is “getting the right materials to the right The main theme of MRP is “getting the right materials to the right place at the right time”.place at the right time”.

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TRADITIONAL COMPONENTS OF TRADITIONAL COMPONENTS OF MRP SYSTEMSMRP SYSTEMS

the master production schedule, which describes when each the master production schedule, which describes when each product is scheduled to be manufacturedproduct is scheduled to be manufactured

bill of materials, which lists exactly the parts or materials bill of materials, which lists exactly the parts or materials required to make each productrequired to make each product

production cycle times and material needs at each stage of the production cycle times and material needs at each stage of the production cycle timeproduction cycle time

supplier lead timessupplier lead times

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ALGORITHM OF MRP SYSTEMSALGORITHM OF MRP SYSTEMS

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APPLYING OF MRP SYSTEMSAPPLYING OF MRP SYSTEMSMRP is being used in a variety of industries MRP is being used in a variety of industries where where number of number of products are made in batches using the same productive products are made in batches using the same productive equipment.equipment.

MRP is most valuable to companies involved in assembly MRP is most valuable to companies involved in assembly operations and least valuable to those in fabrication.operations and least valuable to those in fabrication.

MRP does not work well in companies that produce a low number MRP does not work well in companies that produce a low number of units annually. Especially for companies producing complex of units annually. Especially for companies producing complex expensive products requiring advanced research and design. expensive products requiring advanced research and design. Experience has shown that lead times tend to be too long and too Experience has shown that lead times tend to be too long and too uncertain, and the product configuration too complex for MRP to uncertain, and the product configuration too complex for MRP to handle. Such companies need the control features that network-handle. Such companies need the control features that network-scheduling techniques offer.scheduling techniques offer.

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INDUSTRY APPLICATIONS AND INDUSTRY APPLICATIONS AND EXPECTED BENEFITS OF MRPEXPECTED BENEFITS OF MRP

Industry TypeIndustry Type ExamplesExamples Expected Expected BenefitsBenefits

Assemble-to-Assemble-to-stockstock

Combines multiple component Combines multiple component parts into a finished product, which parts into a finished product, which is then stocked in inventory to is then stocked in inventory to satisfy customer demand. satisfy customer demand. Examples: watches, tools, Examples: watches, tools, appliances.appliances.

HighHigh

Fabricate-to-Fabricate-to-stockstock

Items are manufactured by Items are manufactured by machine rather than assembled machine rather than assembled from parts. These are standard from parts. These are standard stock items carried in anticipation of stock items carried in anticipation of customer demand. Examples: customer demand. Examples: piston rings, electrical switches.piston rings, electrical switches.

LowLow

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Assemble-to-Assemble-to-orderorder

A final assembly is made from A final assembly is made from standard options that the customer standard options that the customer chooses. Examples: trucks, chooses. Examples: trucks, generators, motors.generators, motors.

HighHigh

Fabricate-to-Fabricate-to-orderorder

Items manufactured by machine to Items manufactured by machine to customer order. These are generally customer order. These are generally industrial orders. Examples: industrial orders. Examples: bearings, gears, fasteners.bearings, gears, fasteners.

LowLow

Manufacture-to-Manufacture-to-orderorder

Items fabricated or assembled Items fabricated or assembled completely to customer machine completely to customer machine tools. Examples: turbine generators, tools. Examples: turbine generators, heavy machine tools.heavy machine tools.

HighHigh

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ProcessProcess

Industries such as foundries, Industries such as foundries, rubber and plastics, speciality rubber and plastics, speciality paper, chemicals, paint, drug, food, paper, chemicals, paint, drug, food, processors.processors.

MediumMedium

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REQUARIMENTS FOR REQUARIMENTS FOR IMPLEMENTATION OF A MRP SYSTEMIMPLEMENTATION OF A MRP SYSTEM

Availability of a computer based manufacturing system is a Availability of a computer based manufacturing system is a must. Although it is possible to obtain material requirements must. Although it is possible to obtain material requirements plan manually, it would be impossible to keep it up to date plan manually, it would be impossible to keep it up to date because of the highly dynamic nature of manufacturing because of the highly dynamic nature of manufacturing environments.environments.

A feasible master production schedule must be drawn up, or A feasible master production schedule must be drawn up, or else the accumulated planned orders of components might else the accumulated planned orders of components might “bump” into the resource restrictions and become infeasible.“bump” into the resource restrictions and become infeasible.

The bills of material should be accurate. It is essential to update The bills of material should be accurate. It is essential to update them promptly to reflect any engineering changes brought to them promptly to reflect any engineering changes brought to the product. If a component part is omitted from the bill of the product. If a component part is omitted from the bill of material it will never be ordered by the system.material it will never be ordered by the system.

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REQUARIMENTS FOR REQUARIMENTS FOR IMPLEMENTATION OF A MRP SYSTEMIMPLEMENTATION OF A MRP SYSTEM

Inventory records should be a precise representation of reality, Inventory records should be a precise representation of reality, or else the netting process and the generation of planned or else the netting process and the generation of planned orders become meaningless.orders become meaningless.

Lead times for all inventory items should be known and given to Lead times for all inventory items should be known and given to the MRP system.the MRP system.

Shop floor discipline is necessary to ensure that orders are Shop floor discipline is necessary to ensure that orders are processed in conformity with the established priorities. processed in conformity with the established priorities. Otherwise, the lead times passed to MRP will not materialize.Otherwise, the lead times passed to MRP will not materialize.

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191970s70sMANUFACTURING RESOURCEMANUFACTURING RESOURCE PLANNING PLANNING

Manufacturing ResourceManufacturing Resource Planning Planning (MRP II)(MRP II) is a computer based is a computer based planning and scheduling system designed to improve planning and scheduling system designed to improve management’s control of manufacturing and its support functions.management’s control of manufacturing and its support functions.

MRP MRP II II systems provide answers for several questions:systems provide answers for several questions: What What necessary to producenecessary to produce?? What necessary to have for that?What necessary to have for that? What is availableWhat is available?? What must be purchasedWhat must be purchased??

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LOGIC OF MRP II SYSTEMSLOGIC OF MRP II SYSTEMS

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1.1. Sales and Operation PlanningSales and Operation Planning2.2. Demand ManagementDemand Management3.3. Master Production SchedulingMaster Production Scheduling4.4. Material Requirement PlanningMaterial Requirement Planning5.5. Bill of MaterialsBill of Materials6.6. Inventory Transaction SubsystemInventory Transaction Subsystem7.7. Scheduled Receipts SubsystemScheduled Receipts Subsystem8.8. Shop Flow ControlShop Flow Control9.9. Capacity Requirement PlanningCapacity Requirement Planning10.10. InputInput//output controloutput control11.11. PurchasingPurchasing12.12. Distribution Resource PlanningDistribution Resource Planning13.13. Tooling Planning and ControlTooling Planning and Control14.14. Financial PlanningFinancial Planning15.15. SimulationSimulation16.16. Performance MeasurementPerformance Measurement

MODULES OFMODULES OF MRP II SYSTEMSMRP II SYSTEMS

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TWO-TIERTWO-TIERSOFTWARE ARCHITECTURESOFTWARE ARCHITECTURE

http://www.softwaretestingclass.com/http://www.softwaretestingclass.com/

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TERMINAL OF 19TERMINAL OF 19880s0s

http://upload.wikimedia.org/http://upload.wikimedia.org/

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1980s TREE-TIER1980s TREE-TIERSOFTWARE ARCHITECTURESOFTWARE ARCHITECTURE

Liaquat Hossain, Mohammad A. Rashid, Jon David Patrick. (2002). Liaquat Hossain, Mohammad A. Rashid, Jon David Patrick. (2002). Enterprise Resource Enterprise Resource Planning: Global Opportunities and ChallengesPlanning: Global Opportunities and Challenges. London, Hershey: Idea Group . London, Hershey: Idea Group Publishing.Publishing.

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1.1. Presentation LayerPresentation Layer: Graphical : Graphical UUser ser IInterface (GUI) or browser nterface (GUI) or browser for data entry or accessing system functionsfor data entry or accessing system functions

2.2. Application LayerApplication Layer: Business rules, functions, logic, and : Business rules, functions, logic, and programs acting on data received/transferred from/to the programs acting on data received/transferred from/to the database serversdatabase servers

3.3. Database LayerDatabase Layer: Management of the organization's operational : Management of the organization's operational or transactional data including metadataor transactional data including metadata((in most cases Rin most cases Relationalelational D Database atabase MManagement anagement DDystemystem (RDBMSRDBMS)) with with SStructured tructured QQuery uery LLanguage (SQL)anguage (SQL)))

TREE-TIERTREE-TIERSOFTWARE ARCHITECTURESOFTWARE ARCHITECTURE

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www.linkedin.comwww.linkedin.com

1990s ENTERPRISE RESOURCE 1990s ENTERPRISE RESOURCE PLANNINGPLANNING

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TYPICAL STRUCTURE OFTYPICAL STRUCTURE OFAN ERP SYSTEMAN ERP SYSTEM

Executive Executive Information Information Systems Systems

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THE WAYS OF SUPPORTING AN THE WAYS OF SUPPORTING AN ORGANIZATION BY ERP SYSTEMSORGANIZATION BY ERP SYSTEMS

support organizations by integrating information flows (such as support organizations by integrating information flows (such as customer information, financial and accounting information, customer information, financial and accounting information, human resources information, and supply chain information) human resources information, and supply chain information) and making it available to the entire organizationand making it available to the entire organization

integrate diverse primary business activities, functions, integrate diverse primary business activities, functions, processes, tasks, and work flows (such as accounting, finance, processes, tasks, and work flows (such as accounting, finance, and procurement) as well as secondary activities with primary and procurement) as well as secondary activities with primary activities (such as inventory management)activities (such as inventory management)

serveserverr as a common data repository (master data) for as a common data repository (master data) for organizations (a data repository for an organization is that it organizations (a data repository for an organization is that it may define the format of the data, which makes communication may define the format of the data, which makes communication and interpretation of easier)and interpretation of easier)

specify how organizations should conduct their business based specify how organizations should conduct their business based on a best business practice reference modelon a best business practice reference model

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THE WAYS OF SUPPORTING AN THE WAYS OF SUPPORTING AN ORGANIZATION BY ERP SYSTEMSORGANIZATION BY ERP SYSTEMS

reduce the number of logical computer based information reduce the number of logical computer based information systems and replace old legacy systemssystems and replace old legacy systems

deliver functionality per se – the core business processes deliver functionality per se – the core business processes (such as sales and marketing, procurement, and production) (such as sales and marketing, procurement, and production) and support processes (such as controlling, human resource, and support processes (such as controlling, human resource, and finance) of an enterpriseand finance) of an enterprise..

To achieve these benefits from an ERP implementation, To achieve these benefits from an ERP implementation, organizational changes are required, which are prompted by organizational changes are required, which are prompted by business process reengineering, organizational transition to an business process reengineering, organizational transition to an ERP system, retraining of entire departments, job redefinition, and ERP system, retraining of entire departments, job redefinition, and transformation of core processes.transformation of core processes.ERP systems are often thereby assumed to be a technology, ERP systems are often thereby assumed to be a technology, since organizations have to align their business process to the since organizations have to align their business process to the embedded business processes representing best practice, which embedded business processes representing best practice, which are assumed to generate organizational change.are assumed to generate organizational change.

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AAdvanced dvanced PPlanning and lanning and SScheduling (APS)cheduling (APS)

BBusiness usiness IIntelligence (BI)ntelligence (BI) e-e-BBusiness usiness CCapabilitiesapabilities

Enterprise resource Enterprise resource planning (ERP)planning (ERP)

SSupply upply CChain hain MManagementanagement (SCM) (SCM)

CCustomer ustomer RRelationship elationship MManagementanagement (CRM) (CRM)

SSales force automation ales force automation (SFA)(SFA)

http://www.newfranchisemall.com/http://www.newfranchisemall.com/

WEB BASEDWEB BASEDSOFTWARE ARCHITECTURESOFTWARE ARCHITECTURE

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https://cloudhcm.files.wordpress.comhttps://cloudhcm.files.wordpress.com

XXI CENTURY – SERVICE ORIENTED XXI CENTURY – SERVICE ORIENTED SOFTWARE ARCHITECTURESOFTWARE ARCHITECTURE

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1 EVOLUTION OF MANAGEMENT AND ENTERPRISE SYSTEMS