IE 101-Industrial Engineering Orientation Fall 2009 Lecture on Information Systems and Technology Prof.Dr.Taner ALTUNOK

IE 101-Industrial Engineering OrientationFall 2009

Lecture on Information Systems and Technology

Prof.Dr.Taner ALTUNOK

1.2 © 2006 by Prentice Hall

1Chapter

ManagManagement of ement of the the Digital FirmDigital Firm

ManagManagement of ement of the the Digital FirmDigital Firm


Management Information SystemsManagement Information SystemsChapter 1 Managing the Digital FirmChapter 1 Managing the Digital Firm

• IT is the largest single component of capital investment in the United States.

• About $1.8 trillion is spent each year by American businesses.

• Managers and business students need to know how to invest this capital wisely.

• The success of your business in the future may well depend on how you make IT investment decisions.

Capital Management: Capital Management:

WHY INFORMATION SYSTEMS?



Information Technology Capital Investment Information Technology Capital Investment

Figure 1-1


Source: Based on the data in U.S. Department of Commerce, Bureau of Economic Analysis, National Income and Product Accounts, Tables 5.2 and 5.8, 2004.



• Most businesses today could not operate without Most businesses today could not operate without extensive use of information systems and extensive use of information systems and technologies.technologies.

• IT can increase market share.IT can increase market share.

• IT can help a business become a high-quality, IT can help a business become a high-quality, low-cost producer.low-cost producer.

• IT is vital to the development of new products. IT is vital to the development of new products.

Foundation of doing business:Foundation of doing business:




The Interdependence between Organizations andThe Interdependence between Organizations andInformation Systems Information Systems

Figure 1-2




• IT is one of the most important tools managers have to increase productivity and efficiency of businesses.

• According to the Federal Reserve Bank, IT has reduced the rate of inflation by 0.5 to 1% in the last decade. For firms this means IT is a major factor in reducing costs.

• It is estimated that IT has increased productivity in the economy by about 1% in the last decade. For firms this means IT is a major source of labor and capital efficiency.


Productivity:



• Create competitive advantage: IT makes it possible to develop competitive advantages.

• New Business Models: Dell Computer has built its competitive advantage on an IT enabled build-to-order business model that other firms have not been able to imitate.


Strategic Opportunity and Advantage:



• Create new services: eBay has developed the largest auction trading platform for millions of individuals and businesses. Competitors have not been able to imitate its success.

• Differentiate yourself from your competitors: Amazon has become the largest book retailer in the United States on the strength of its huge online inventory and recommender system. It has no rivals in size and scope.


Strategic Opportunity and Advantage:



The Growth of the Information Economy

Figure 1-3


Source: U.S. Department of Commerce, Bureau of the Census, Statistical Abstract of the United States, 2003, Table 615; and Historical Statistics of the United States, Colonial Times to 1970, Vol. 1, Series D, pp. 182-232.



• Digitally enabled relationships with customers, suppliers, and employees

• Core business processes accomplished using digital networks

• Digital management of key corporate assets


Emergence of the Digital Firm:



• Agile sensing and responding to environmental changes

• Seamless flow of information within the firm, and with strategic partners


Emergence of the Digital Firm (Continued):



The Emerging Digital Firm The Emerging Digital Firm

Figure 1-4



PERSPECTIVES ON INFORMATION SYSTEMS


What Is an Information System?

Technology perspective:Technology perspective: A set of interrelated

components that collect (or retrieve), process, store,

and distribute information to support decision

making and control in an organization




What is an Information System? (Continued)

• Data: Streams of raw facts representing events such as business transactions

• Information: Clusters of facts meaningful and useful to human beings in the processes such as making decisions




Data and Information

Figure 1-5




Functions of an Information System

Figure 1-6



• Rely on computer hardware and software Rely on computer hardware and software

• Processing and disseminating informationProcessing and disseminating information

• Fixed definitions of data and proceduresFixed definitions of data and procedures

• Collecting, storing, and using informationCollecting, storing, and using information


Computer-Based Information System (CBIS)




The Business Information Value Chain

Figure 1-7




Information Systems Are More than Computers

Figure 1-8



• Sales and marketingSales and marketing

• ManufacturingManufacturing

• FinanceFinance

• AccountingAccounting

• Human resourcesHuman resources


Major Business Functions Rely on Information Systems



• Hardware:Hardware: Physical equipment Physical equipment

• Software:Software: Detailed preprogrammed instructions Detailed preprogrammed instructions

• Storage:Storage: Physical media for storing data and the Physical media for storing data and the softwaresoftware


Information technology is one of the tools managers Information technology is one of the tools managers use to cope with change:use to cope with change:

The Technology Dimension of Information Systems



• Communications technology:Communications technology: Transfers data Transfers data from one physical location to anotherfrom one physical location to another

• Networks:Networks: Links computers to share data or Links computers to share data or resourcesresources


The Technology Dimension of Information Systems (Continued)

Managers need to know enough about information Managers need to know enough about information technology to make intelligent decisions about how to technology to make intelligent decisions about how to use it for creating business value.use it for creating business value.




Variation in Returns on Information Technology Investment

Figure 1-9

Source: Based on Erik Brynjolfsson and Lorin M. Hitt, “Beyond Computation: Information Technology, Organizational Transformation and Business Performance.” Journal of Economic Perspectives 14, no. 4 (Fall 2000). Used with permission of the American Economic Association.


2Chapter

Information Information

Systems in theSystems in the

EnterpriseEnterprise

Information Information

Systems in theSystems in the

EnterpriseEnterprise


Management Information SystemsManagement Information SystemsChapter 2 Information Systems in the EnterpriseChapter 2 Information Systems in the Enterprise

MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS

Decision-Support Systems (DSS)

Management level

• Inputs: Transaction level data

• Processing: Interactive

• Outputs: Decision analysis

• Users: Professionals, staff

Example: Contract cost analysis



MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS

Decision-Support Systems (DSS) (Continued)Voyage-estimating decision-support system

Figure 2-7



SYSTEMS FROM A FUNCTIONAL PERSPECTIVE

Manufacturing and Production Systems

Major functions of systems: • Scheduling, purchasing, shipping, receiving,

engineering, operations

Major application systems: • Materials resource planning systems, purchase

order control systems, engineering systems, quality control systems




SYSTEM DESCRIPTION ORGANIZATIONAL LEVEL

Machine control

Control the actions of machines and equipment

Operational

Production planning

Decide when and how many products should be produced

Management

Facilities location

Decide where to locate new production facilities

Strategic

Manufacturing and Production Systems



Overview of an Inventory System

Figure 2-10




Business Processes and Information Systems

Cross-Functional Business Processes: Cross-Functional Business Processes:

• Transcend boundary between sales, marketing, Transcend boundary between sales, marketing, manufacturing, and research and developmentmanufacturing, and research and development

• Group employees from different functional Group employees from different functional specialties to a complete piece of workspecialties to a complete piece of work

Example: Order Fulfillment ProcessExample: Order Fulfillment Process

INTEGRATING FUNCTIONS AND BUSINESS PROCESSES: Introduction to Enterprise Applications



The Order Fulfillment Process

Figure 2-12




Systems for Enterprise-Wide Process Integration

Enterprise applications: • Designed to support organization-wide process Designed to support organization-wide process

coordination and integrationcoordination and integration



Consist of Consist of :

• Enterprise systems

• Supply chain management systems

• Customer relationship management systems

• Knowledge management systems


Systems for Enterprise-Wide Process Integration (Continued)




Enterprise Systems

• Enterprise systems, also known as enterprise Enterprise systems, also known as enterprise resource planning (ERP) systems, provide a resource planning (ERP) systems, provide a single information system for organization-wide single information system for organization-wide coordination and integration of key business coordination and integration of key business processes.processes.

• Information that was previously fragmented in Information that was previously fragmented in different systems can seamlessly flow different systems can seamlessly flow throughout the firm so that it can be shared by throughout the firm so that it can be shared by business processes in manufacturing, business processes in manufacturing, accounting, human resources, and other areas.accounting, human resources, and other areas.




Enterprise Application Architecture

Figure 2-13




Traditional “Silo” View of Information Systems

Within the business:Within the business: • There are functions, each having its uses of There are functions, each having its uses of

information systemsinformation systems

Outside the organization’s boundaries:Outside the organization’s boundaries: • There are customers and vendorsThere are customers and vendors

Functions tend to work in isolationFunctions tend to work in isolation




Traditional View of Systems

Figure 2-14




Enterprise Systems

Figure 2-15




Benefits of Enterprise Systems

• Help to unify the firm’s structure and Help to unify the firm’s structure and organization:organization: One organization One organization

• Management:Management: Firm wide knowledge-based Firm wide knowledge-based management processesmanagement processes

• Technology:Technology: Unified platform Unified platform

• Business:Business: More efficient operations & customer- More efficient operations & customer-driven business processesdriven business processes



Mago.NetBOM and Basic Manufacturing


Mago.Net – BOM

What is a BOM

Studying BOM head fields

Studying the BOM component tab

Studying operations

The BOM costing

The Production Plan

The Production run and confirmation

Lots management

BOMs in sale documents


The BOM is a list of particulars or parts or semifinished that form an assembly.

The assembly means a finished product or a big part of it.

Normally this list contains further information to allow its employment for different purposes.

In manufacturing we usually represent the process plant with the Bill Of Material of any product. This means defining the intermediate steps in which “SEMIFINISHED” are identified.

BILL OF MATERIALS

D E

B

F G

C

A


Studying BOM head fields

The BOM type can be an inventory item or a phantom.


• The production plan is a document that describes for each item quantities to produce.

Sales OrdersInventory

Requirements

PRODUCTION PLAN

The Production Plan


The Production Plan

… otherwise, it is possible to create the Production Plan manually.


What can be done with the Basic Manufacturing

BOM peculiarity with the Basic Manufacturing

Progress Manufacturing

The material picking

Lots management

Confirmation

Procedures to edit in progress processings

Lots management

Subcontracting

Purchase orders for external processing

Delivery notes

Bills of Lading

Mago.Net Basic Manufacturing


MANUFACTURING ORDER

Production Plan

Manufacturing Orders

BOMs entered in the Production Plan are expanded and a manufacturing order for each finished product or semifinished (for each level of the BOM) is generated.

BOMs entered in the Production Plan are expanded and a manufacturing order for each finished product or semifinished (for each level of the BOM) is generated.

Sale OrdersInventory requirements


Production DevelopmentThe Production Development can be run directly by the Manufacturing Order.

The Production Development is run for the current MO and for all MOs hierarchically connected.

By right clicking


Materials picking

To define a Manufacturing Storage, it is necessary to set the Enable Picking from this Storage for Production checkbox.

During the Production Development all components are picked, also if not available (according to the country localization).


Production Development

JOB TICKET

MATERIALS PICKING

MO CONFIRMATION

Manufacturing Order ConfirmationWith the MO Confirmation we can enter:

Produced quantities (partial too)

Scraped quantities

Load storages (storages set in the Manufacturing Parameters, Storages tab are proposed)

The manufacturing order status

Created

changes in

Processing for partial quantities

Confirmed also if the MO is closed for partial quantities


Manufacturing Order ConfirmationThe Confirmation can be run directly by the Manufacturing Order

The Confirmation is run for the current MO

By right clicking


Confirmation by Bill of LadingTo enter scraps it is necessary to edit the Item status Scrap.

If some quantities are Confirming and other are scraps, the same row must be loaded twice on the Bill of Lading, one with the Item status Confirming and another one with the Item status Scrap.


A variant is a modification to a standard BOM, it defines raw materials or semifinished to be added, eliminated or modified to obtain a particular BOM.

We can enter all BOMs we want, but to simplify the maintenance of many BOMS, it is suggested to define the standard BOM only one time and then to define variants.

Variants


MAGO-MAGIC-INT


What is Magic Documents?

• It’s the new Mago.Net module that, by using the MS

Office technology (Smart Tag), allows the integration

of Taskbuilder with MS Word and MS Excel.

It is available both for Professional and Standard (only for use, not for design) edition of Mago.Net.


What does Magic Documents allow?

• Use Mago.Net without Mago.Net!

• Create your own data entries only with the desired information, thanks to the flexibility offered by the XTech profiles. The user can change the contents and the layout of the data entry using the power of Office

• Show the reports using the power of Excel as an analysis tool


3Chapter

Information Systems, Information Systems, Organizations, Organizations,

Management, and Management, and StrategyStrategy

Information Systems, Information Systems, Organizations, Organizations,

Management, and Management, and StrategyStrategy


INFORMATION SYSTEMS AND BUSINESS STRATEGY

• IT is used at the firm level to discourage customers from switching to other suppliers, and “locking” them into a firm’s channels.

• Switching cost is the expense incurred by a customer or company for changing from one supplier or system to another.

• Example: Baxter International

Management Information SystemsChapter 3

Information Systems, Organizations, Management, and Strategy

Switching Costs and Lock-in EffectsSwitching Costs and Lock-in Effects


INFORMATION SYSTEMS AND BUSINESS STRATEGY

Stockless Inventory compared to Traditional and Just-Stockless Inventory compared to Traditional and Just-in-time Supply Methodsin-time Supply Methods

Figure 3-13

Management Information SystemsChapter 3

Information Systems, Organizations, Management, and Strategy
