Transcript E. R. P SYSTEMS Anicet Yalaho Maria-J. Echeverria Seppo Selkälä

E. R. P SYSTEMS
Presented by:
Anicet Yalaho
Maria-J. Echeverria
Seppo Selkälä
Faculty of Information Technology
University of Jyväskylä
University
of
Jyväskylä
A Book Review
ERP- The dynamics of Operations
Management, Avraham Shtub (1999)
2
1. BPR & ERP
2. Introduction to the book
3. Marketing Considerations
4. Purchasing and Inventory Management
5. Scheduling
6. Material Requirement Planning
7. Managing the process using ERP
8. Teaching and Training IPOM
3
BPR & ERP
What is ERP
Relationship: BPR/ERP
4
Enterprise Resource Planning
• ERP is a software solution, with all the
organisation’s records managed from one
large database. An integrated IS.
• It takes the process view of an
organisation to meet the organisational
goals tightly integrating all functions of an
enterprise.
5
Relationship BPR - ERP
• A BPR study
• brings out deficiencies of the existing system
• attempts to maximize productivity through
• re-structuring and
• re-organising the human resources as well as the
divisions and departments in the organisation
• BPR will initially question the value-add of the
particular process
• Then it will go on to put some systems and
procedures in place -> ERP is a key enabler in
any BPR effort
6
Relationship BPR – ERP (2)
• You can
• do BPR without buying an ERP solution,
• unusual
• buy an ERP solution without doing any BPR
• wasteful investment...
• The question is not whether ERP functions or
not without BPR
• Key question: whether every company that
implements ERP has to reengineer its processes
7
ERP
• ERP doesn’t blindly automate- it takes
into account
• company’s internal issues,
• but also factors in the external imperatives in
terms of competition, time-to-market,...
8
ERP (2)
• ERP is the planning of the 4Ms of the
enterprise resources– Man, Money,
Materials, Machines.
• ERP helps in addressing needs like
reduced cycle time, customer focus,
sharing information seamlessly across the
enterprise and JIT management
9
1. BPR & ERP
2. Introduction to the book
3. Marketing Considerations
4. Purchasing and Inventory Management
5. Scheduling
6. Material Requirement Planning
7. Managing the process using ERP
8. Teaching and Training IPOM
10
An Introduction to:
’ERP- The dynamics of
Operations Management’,
Avraham Shtub (1999)
11
’ERP- Dynamics of
Operations Management’
• Scope of the book:
• ’to help and support the development of teams to
implement the Integrated Production and Order
Management (IPOM) approach’
• The Four cornerstones for success:
Flexibility, Time, Quality, Cost
• Four main functional activities:
Marketing, Purchasing, Production, Finance
12
’ERP- Dynamics of OM’ (2)
• A book delivered with a software:
• the Operations Trainer
• ”a dynamic-integrated environment for
students and executives to experiment with
IPOM and to learn the ERP concepts”
13
Operations Management
• Several approaches to Operations
Management:
• operations research oriented
• case studies oriented
• A new approach proposed by Hammer and
Champy (1993): the reengineering of
business processes to inflect changes on
organisations
14
Integrated Production and Order
Management Approach
• New managerial approaches
• Concurrent Engineering:
• an integrated, dynamic approach to new product
development. New product development teams
composed of experts from different functions. Share
the same goals.
• Group Technology:
• focused “cells” specialising in a small number of
similar products.
15
IPOM approach (2)
• Development of IS:
• MRP- Material Requirement Planning
• not good enough on its own...
• Integration of modern DBMS, DSS and MIS
• -> the new generation of ERP systems was
borne
• An essential process- The order fulfilment
• -> Integrated Production and Order Management
16
IPOM approach (3)
• Process-based
• Process: order fulfilment- from the reception
of a customer order to the supply of the right
goods on time, the required quantities and at a
competitive cost
• ERP supported
• 3 types of IS support Order fulfilment process:
• Transaction Processing System (any transaction
can be ordered/analysed via the software)
• MIS (a unique database)
• DSS (decisions’ consequences can be analysed, ...)
17
IPOM (4)
• An Integrated IS
• finance, marketing, production, purchasing
• that supports order fulfilment process:
• Transaction processing systems / MIS / DSS
• A single DB
• A model base (for well-structured/routine
processes, for non-structured/-routine problems, or
for process control)- used when a problem is too
difficult to analyse and solve.
18
1. BPR & ERP
2. Introduction to the book
3. Marketing Considerations
4. Purchasing and Inventory Management
5. Scheduling
6. Material Requirement Planning
7. Managing the process using ERP
8. Teaching and Training IPOM
19
Marketing Considerations
20
Production and order policies
• Order fulfillment process process triggered
by customer orders
• Orders entered into Master Production
Schedule
• Purchasing and order fulfillment processes
are based on:
• firm customer orders
• demand forecasts
21
Three types of order policies
• Make to stock
• new production triggered by forecasts
• Minimizes the promised lead-time at the cost of
carrying inventories
• Make to order
• No stocks carried
• Only customer order triggers production
• Assemble to order
• Raw materials and parts stocked but final assembly
triggered by customer order
22
Master Production Schedule
(MPS)
• Statement of planned future, gross
requirements of end products
• MPS is triggered by the market demand
• combination of orders and forecasts
• Management of MPS:
• introduction of new requirements
• updating existing requirements
• monitoring and control of actual performance
compared to goals
23
Time based competition
• Lead time: time from order to delivery
• Importance of time in order fulfillment
• shorter lead-time
• competitiveness and ability to get new business
• delivery on right time
• promised vs. actual lead-time
• Lead-time is affected by:
• data processing, decision making, production
• Each operation affects lead-time
• should be studied and optimised
• minimízation, elimination
24
Quality based competition
• Success dependent on customer satisfaction
• Eight dimensions in quality based competition:
• performance, features, reliability,conformance,
durability, serviceability, aesthetics, and perceived
quality
• Quality in order fulfilment process refers mainly
to:
• DDP Due Date Performance
25
Cost based competition
• Profit = selling - buying price
• Higher profit: reduce the cost of products
• Problem of measuring costs of a unit
• direct, indirect costs
• fixed, variable costs
• Solution:
• Look at the throughput
26
Summary of
Marketing Considerations
• Order fulfillment process triggered by
• actual order or forecasts
• 3 types of order policies
• make to stock, make to order, assemble to order
• Dimensions of competition
• time, cost, (flexibility), and quality
27
1. BPR & ERP
2. INTRODUCTION OF THE BOOK
3. Marketing Considerations
4. Purchasing and Inventory
Management
5. Scheduling
6. Material Requirement Planning
28
Purchasing and Inventory
Management
29
The Need for Outsourcing
• Outsourcing: purchase some materials,
parts, and services from outside services
• increase your effective capacity without capital
requirements
• enhance the organizations competitive edge
• Points to be carefully evaluated:
• Make or buy decision
• supplier management
• inventory management
30
Outsourcing:
Make or Buy Decisions
• Factors to be taken into consideration:
• Capacity, Know-how, Cost-Volume, Demand
pattern, Time, Quality, Control and Feasibility
• Decision making levels:
• Strategic level
• what part of production kept in house
• Operational level
• capacity considerations
31
Outsourcing:
Supplier management
• Importance of order fulfilment process:
• purchases constitute 30-50% of sales
• Sub-activities of supplier management:
• specifications of requirements
• selection of suppliers
• contract management
32
Supplier Management:
Specifications of Requirements
• Definition of the required product or service
including functional, physical and technical
specifications
• Definition of the order fulfilment process
requirements, including required lead time, size
and number of shipments, shipping arrangements
and frequency of deliveries
• Definition of quality system the supplier should
employ and quality requirements applied to the
product or service
33
Supplier Management:
Selection of Suppliers
• Different approaches: single vs. multiple
• Supplier evaluation considerations:
•
•
•
•
•
•
Process capability
Quality assurance
Financial capability
Cost structure
Track record
Production planning and control system
34
Supplier Management:
Contract management
• The ongoing relationship with supplier
• Three categories of relationships:
• Inspection
• focusing on product inspection to eliminate defects
• Prevention
• purchaser helps to build quality into the product and process
• Partnership
• long term relationship
• e.g. Joint design, delivery directly to the point of use
• JIT-approach
35
Inventory Management
• Inventory management:
• policies, decisions, actions and the monitoring
and control of stock
• Stock types:
• Raw materials, parts and components, work in
process, finished goods, supplies
36
Inventory Management:
Benefits and costs
• The benefits of using stocks:
• Time based competition
• reduce lead time
• Coping with uncertainty
• buffer inventories
• Cost based competition
• order in large quantities
• Inventory costs
• capital costs, operating costs, risk related costs
• Many benefits, but still inventories are expensive and
create waste
• search for trade off btw. benefits and costs
37
Inventory Management:
Models – Pareto Model
• ABC or Pareto
Analysis:
• type A 20% of
items, count for
80% of costs
• type B 30% of
items, count for
15% of costs
• type C 50% of
items, count for
5% of costs
38
Inventory Management:
Models – EOQ Model
• Help: when to place order
and what quantity to order?
• the economic order quantity
(EOQ) model
• Problems:
•
•
•
•
assumes demand constant
stable inventory costs
lead time constant
constant parameters
39
Inventory Management:
Models – (s,S) Model
• (s,S) Model
• whenever the current inventory level drops
below predetermined value (s), and order is
placed to bring the inventory level to the higher
predetermined value (S)
• Advantage: not based on simplifying
assumptions like EOQ model
• Intuition and expertise driven
40
Summary of Inventory
Management
• Outsourcing (Make or buy decision):
• what to keep in house? (strategic decision)
• capacity constraints (operational decision)
• Inventories
• trade off btw. costs and benefits of carrying
inventories
• coping with uncertainty of demand and capacity
constraints
• expensive
41
1. BPR & ERP
2. INTRODUCTION OF THE BOOK
3. Marketing Considerations
4. Purchasing and Inventory
Management
5. Scheduling
6. Material Requirement Planning
42
Scheduling
Job Shop
Flow Shop
JIT approach
Dynamic Shop
DrumBufferRope approach
43
Scheduling
• Scheduling is concerned with allocation
of limited resources to tasks over time
• the driver: Master Production Schedule
(MPS)
• Variety of scheduling models have been
developed and implemented
44
Job Shop:
Implementing Priority Rules 1
• Machines performing the same function grouped
• Scheduling objectives:
• on time completion of each part according to MPS
• the completion of all jobs as early as possible
• minimization of the time that parts spend in the shop
(min. process inventory)
• maximization of the utilization of resources by
minimizing their idle time
• minimization of costs by using less expensive materials
45
Job Shop:
Implementing Priority Rules 2
• When set-up time is significant and machine
capacity limited --> batch processing
• Several models exist to provide optimum
• only for very small problems
• based local view of a larger situation
• How to assign priority (simple methods):
•
•
•
•
FIFO (First In First Out)
EDD (Early Due Date)
Current job (to save set up time)
SPT (Shortest Processing Time)
46
Job Shop:
Implementing Priority Rules 3
• How to assign priority (complex methods):
• Critical ratio (CR)
• difference between due date and current date divided by time
required to complete the remaining work.
• Slack Time Remaining (STR)
• difference between the time remaining before the due date and
the time required for processing the remaining jobs.
• Slack Time Remaining per Operation (STR/OP)
• average slack time per remaining operation.
• Smaller values have higher priority (for the 3 methods)
47
Job Shop:
Implementing Priority Rules 4
• By monitoring the situation on the shop
floor and selecting the right priority
rules for the situation, the management
can improve performances on the
delivery schedule
• Also scheduling manually is possible
when job is late
48
Job Shop:
Implementing Priority Rules 5
• The selection of most appropriate priority rule as
well as decision to expedite a job, is based on the
Shop floor control system
• current information on the jobs waiting for processing
in front of each machine
• Priority rules based on single machine
• starvation --> monitor continuously inventory levels in
front of each machine
• control by input-output analysis
• identify bottlenecks
49
Flow Shop:
Scheduling
• In the flow job all product types are
processed in the same order
• problems: starvation and blocking
• especially when product units are large and inprocess inventory is limited (JIT)
• Flexible flow job
• many similar machines operate in parallel
50
Flow Shop:
Scheduling (2)
• Johnson´s rule
• for simple cases (2 types of machines)
• objective to minimize make span
• Based on simplifying assumptions
--> direct implementation of their results may
lead to poor performance of the order fulfilment
process
51
The Just In Time (JIT) Approach
• Profit = revenue - costs
• to increase profit:
• increase revenue
• reduce costs
• Focus on cost (waste) reduction
52
JIT Approach (2)
• Potential forms of waste according to JIT
• Quality related waste
• Inventory related waste
• Waste of space
• Material handling waste
• Distinction between value-added and non
value-added operations
• eliminate (if not possible minimize) non valueadded operations, such as material handling
53
JIT Approach (3)
• Impacts of JIT in scheduling
• minimize process inventories
•
•
•
•
•
•
use small batch size (ideal batch size 1)
promote faster set ups
use of scheduling systems
limit space available for inventories in process
preventive maintenance efforts
quality at the source
• long term, close relationships with suppliers to
ensure quality and delivery when needed
54
JIT Approach (4)
• The order fulfilment process in the JIT system is
synchronized and controlled by a special system
• KANBAN cards
• Contains information: production order, purchase order,
inventory control device
• Integrated (all work centers are connected)
• Dynamic (inventories limited by # of Kanbans)
55
Approaches for
Expediting and Changing Priorities
• Demand fluctuates over time, solutions:
• manufacturing to stock
• buffer inventories
• freeze MPS (master production schedule)
• stabilize demand over the freeze period
• monitor each job as it moves
• ERP systems: analyse data and support decision making
• focus on problematic work centres
• derive the schedule according to bottlenecks
56
The Drum, Buffer, Rope (DBR)
Approach
• In this scheduling technique the schedule of
all work centres is driven by the schedule of
critical work centres (insufficient capacity)
• Three performance measures:
• MAX: Throughput (T) = Sales - Expenses
• MIN: Inventory (I)
• MIN: Operating expenses (OE)
• avoid production to stock
57
The Drum, Buffer, Rope (DBR)
Approach (2)
• Focus should be on the constraint as it is the weakest link
in the chain of the order fulfilment process
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• Job shop
Summary of
Scheduling
• limited applicability: need for shop floor control
system to monitor + management intuition
• Flow shop
• Johnson´s rule (limited applicability)
• JIT
• kanban cards and shop floor control system
• Dynamic shop
• approaches for demand fluctuations
• DrumBufferRope approach
• driven by critical work centers (bottlenecks)
59
1. BPR & ERP
2. INTRODUCTION OF THE BOOK
3. Marketing Considerations
4. Purchasing and Inventory
Management
5. Scheduling
6. Material Requirement Planning
60
Material Requirement Planning
61
Material Requirement Planning
(MRP)
• Is an early attempt to develop an
integrated MIS for the order fulfilment
process
• By combining information...
• By integrating the inventory management
information
62
MRP (2)
• By introducing lead time information for purchased items and for
manufactured items manufacturing and purchasing orders can be
time phased to ensure delivery exactly when needed
• The original MRP System (MRP I ) combined
• Marketing information in the Master Production
• Technological information about the structure of each product and
its manufacturing process
• New capabilities were added to these systems including:
• Planning module that reveal capacity shortage
• Shop floor control modules that utilise limited capacity efficiently
• MRP II (Manufacturing resource Planning).Systems that
deal with resource capacities were born
63
MRP (3)
• MRP II Systems deal with resource
• recent development in this area produced
ERP ( Enterprise Resource Planning)
Systems designed to support the order
fulfilment process of an enterprise operating
several factories warehouses and integrated
logistic system a complex known as the
supply chain
64
The typical data file: the Master Production
Schedule(MPS), the Bill of Material(BOM)& inventory data
Basic MRP System
Demand
Forecasts
Firm Customers
Orders
Bill of
Material BOM
Master Production
Schedule
(MPS)
Inventory
Records
Material Requirements
Planning (MRP)
Work Orders
Report
Purchase
Orders
65
The typical data file (2)
• Many MRP installations did not fulfil the
expectations to improve the order fulfilment
process. There are several reasons for the failure
of MRP System:
• Quality of input data
• Team mutual understanding on how to use MRP
• The early MRP System dedicated files were used
to store the data, as database technology were not
available.
66
The typical data file (3)
• The important data files in the early MRP
applications were the following:
• The Master Production Schedule (MPS)
• Marketing information on actual
customer orders and forecasts of future
demand.
• Manufacturing information
67
The typical data file (4)
• Purchasing information on supplier’s lead-time
and the availability of purchased parts and
materials in inventory and in the pipelines
• Cost information on the cost of manufacturing
each independent demand item.
• Master Production Scheduling is an
excellent example for the need to integrate
the different aspects of the order fulfilment
process
68
The typical data file (5)
• The time frame used for the MPS is
important.The minimum planning time
period known as time buckets specifies
the accuracy of the planning process, a
time bucket of one week is typical
• The minimum length of the planning
69
The typical data file (6)
• Change management is an important part of
the order fulfilment process
• Change in the MPS create changes in the
production and purchasing plans
• The MPS´is updated continuously
• When current time is over, the next period
becomes the current one and a new period
enters the planning horizon
70
The typical data file (7)
• Key issue´s to consider are who should
mange the MPS and How
• The Bill of Material
• The Inventory Record
71
Gross to net and time phasing:
The MRP logic
• MRP systems are designed to support the material
management function in the order fulfilment
process
• The Basic idea is that the same logic can be used
for ordering purchased materials or parts,
manufactured components and assembled products
• The MPS is the source of information on gross
requirements for independent demand items
• Basic MRP logic makes use of this information as
input and translates it into time phased net
requirements
72
Gross to net and time phasing:
The MRP logic
The Basic MRP record for product A
Week
Gross Requirement
0
1
2
3
3
7
4
5
10
6
7
8
8
9
6
Scheduled receipts
Projected available
balance
Planned order
release
73
Gross to net and time phasing:
The MRP logic
Projected available balance (t+1)=
Projected available balance
+Scheduled receipt (t+1)
-Gross requirement (t+1)
•Based on the calculed projected available balance a decision to
issue work orders or purchase orders is made
•A simple decision rule known as : LOT FOR LOT (LFL)
74
Modification of: The MRP logic
• MPS is used as the resource of Gross
requirements for independent demand items.
• Basic MRP logic is modified to accommodate
special situations. a common modification is in the
lot sizing policy
• The Economic Order quantity (EOQ) logic
discussed early, is frequently used to calculate this
minimum size. The same logic applies parts when
economy to scale is available
• Ex: The cost per unit decrease as the order size
increases
75
Modification of: The MRP logic
• Other modifications in the lot sizing policy
are based on the idea that each order should
cover a minimum period of demand
• That is know as the Periodic Order quantity
• Unlike LFL logic both EOQ and POQ
generate inventories
• Another modification of the MRP logic is to
buffer against uncertainty
76
Modification of: The MRP logic
• Two types of buffers
• Buffer stock- in this case the minimum
inventory level target is set.
• Buffer lead time-this method is designed to
protect the system from fluctuations in supply
lead-time. It is based on increasing the lead
time of part number by a predetermined amount
to protect the system against uncertainty in the
actual delivery dates
77
Capacity considerations
• MRP logic of gross to Net and Time Phasing derives the
requirements for material from the MPS
• Early applications of MRP logic focused on material
requirements
• To coordinate resource availability with resource
requirements, capacity considerations had to be added to
the basic MRP system
• One way of doing that is known as Rough cut Capacity
Planning (RCCP)
• Another approach is known as Capacity Requirement
Planning (CRP)
78
Capacity considerations: Rough
cut Capacity Planning (RCCP)
• Rough cut Capacity Planning (RCCP) is
performed at the MPS level. Its major
inputs are the MPS and Information about
the processing time per unit product on each
machine or work centre
• The logic used for Rough cut Capacity
Planning varies in its complexity and in the
accuracy of the capacity requirements
forecasts generated
79
Capacity considerations: Rough
cut Capacity Planning (RCCP)
• Rough cut Capacity Planning is an important tool
for the management of the MPS
• Rough cut Capacity Planning is also the basis for
setting priorities in monitoring and controlling the
shop floor
• This is logic is the basis of the work of Goldratt
and Fox (1986) which an effort to identify the few
resources that are short of capacity and to schedule
the whole operation in such a way that these
resources will be used efficiently and effectively
80
Capacity considerations: Rough
cut Capacity Planning (RCCP)
•
Goldratt’s logic is translated into the following
step:
1. Identity the system’s constraints ( the bottlenecks)
2. Develop a detailed schedule for the bottlenecks
3. Derive the schedule for all non-bottleneck resources from
the schedule developed for the bottlenecks.
4. Repeat the process
81
Capacity considerations: Rough
cut Capacity Planning (RCCP)
• The use of the MPS as a basis for rough cut
capacity planning may lead to substantial
errors in estimating the resource
requirements
• To overcome these difficulties a more
detailed approach for capacity planning is
used
82
Capacity considerations:
Capacity Requirement Planning (CRP)
• Capacity Requirement Planning (CRP) is based on an
effort to treat the requirements for resources by logic
similar to the logic used for material planning
• Logic based on the output of the MRP-work orders
generated by the gross to Net and the Time Phasing logic
• Based on the orders released by MRP logic, the required
periodical capacity of each resource is calculated
• The MRP logic that generates work orders takes existing in
process inventories into account in its gross to net analysis
the capacity requirements are more accurate
83
Capacity considerations:
CRP Vs. RCCP
• Both CRP and RCCP are tools for testing the
feasibility of the plans developed by the MIS
• The RCCP test the feasibility of the MPS while
the CRP tests the feasibility of the MRP plans
• Both tools are based on estimates of available
capacity and forecasts of expected loads and
therefore do not provide perfect accuracy
• A module called shop Floor Control is added to
support the order fulfilment team in its resource
management tasks
84
Capacity considerations:
Shop Floor Control (SFC)
• The module implement logic known as InputOutput analysis
• The logic is based on monitoring the actual queue
of work orders in front of each work centre
• The name Input Output analysis comes from the
analogy between the queue in front of a work
centre and reservoir
• The complete MRP II system consist of the basic
MRP I module plus the RCCP,CRP and SFC
modules (see Schema next)
85
Capacity considerations
The Modules of MRP II System
FIRM CUSTOMERS
ORDERS
DEMAND
FORECASTS
MPS
BOM
CRP
WORK ORDERS
AND SHOP FOOR
CONTROL
RCCP
INVENTORY
RECORDS
MRP
REPORT
PURCHASE
ORDERS
AND SUPPLIERS
MANAGEMENT
86
Managing the Integrated Order
Fulfilment Process Using ERP:
Setting goals, Establishing
performance, Measures developing
policies and Taking actions
87
The role of management in the
integrated order fulfilment process
• Organization structures establish clear
relationships and communication lines
between managers and subordinates
• The traditional functional organizational
structure may not provide adequate support
for the management of the order fulfilment
process due t the following problems:
88
The role of management in the
integrated order fulfilment process (1)
• Problems:
• Each functional organizational unit tends to
focus on its local goals and objectives
• In a functional organization the order fulfilment
does not have a clear owner responsible for its
performances from start-getting a customer
order, to finish-supplying the order efficiency
and on time
89
The role of management in the
integrated order fulfilment process (2)
• Concurrent Engineering-is based on a team of
experts in the areas of product development,
manufacturing and logistics support
• Application of this new approach improved the
communication between the participants in the
development process and resulted in a shorted
development cycle
• Team building is a challenging managerial task
and it is a process of organizing, staffing,
motivating and leading people
90
The role of management in the
integrated order fulfilment process (3)
• Responsibility of the order fulfilment team: to plan, direct
and control the activities of the resources used to perform
the order fulfilment process
• Information acquired by marketing, purchasing and
operations management represents the common
Knowledge that should be shared by all the members of the
order fulfilment team
• This common knowledge provides the ability to
communicate, to set common goals and to develop an
integrated plan that can be controlled and directed
efficiently by the team
91
The role of management in the
integrated order fulfilment process (4)
• The common knowledge and the
understanding that the whole team shares
the responsibility for the entire order
fulfilment process is the cornerstone of a
successful ERP implementation
• Planning starts with the definition of the
goals for the whole order fulfilment process
and the agreement on the frame to reach the
goals
92
The role of management in the
integrated order fulfilment process (5)
• A combination of long term and short-term
gaols is needed
• A short term goal
• a long term goal
93
The role of management in the
integrated order fulfilment process (6)
• The plan provides each team member with exact
information on what he is supposed to do and
when
• The plan integrates and coordinates the efforts of
individuals involved in the process and facilitate
teamwork.It serves like:
• A note (in an orchestra)
• A Compass
• Deviations from the original plan are likely due to:
• Uncertainty
• Late delivery
94
• Special action as opposed to long lasting
policies are needed when deviations are
detected
• The ERP concept of a single information
system that supports all the processes in the
organisation by providing an integrated data
base and a comprehensive model base is
therefore essential for successful
implementation
• Learning how to use the ERP, how to work
in a team, and how to lead in a dynamic,
integrate environment is equally important
95
The Hierarchy of Goals
Alice in Wonderland
Should with
turn right
Itor
does not
left? matter!
In that case
you can go
either way
Where
do you
want to
go?
Alice
96
• This global goal is translated into several
lower level goals such as:
• Time related Goal
• Deliver in a short lead-time
• Deliver on time to the customers
• Cost related goals
• Deliver at the minimum cost possible
• Minimize the operating cost of the process
• Minimize inventories to minimize the inventoryrelated costs
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Developing a plan-The road map
to the goal
• A plan that coordinates the efforts of the team
members
• Coordination is easier in a repetitive environment
where the same hierarchy of goals is valid over a
long period of time and the same plan may be
applied rapidly to reach these goals
• As long as the goal does not change, the MRP
logic is implemented correctly and uncertainty
does not intervene, the automatic planning process
should yield the desired results
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Establishing Control-Identifying
Problem
• To reduce the effect of uncertainty, management
tries to establish systems that identify problems in
implementing its plans as early as possible
• Control systems are common in many engineering
and organizational applications
• Ex:The control of the room’s temperature
• The control of the order fulfilment process is
based on the same principles, but more human
decision making is required when the process is
not repetitive
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• First approach, Monitoring the value of the
performance measures is one way to go
• Ex: If due date performance is an important measure it is
preferable to detect problems on the shop floor that might
cause delay in a customer order or to detect late deliveries
from suppliers and fix these problems before due date
performance level is affected
• The Three aspects of the order fulfilment should be
monitored continuously
• The interface with customers
• The interface with suppliers
• The performance of the shop floor
• The second approach, fits generative MRP systems
where translations are collected and processed as a
batch to update the mater files of the MRP systems
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• A combination of continuous and periodic
control is essential for a successful, flexible
order fulfilment process
• the design of the control system is an
important part of any ERP implementation
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Taking Action-Solving Problem
• To analyse the source of problems and
decide whether there is a need to change the
current policy in order to avoid the
occurrence of similar problems in the future
• Problem solving is tricky due to the
integrate, dynamic nature of the process and
the uncertain environment
• System behaviours can be difficult to grasp
and even more difficult to predict
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• First step in solving problems is to recognize that
there is a problem and to define it clearly
• Next step, is to define it in clear terms. The
performance measures used to evaluate the
process are the basis for problem definition
• Then-problem analysis
• The third step-is to generate alternative solutions
to the problem. Two types of solution are needed:
• Ad-hoc solution
• Long term solution
• the alternatives expected to yield the best results
are selected and implemented in the process
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• Problem solving approach can be summarized
as follows
• Identify the problem
• Define the problem in term of the process
•
•
•
•
•
performance measures
Analyse the problem to find its roots
Generate alternative long and short range solutions
Evaluate the solutions with respect to their effect on
the performance measures
Select the best solutions
Implement the selected solutions
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Policies Control Systems and
Actions in the Operations
• The integrated dynamic management concept is based on
management’s ability to:
• Understand the whole order fulfilment process and the interactions
•
•
•
•
•
between its different aspects
Establish goals and performance measures
Develop adequate policies based on the understanding of the whole
process, its goals, its performance measures, its different aspects
and the dynamic interactions among these aspects
Design a monitoring system and use its signals to control the whole
process
Develop problem-solving skills as individuals and as a group
Implement the policies, controls and solutions to problems
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• The selection of policies
• Marketing policies
• Make-to-stock
• Make-to-order
• Production policies
• Dispatching policy
• Purchasing action
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Teaching and Training
Integrated Production and
Order Management
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Individual Learning
and
Organisational Learning
• The essence of Integrated Production order
order Management is teamwork. A process
based organization is responsible for each
process.
• In the functional organization people are
grouped according to the function they
perform and are trained to focus on their
part of the order fulfilment process.
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• IPOM is based on an integrated approach
to the order fulfilment process (integration
as the opposite of de coupling).
• IPOM environment each member of the
team have to understand the whole process
including the role of every other team
member. all team members participate in the
decision making process
• The teaching of IPOM at the individual
level starts with the basic concepts of
information and its use
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• Building the team and training it to play
together as a team is very important. Each
player has to understand his role and to
excel in it. Coordination between the
players is also an important part of training
a basketball or a football team
• The high degree of dependency among the
players and the dynamic, stochastic
environment requires team building and
team learning
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Individual Learning Curve
• if each individual is an expert in his task the
integration of individual expertise by well planned
organizational structure provides the
organization's competitive edge
• Individual learning can take many forms including
the learning of verbal knowledge, intellectual
skills,cognitive strategies and attitude
• Learning by imitation
• Learning by repetition
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Learning curve model
Unit Number
30
112
• Group learning in its simplest form is an
aggregation of individual learning
• Three problems with the extension of
individual learning curve to group learning
• First, the learning coefficients of individuals in
a group are not necessary the same
• Second, Absenteeism turnover and job rotation
makes the organizational learning curve
difficult to predict ...
• Third, problem related to synergy in team
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Teambuilding and the Team
Performance Curve
• Katzenbach and smith (1993) relates the
types of group and its performance
High-performing
team
Performance impact
Real team
Working
group
Pseudo team
Potential team
In this
model five
types of
groups are
defined
Team effectiveness
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• The Katzentbach and smith (1993) model explains
how important it is to combine individual learning
with team building in order to succeed in
implementing integrated Production and Order
Management
• There are several barriers that a new team must
overcome (Thamhain and Wilemon (1979))
•
•
•
•
Unclear objectives
Differing outlook
Role conflicts
Personnel selection
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•
Katzenbach and smith (1993) list several hints
that can help in the process of team building:
1. Establish urgency and direction-All team members
need to believe the team has urgent and worthwhile
purposes
2. Select members based on skill and their potential. not
personalities
3. Pay particular attention to first meetings and actions.
Initial impressions always mean a great deal.
4. Set some clear rules of behaviour. Rules regarding
attendance, discussion confidentiality and
contributions are very important and help the team
perform its tasks in the early stages
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5 . Set and seize upon a few immediate performance. By
establishing a few challenging yet achievable goals
members of the team can start working together right a
way a process that forge them together.
6 . Challenge the group regularly with fresh facts and
information. New information helps the team shape a
common purpose and set clearer goals.
7 . Spend lots of time together. Creative insights as well as
personal bonding are created early on if the team
members spend time together.
8.Exploit the power of positive feedback, recognition and
reward. Positive or reinforcing feedback helps the
process of team building and accelerates it
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• The Operations Trainer is designed to
Support team building
• Promoting and nurturing individual
learning, team building and organizational
learning are key elements in the
implementation of IPOM
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Organizational Learning in the
IPOM environment
• Individual learning and team building are necessary steps
in the implementation of IPOM
• The players must learn how to coordinate effort in an
uncertain environment were "division of labour" is
important but the process is far from being completely
repeatable, players are dependent on each other as the
situation changes rapidly in an unpredictable way
• Individual leaning is the basis. but it is not sufficient in
a highly competitive, dynamic, uncertainty environment
were the coordinated effort of many individuals is
required
119
• Tasks are not independent and the process is
not completely repeatable
• Organizational or group learning is the
process of developing the ability of a group
of individuals to improve its performances
working as a team to achieve a common
goal
• Argyris and Schon (1978) define two levels
of organization learning
• Organization learning involves the detection
and correction
• Double loop learning
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• Successful implementation of IPOM depends on the ability
of the organization to create an environment that
encourages single loop and double loop learning
• Group learning is based on several mechanism one of
which is repetition
• Other mechanisms are:
1. The ability to collect and share knowledge so that members of
the group can learn from each other's experience.
2. The ability to learn from the experience of other groups or
organizations
3. The development of an efficient group decisions making
process
4. The ability to share and use information real time.
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Teaching IPOM - the Operations
Trainer
• The Operations Trainer is designed to provide the
teaching environment for IPOM.To achieve this
goal´the trainer is an integration of tree different
systems:
• A simulation system that can simulate a variety of
scenarios in great detail.
• An information system that handles the traditional tasks
of transactions processing, management information
and DSS
• An ERP like system composed of an integrated
database and a model base
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• The operation trainer supports individual
and organization learning in tree ways
• As a tool for teaching individuals the concepts
of information and it use
• As a tool for practicing traditional Operations
Management by assigning a group of students
or managers to manage the simulated plan
• As tool for teaching IPOM and ERP concept by
assigning a group of manager or students to
manage a simulated plant were the whole group
serve as a team responsible for the integrated
process and sharing information
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ERP/ERM
Dale Kutnick
Contributing Analyst, Executive Directions
CEO & Co-Research Director, Officers
Chairman, Board of Directors
Barry Wilderman
Vice President, Application Delivery Strategies
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THANK YOU
FOR
LISTENING
Seppo
Anicet
Maria
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