YalahoAll the slides together..ppt

Faculty of Information Technology

University of JyväskyläUniversity

of Jyväskylä

University of

Jyväskylä

Anicet Yalaho, dept. of GT

Maria-J. Echeverria, dept. of GT

Seppo Selkala, dept. of GT

Anicet Yalaho, dept. of GT

Maria-J. Echeverria, dept. of GT

Seppo Selkala, dept. of GT

Presented by:

By: Anicet Y., Maria-J. E., Seppo S., Department of Grouptechnology, Faculty of IT 2

University of

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University of

Jyväskylä

A Book Review

ERP- The dynamics of Operations Management, Avraham Shtub (1999)

• Main BPR concepts

• Relationships BPR / ERP

• An Objective Review of the book

• Conclusion


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University of

Jyväskylä What is Business Process Re-engineering?


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University of

Jyväskylä

”Redesigning Enterprise Processes for e-Business”, Omar A. El Sawy

• BPR: • ’a performance improvement philosophy that

aims to achieve quantum improvements by primarily rethinking and redesigning the way businesses are carried out’

• Business Processes: a set of activities that transform a set of inputs into a set of outputs


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University of

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Enterprise Processes

A clear objective: being competitive in today’s market

Continuous improvement model- an effective approach to obtain gradual, incremental improvement

Several factors accelerating the need to improve BP- Technology

SupplierYour

process CustomerInputs Outputs

Feedback


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University of

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The 5 Five Typical Phase of BPR in the Big

Triggering & Executive

Visioning

BPR Project Mobilization

Process Redesign:-Scoping- Modeling, Analysis & Redesign- Integration

Implementation & Organisational Transformation

Monitoring & Maintenance


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University of

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A dynamic environment

• The Leavitt Diamond: a conceptual framework for balancing IT-enabled transformation

IT use

Business Processes

Requisite People Skills

Organisational Form


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University of

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BPR & ERP

What is ERPRelationship with BPR


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University of

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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.

(more about ERP history to come)


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University of

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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


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University of

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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


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University of

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ERP

• ERP doesn’t blindy automate- it takes into account• company’s internal issues,

• but also factors in the external imperatives in terms of competition, time-to-market,...


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University of

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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


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University of

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’ERP- Dynamics of OM’

• Scope of the book: • ’to help and support the development of teams

to implement the Integrated Production and Order Management (OM) approach’

• The Four cornerstones for success: flexibility, time, quality and cost

• Four main functional activities: Marketing, Purchasing, Production, Finance


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University of

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’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”


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University of

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Review of a book“ERP-Dynamics of Operations Management”, Avraham Shtub


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University of

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Operations Management

• Several approaches to Operations Management:• operations research oriented

• case studies oriented

• A new approach proposed by Hammer and Champy: the reengineering of business processes to inflect changes on organisations


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University of

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IPOM 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.


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University of

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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

borned

• An essential process- The order fulfilment • -> Integrated Production and Order Management


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University of

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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, ...)


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University of

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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)


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University of

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Marketing Considerations


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University of

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Production and order policies

• Process triggered by customer orders• Written form, long term contract, order issued

by marketing based on a demand forecast

• Orders entered into Master Production Schedule

• Competition in order fulfillment process:• time, cost, flexibility, and quality


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University of

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Production and order policies (2)

• Inventories of finished goods are used to buffer against uncertainty (in forecasting)

• Several alternatives to initiate purchasing orders and production orders:• based on firm customer orders

• based on demand forecasts (+raw mat. inv.)

• based on firm customer orders + current inv. level of raw materials and parts


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University of

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Production and order policies (3)

• Importance of lead-time• time from order to delivery

• “Supermarket approach”• if acceptable lead-time > actual lead-time;

no inventory– reduce setup times and batch sizes

• if acceptable lead-time < actual lead-time; keep enough inventory to cover for the difference


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University of

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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


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University of

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Master Production Schedule (MPS)

• Statement of planned future, gross requirements of end products

• MPS triggered by the market demand• combination of orders and forecasts

• If order fulfillment process not well integrated conflict highly likely:• marketing, production/purchasing

• different measures of performance


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University of

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Master Production Schedule

• To avoid conflict:• common set of goals

• Appropriate performance measures

• Management of MPS:• introduction of new requirements

• updating existing requirements

• monitoring and control of actual performance compared to goals


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University of

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Lead-time and time based competition

• 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:• data processing, decision making, production

• Each operation affects lead-time• should be studied and optimized


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University of

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Optimization of operations

• Elimination of unnecessary operations

• Minimization of the duration of necessary operations

• Minimization of delays before, after, and during the operations• batch production --> reduce setup times

• get rid of bottlenecks (DBR)

• information sequentially - hierarchy levels

• control points --> data sharing


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University of

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Quality and its management - quality based competition

• Success dependent on customer satisfaction

• Eight dimensions in quality based competition:• performance, features, reliability,conformance,

durability, serviceability, aesthetics, and perceived quality

• Order fulfillment process:• DDP Due Date Performance


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University of

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Cost considerations -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


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University of

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Summary of Chapter 4

• Add text here later


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Purchasing and Inventory Management


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University of

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The Need for Outsourcing

• Outsourcing: purchase some materials, parts, and services from outside services• increase effective capacity without capital

• enhance the organizations competitive edge

• Points to be carefully evaluated:• Make or buy decision

• supplier management

• inventory management


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University of

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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


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University of

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Outsourcing:Supplier management

• Importance of order fulfillment process:• purchases constitute 30-50% of sales

• Sub-activities:• specifications of requirements

• selection of suppliers

• contract management


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University of

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Specifications of Requirements

• Definition of the required product or service including functional, physical and technical specifications

• Definition of the order fulfillment 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


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University of

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Selection of Suppliers• Different approaches: single vs. Multiple

• Supplier evaluation considerations:• Process capability:

• Can supplier produce in specific quality level?

• Quality assurance:• Are quality control procedures adequate?

• Financial capability• the risk associated with doing business with supplier

• Cost structure:• Supplier´s costs (mat., labor, OH.) and profits


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University of

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Selection of Suppliers

• Value analysis effort:• Ability to perform value analysis (+past success)

• Production scheduling:• Abilities of production planning and control system

• Contract performance• Performance measures to evaluate suppliers

• Can also rely on standard specifications• e.g. ISO 9000 series


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University of

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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


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University of

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Inventory Management:Benefit and cost considerations

• 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


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University of

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Inventory Management:Benefit and cost considerations (2)

• The benefits of using stocks:• Time based competition

• reduce lead time)

• Coping with uncertainty• buffer inventories)

• De-coupling activities in the order fulfillment process

• Cost based competition• order in large quantities)

• Technological considerations• some processes are designed for a batch of a given size


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University of

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• Many benefits, but still inventories are expensive and create waste• search for trade off btw. benefits and costs

• Inventory costs:• capital costs

• operating costs

• risk related costs

• JIT -> inventory = waste+problems


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University of

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• 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

Add here scanned picture from page 70!


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University of

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Inventory Management:Models and their assumptions

• 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

• no interactions between different items

• constant parameters



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University of

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Inventory Management:Models and their assumptions (2)• (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


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University of

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University of

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Scheduling


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University of

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Job Shop:Implementing Priority Rules

• 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• based on assumptions: technology, layout,

objectives and constraints of organization, environment


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University of

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Job Shop:Implementing Priority Rules (2)

• 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


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University of

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• When setup 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 setup time)

• SPT (Shortest Processing Time)


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University of

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• 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)


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University of

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• 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


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University of

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• 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


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University of

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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 in-process inventory is limited (JIT)

• Flexible flow job• many similar machines operate in parallel


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University of

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Flow Shop:Scheduling (2)

• Johnson´s rule• for simple cases (2 types of machines)

• objective to minimize make span

• Insert here POSSIBLE EXAMPLE!

• Based on simplifying assumptions

• --> direct implementation of their results may lead to poor performance of the order fulfillment process


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University of

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The Just In Time (JIT) Approach

• Founder Dr. Ohno of Toyota, Japan

• Profit = revenue - costs

• to increase profit:• increase revenue

• reduce costs

• Focus on cost (waste) reduction


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University of

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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 value-

added operations, such as material handling


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University of

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JIT Approach (3)• Impacts of JIT in scheduling

• minimize process inventories• use small batch size (ideal batch size 1)

• promote faster setups

• 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


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University of

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JIT Approach (4)• To succeed in the elimination of waste while

keeping the competitive edge in time based competition, the order fulfillment 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)


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University of

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JIT Approach (5)

• Just in time is a form of synchronous production• a system in which entire order fulfillment process

is synchronized (i.e. works in harmony) to achieve its multidimensional goals (time, cost, flexibility, and quality)

• The synchronizing device - the Kanban card provides tight connection between the work centers


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University of

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The Dynamic Shop: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: analyze data and support decision making

• focus on problematic work centers• derive the schedule according to bottlenecks


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University of

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The Drum, Buffer, Rope (DBR)Approach

• In this scheduling technique the schedule of all work centers is driven by the schedule of critical work centers (insufficient capacity)

• Three performance measures:• MAX: Throughput (T) = Sales - Expenses

• MIN: Inventory (I)

• MIN: Operating expenses (OE)• avoid production to stock


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University of

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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 fulfillment process



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University of

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University of

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University of

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Material Requirement Planning


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University of

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Material Requirement Planning (MRP)

• Is an early attempt to develop an integrated MIS for the order fulfilment process• By combining information on the demand for products purchased

by the customers with information on the structure of these products,the required quantities of dependent demand item do not have to be forecasted-they can be calculated.Uncertainty associated with forecasting is reduced

• By integrating the inventory management information into the system the requirements for dependent demand items as well as those for independent demand item can be placed against existing inventories and pipeline inventories so that only the net required can be ordered


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University of

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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


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University of

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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


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University of

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The typical data file: the Master Production Schedule(MPS), the Bill of Material(BOM)& inventory data

Firm CustomersOrders

Demand Forecasts

Master ProductionSchedule

(MPS)Bill of

Material BOM

Material RequirementsPlanning (MRP)

Work Orders ReportPurchase

Orders

InventoryRecords

Basic MRP System


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University of

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The typical data file (2)

• Many MRP installations did not fulfil the expectations 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.


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University of

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• The important data files in the early MRP applications were the following:• The Master Production Schedule (MPS)- The MPS is

the anticipated build schedule for selected (independent demand) items by quantity per planning period

• Marketing information on actual customer orders and forecasts of future demand.

• Manufacturing information on the current load on the shop floor and the ability to supply additional customers orders during each period in the planning horizon


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University of

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• 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


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University of

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• 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 horizon should be

equal to the total time required to purchase raw materials and component parts, to manufacture and assemble the independent demand item with the longest lead time, to provide enough time for the order fufilment process to supply this item when needed


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• Change management is an important part of the order fulfilment process• Change in the MPS create changes in the production

and purchasing plans that results in nerveousness of the system and in low efficiencies, excess inventories and an unstable order fulfilment process

• 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


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University of

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• Key issue´s to consider are who should mange the MPS and How• The Bill of Material-The Bill of Material or BOM is the

source of information about the structure of each independent demand item. Through the BOM it is possible to coordinate the requirements for subassemblies, components and raw materials

• The Inventory Record-To function properly, the MRP system compares the gross requirements for each part number to its current inventory.Only if the gross requirements exceed the current inventory an order for that part number should be issued


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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


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University of

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Scheduled receipts

Projected available balance

Planned order release


The Basic MRP record for product A


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University of

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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)


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University of

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Modification of: The MRP logic

• MPS is used as the resource of Gross requirements for independent demand items.

• Basic MRP logic is modified to accomodate 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 applíes parts when economy to scale is available• Ex: The cost per unit decrease as the order size

increases


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University of

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• 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


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University of

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• 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 deleivery dates


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University of

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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)


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University of

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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 center

• The logic used for Rough cut Capacity Planning varies in its complexity and in the accuracy of the capacity requirements forecasts generated


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University of

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• 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


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University of

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• Goldratt’s logic is translated into the following step:1. Identity the system’s constraints ( the bottlenecks)-this step can be

based on rough estimates of the load on each resource compared to its available capacity

2. Develop a detailed schedule for the bottlenecks-using simple techniques such as Gantt Chart

3. Derive the schedule for all non-bottleneck resources from the schedule developed for the bottlenecks. Since the non-constrained resources have excess capacity the assumption is that it is possible to schedule these resources to support the schedule of the bottlenecks

4. Repeat the process-Since bottlenecks may change over time as the product mix changes or due to changes in resources capacity, it is necessary to identify the system’s constraints repetitively every and to watch the actual utilisation of the bottleneck to avoid idle time


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University of

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• 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


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University of

Jyväskylä

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


University of

Jyväskylä

University of

Jyväskylä

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


University of

Jyväskylä

University of

Jyväskylä

Capacity considerations:Shop Floor Control (SFC)

• The module implement logic known as Input-Output 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)


University of

Jyväskylä

University of

Jyväskylä

Capacity considerationsThe Modules of MRP II SystemThe Modules of MRP II System

FIRM CUSTOMERSORDERS

DEMAND FORECASTS

MPS RCCP

INVENTORYRECORDS

BOM

MRP

REPORTWORK ORDERSAND SHOP FOOR

CONTROL

PURCHASE ORDERS

AND SUPPLIERSMANAGEMENT

CRP


University of

Jyväskylä

University of

Jyväskylä

Managing the Integrated Order Fulfilment Process Using ERP:Setting goals, Establishing performance, Measures developing policies and Taking actions

Managing the Integrated Order Fulfilment Process Using ERP:Setting goals, Establishing performance, Measures developing policies and Taking actions


University of

Jyväskylä

University of

Jyväskylä

The role of management in the integrated order fulfilment process

• Organization structures establish clear relationships and communication lines between managers and subordinates, within these structures the lines of authority and responsibility are easy to define and maintain

• The traditional functional organizational structure may not provide adequate support for the management of the order fulfilment process due t the following problems:


University of

Jyväskylä

University of

Jyväskylä

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


University of

Jyväskylä

University of

Jyväskylä


• 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


University of

Jyväskylä

University of

Jyväskylä


• 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


University of

Jyväskylä

University of

Jyväskylä


• 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


University of

Jyväskylä

University of

Jyväskylä• A combination of long term and short-term

gaols is needed• A short term goal may be to supply a

customer’s order ahead of it’s promised due date when a preferred customer’s order ahead of it’s promised due date

• a long term goal is to become a leader in the market and to capture a market share of fifty percent or more within two years



University of

Jyväskylä

University of

Jyväskylä


• 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


University of

Jyväskylä

University of

Jyväskylä

• 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


University of

Jyväskylä

University of

Jyväskylä

The Hierarchy of Goals

Should with turn right or

left?

Where do you want to

go?

He does not matter! In that case

you can go either way

Alice

Alice in Wonderland


University of

Jyväskylä

University of

Jyväskylä

• 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 inventory-related costs


University of

Jyväskylä

University of

Jyväskylä

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


University of

Jyväskylä

University of

Jyväskylä

Establishing Control-Identifying Problem

• To reduce the effect of uncertainty, management tries to establish estems 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


University of

Jyväskylä

University of

Jyväskylä

• 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


University of

Jyväskylä

University of

Jyväskylä

• 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


University of

Jyväskylä

University of

Jyväskylä

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


University of

Jyväskylä

University of

Jyväskylä

• 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


University of

Jyväskylä

University of

Jyväskylä

• 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


University of

Jyväskylä

University of

Jyväskylä

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


University of

Jyväskylä

University of

Jyväskylä

• The selection of policies• Marketing policies

• Make-to-stock

• Make-to-order

• Production policies• Dispatching policy

• Purchasing action


University of

Jyväskylä

University of

JyväskyläTeaching and Training

Integrated Production and Order Management

Teaching and Training Integrated Production and

Order Management


University of

Jyväskylä

University of

Jyväskylä

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.


University of

Jyväskylä

University of

Jyväskylä

• 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


University of

Jyväskylä

University of

Jyväskylä

• 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


University of

Jyväskylä

University of

Jyväskylä

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


University of

Jyväskylä

University of

Jyväskylä

Learning curve model

30Unit Number

Dir

ect P

rod u

ctio

n ti

me


University of

Jyväskylä

University of

Jyväskylä

• 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


University of

Jyväskylä

University of

Jyväskylä

Teambuilding and the Team Performance Curve

• Katzenbach and smith (1993) relates the types of group and its performance

Performance impact

Team effectiveness

Working group Potential team

Pseudo team

Real team

High-performing team

In this model five

types of groups are

defined


University of

Jyväskylä

University of

Jyväskylä

• 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


University of

Jyväskylä

University of

Jyväskylä

• 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


University of

Jyväskylä

University of

Jyväskylä

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


University of

Jyväskylä

University of

Jyväskylä• 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


University of

Jyväskylä

University of

Jyväskylä

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


University of

Jyväskylä

University of

Jyväskylä

• 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


University of

Jyväskylä

University of

Jyväskylä

• 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.


University of

Jyväskylä

University of

Jyväskylä

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


University of

Jyväskylä

University of

Jyväskylä

• 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


University of

Jyväskylä

University of

Jyväskylä

ERP/ERM

Barry WildermanVice President, Application Delivery Strategies

Dale KutnickContributing Analyst, Executive DirectionsCEO & Co-Research Director, OfficersChairman, Board of Directors


University of

Jyväskylä

University of

Jyväskylä

THANK YOU FOR

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