IE 101-Industrial Engineering Orientation Fall 200 9 Lecture on Information Systems and T echnology Prof.Dr.Taner ALTUN

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

2. 1 Chapter Management of the Digital Firm

3. Management Information Systems Chapter 1 Managing the Digital Firm WHY INFORMATION SYSTEMS? Capital Management: • IT is the largest single component of capital investment in the United States. • About $1.8 trillion is spent each year by American businesses. • Managers and business students need to know how to invest this capital wisely. • The success of your business in the future may well depend on how you make IT investment decisions.

4. Figure 1-1 Management Information Systems Chapter 1 Managing the Digital Firm WHY INFORMATION SYSTEMS? Information Technology Capital Investment Source: Based on the data in U.S. Department of Commerce, Bureau of Economic Analysis, National Income and Product Accounts, Tables 5.2 and 5.8, 2004.

5. Management Information Systems Chapter 1 Managing the Digital Firm WHY INFORMATION SYSTEMS? Foundation of doing business: • Most businesses today could not operate without extensive use of information systems and technologies. • IT can increase market share. • IT can help a business become a high-quality, low-cost producer. • IT is vital to the development of new products.

6. Figure 1-2 Management Information Systems Chapter 1 Managing the Digital Firm WHY INFORMATION SYSTEMS? The Interdependence between Organizations and Information Systems

7. Management Information Systems Chapter 1 Managing the Digital Firm WHY INFORMATION SYSTEMS? Productivity: • IT is one of the most important tools managers have to increase productivity and efficiency of businesses. • According to the Federal Reserve Bank, IT has reduced the rate of inflation by 0.5 to 1% in the last decade. For firms this means IT is a major factor in reducing costs. • It is estimated that IT has increased productivity in the economy by about 1% in the last decade. For firms this means IT is a major source of labor and capital efficiency.

8. Management Information Systems Chapter 1 Managing the Digital Firm WHY INFORMATION SYSTEMS? Strategic Opportunity and Advantage: • Create competitive advantage: IT makes it possible to develop competitive advantages. • New Business Models: Dell Computer has built its competitive advantage on an IT enabled build-to-order business model that other firms have not been able to imitate.

9. Management Information Systems Chapter 1 Managing the Digital Firm WHY INFORMATION SYSTEMS? Strategic Opportunity and Advantage: • Create new services: eBay has developed the largest auction trading platform for millions of individuals and businesses. Competitors have not been able to imitate its success. • Differentiate yourself from your competitors: Amazon has become the largest book retailer in the United States on the strength of its huge online inventory and recommender system. It has no rivals in size and scope.

10. Figure 1-3 Management Information Systems Chapter 1 Managing the Digital Firm WHY INFORMATION SYSTEMS? The Growth of the Information Economy Source: U.S. Department of Commerce, Bureau of the Census, Statistical Abstract of the United States, 2003, Table 615; and Historical Statistics of the United States, Colonial Times to 1970, Vol. 1, Series D, pp. 182-232.

11. Management Information Systems Chapter 1 Managing the Digital Firm WHY INFORMATION SYSTEMS? Emergence of the Digital Firm: • Digitally enabled relationships with customers, suppliers, and employees • Core business processes accomplished using digital networks • Digital management of key corporate assets

12. Management Information Systems Chapter 1 Managing the Digital Firm WHY INFORMATION SYSTEMS? • Agile sensing and responding to environmental changes • Seamless flow of information within the firm, and with strategic partners Emergence of the Digital Firm (Continued):

13. Figure 1-4 Management Information Systems Chapter 1 Managing the Digital Firm WHY INFORMATION SYSTEMS? The Emerging Digital Firm

14. Management Information Systems Chapter 1 Managing the Digital Firm PERSPECTIVES ON INFORMATION SYSTEMS What Is an Information System? Technology perspective:A set of interrelated components that collect (or retrieve), process, store, and distribute information to support decision making and control in an organization

15. Management Information Systems Chapter 1 Managing the Digital Firm PERSPECTIVES ON INFORMATION SYSTEMS What is an Information System? (Continued) • Data: Streams of raw facts representing events such as business transactions • Information: Clusters of facts meaningful and useful to human beings in the processes such as making decisions

16. Figure 1-5 Management Information Systems Chapter 1 Managing the Digital Firm PERSPECTIVES ON INFORMATION SYSTEMS Data and Information

17. Figure 1-6 Management Information Systems Chapter 1 Managing the Digital Firm PERSPECTIVES ON INFORMATION SYSTEMS Functions of an Information System

18. Management Information Systems Chapter 1 Managing the Digital Firm PERSPECTIVES ON INFORMATION SYSTEMS Computer-Based Information System (CBIS) • Rely on computer hardware and software • Processing and disseminating information • Fixed definitions of data and procedures • Collecting, storing, and using information

19. Figure 1-7 Management Information Systems Chapter 1 Managing the Digital Firm PERSPECTIVES ON INFORMATION SYSTEMS The Business Information Value Chain

20. Figure 1-8 Management Information Systems Chapter 1 Managing the Digital Firm PERSPECTIVES ON INFORMATION SYSTEMS Information Systems Are More than Computers

21. Management Information Systems Chapter 1 Managing the Digital Firm PERSPECTIVES ON INFORMATION SYSTEMS Major Business Functions Rely on Information Systems • Sales and marketing • Manufacturing • Finance • Accounting • Human resources

22. Management Information Systems Chapter 1 Managing the Digital Firm PERSPECTIVES ON INFORMATION SYSTEMS The Technology Dimension of Information Systems Information technology is one of the tools managers use to cope with change: • Hardware: Physical equipment • Software: Detailed preprogrammed instructions • Storage: Physical media for storing data and the software

23. Management Information Systems Chapter 1 Managing the Digital Firm PERSPECTIVES ON INFORMATION SYSTEMS The Technology Dimension of Information Systems (Continued) • Communications technology: Transfers data from one physical location to another • Networks: Links computers to share data or resources Managers need to know enough about information technology to make intelligent decisions about how to use it for creating business value.

24. Figure 1-9 Management Information Systems Chapter 1 Managing the Digital Firm PERSPECTIVES ON INFORMATION SYSTEMS Variation in Returns on Information Technology Investment Source: Based on Erik Brynjolfsson and Lorin M. Hitt, “Beyond Computation: Information Technology, Organizational Transformation and Business Performance.” Journal of Economic Perspectives 14, no. 4 (Fall 2000). Used with permission of the American Economic Association.

25. 2 Chapter Information Systems in the Enterprise

26. Management Information Systems Chapter 2 Information Systems in the Enterprise MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS Decision-Support Systems (DSS) • Management level • Inputs:Transaction level data • Processing: Interactive • Outputs: Decision analysis • Users: Professionals, staff • Example: Contract cost analysis

27. Figure 2-7 Management Information Systems Chapter 2 Information Systems in the Enterprise MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS Decision-Support Systems (DSS) (Continued) Voyage-estimating decision-support system

28. Management Information Systems Chapter 2 Information Systems in the Enterprise SYSTEMS FROM A FUNCTIONAL PERSPECTIVE Manufacturing and Production Systems • Major functions of systems: • Scheduling, purchasing, shipping, receiving, engineering, operations • Major application systems: • Materials resource planning systems, purchase order control systems, engineering systems, quality control systems

29. SYSTEM DESCRIPTION ORGANIZATIONAL LEVEL Machine control Control the actions of machines and equipment Operational Production planning Decide when and how many products should be produced Management Facilities location Decide where to locate new production facilities Strategic Management Information Systems Chapter 2 Information Systems in the Enterprise SYSTEMS FROM A FUNCTIONAL PERSPECTIVE Manufacturing and Production Systems

30. Figure 2-10 Management Information Systems Chapter 2 Information Systems in the Enterprise SYSTEMS FROM A FUNCTIONAL PERSPECTIVE Overview of an Inventory System

31. Management Information Systems Chapter 2 Information Systems in the Enterprise INTEGRATING FUNCTIONS AND BUSINESS PROCESSES: Introduction to Enterprise Applications Business Processes and Information Systems • Cross-Functional Business Processes: • Transcend boundary between sales, marketing, manufacturing, and research and development • Group employees from different functional specialties to a complete piece of work • Example: Order Fulfillment Process

32. Figure 2-12 Management Information Systems Chapter 2 Information Systems in the Enterprise INTEGRATING FUNCTIONS AND BUSINESS PROCESSES: Introduction to Enterprise Applications The Order Fulfillment Process

33. Management Information Systems Chapter 2 Information Systems in the Enterprise INTEGRATING FUNCTIONS AND BUSINESS PROCESSES: Introduction to Enterprise Applications Systems for Enterprise-Wide Process Integration • Enterprise applications: • Designed to support organization-wide process coordination and integration

34. Management Information Systems Chapter 2 Information Systems in the Enterprise INTEGRATING FUNCTIONS AND BUSINESS PROCESSES: Introduction to Enterprise Applications Systems for Enterprise-Wide Process Integration (Continued) • Consist of : • Enterprise systems • Supply chain management systems • Customer relationship management systems • Knowledge management systems

35. Management Information Systems Chapter 2 Information Systems in the Enterprise INTEGRATING FUNCTIONS AND BUSINESS PROCESSES: Introduction to Enterprise Applications Enterprise Systems • Enterprise systems, also known as enterprise resource planning (ERP) systems, provide a single information system for organization-wide coordination and integration of key business processes. • Information that was previously fragmented in different systems can seamlessly flow throughout the firm so that it can be shared by business processes in manufacturing, accounting, human resources, and other areas.

36. Figure 2-13 Management Information Systems Chapter 2 Information Systems in the Enterprise INTEGRATING FUNCTIONS AND BUSINESS PROCESSES: Introduction to Enterprise Applications Enterprise Application Architecture

37. Management Information Systems Chapter 2 Information Systems in the Enterprise INTEGRATING FUNCTIONS AND BUSINESS PROCESSES: Introduction to Enterprise Applications Traditional “Silo” View of Information Systems • Within the business: • There are functions, each having its uses of information systems • Outside the organization’s boundaries: • There are customers and vendors • Functions tend to work in isolation

38. Figure 2-14 Management Information Systems Chapter 2 Information Systems in the Enterprise INTEGRATING FUNCTIONS AND BUSINESS PROCESSES: Introduction to Enterprise Applications Traditional View of Systems

39. Figure 2-15 Management Information Systems Chapter 2 Information Systems in the Enterprise INTEGRATING FUNCTIONS AND BUSINESS PROCESSES: Introduction to Enterprise Applications Enterprise Systems

40. Management Information Systems Chapter 2 Information Systems in the Enterprise INTEGRATING FUNCTIONS AND BUSINESS PROCESSES: Introduction to Enterprise Applications Benefits of Enterprise Systems • Help to unify the firm’s structure and organization: One organization • Management: Firm wide knowledge-based management processes • Technology: Unified platform • Business: More efficient operations & customer-driven business processes

41. Mago.Net BOM and Basic Manufacturing

42. Mago.Net – BOM • What is a BOM • Studying BOM head fields • Studying the BOM component tab • Studying operations • The BOM costing • The Production Plan • The Production run and confirmation • Lots management • BOMs in sale documents

43. The BOM is a list of particulars or parts or semifinished that form an assembly. The assembly means a finished product or a big part of it. Normally this list contains further information to allow its employment for different purposes. In manufacturing we usually represent the process plant with the Bill Of Material of any product. This means defining the intermediate steps in which “SEMIFINISHED” are identified. BILL OF MATERIALS

44. Studying BOM head fields The BOM type can be an inventory item or a phantom.

45. The production plan is a document that describes for each item quantities to produce. The Production Plan Inventory Requirements Sales Orders PRODUCTION PLAN

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

47. Mago.Net Basic Manufacturing • What can be done with the Basic Manufacturing • BOM peculiarity with the Basic Manufacturing • Progress Manufacturing • The material picking • Lots management • Confirmation • Procedures to edit in progress processings • Lots management • Subcontracting • Purchase orders for external processing • Delivery notes • Bills of Lading

48. MANUFACTURING ORDER Sale Orders Inventory requirements Production Plan Manufacturing Orders BOMs entered in the Production Plan are expanded and a manufacturing order for each finished product or semifinished (for each level of the BOM) is generated.

49. Production Development The Production Development can be run directly by the Manufacturing Order. By right clicking The Production Developmentis runfor the current MO and for all MOs hierarchically connected.

50. Materials picking During the Production Development all components are picked, also if not available (according to the country localization). To define a Manufacturing Storage, it is necessary to set the Enable Picking from this Storage for Production checkbox.