Evolution of management and enterprise systems

1. EVOLUTION OF MANAGEMENT AND ENTERPRISE SYSTEMS

2. 1776

Adam Smith published
“The Wealth of Nations”.
In this, he suggested the
specialization of labor as a way
for workers to achieve greater
productivity. Smith's ideas
suggested efficiency could best
be achieved by breaking large
jobs down into small tasks which
could be performed repetitively.
Adam Smith
(1723 – 1790)

3. 1820s

The railroad companies
introduced bureaucracies to
avoid collisions on singletrack lines – formal operating
procedures, centralized
management and a rule for
every contingency.
This was the forerunner of
the command-and-control
system still in use today –
where there are workers and
supervisors to keep things
organized.

4. EARLY XX CENTURY

Taylor was a mechanical engineer
who sought to improve industrial
efficiency. He is regarded as the father
of scientific management, and was
one of the first management
consultants.
“It is only through enforced
standardization of methods, enforced
adoption of the best implements and
working conditions, and enforced
cooperation that this faster work can
be assured. And the duty of enforcing
the adoption of standards and
enforcing this cooperation rests with
management alone”
Frederick Winslow Taylor
(1856 – 1915)

5. SCIENTIFIC MANAGEMENT

The main elements of the Scientific Management are:
Time studies
Functional or specialized supervision
Standardization of tools and implements
Standardization of work methods
Separate
Planning function
Management by exception principle
The use of “slide-rules and similar time-saving devices”
Instruction cards for workmen
Task allocation and large bonus for successful performance
The use of the “differential rate”
Mnemonic systems for classifying products and implements
A routing system
A modern costing system

6. SCIENTIFIC MANAGEMENT

Taylor called these elements “merely the elements or details of
the mechanisms of management”. He saw them as extensions of
the four principles of management.
1. The development of a true science
2. The scientific selection of the workman
3. The scientific education and development of the workman
4. Intimate and friendly cooperation between the management
and the men

7. EARLY XX CENTURY

Henry Gantt's legacy to production
management:
The Gantt chart still accepted as
an important management tool, it
provides a graphic schedule for
the planning and controlling of
work, and recording progress
towards stages of a project.
Industrial efficiency can only be
produced by the application of
scientific analysis to all aspects of
the work in progress.
The industrial management role is
to improve the system by
eliminating chance of accidents.
Henry Laurence Gantt
(1861 – 1919)

8. EARLY XX CENTURY

The Task And Bonus System – he
linked the bonus paid to managers
to how well they taught their
employees to improve
performance.
The social responsibility of
business – he believed that
businesses have obligations to the
welfare of the society in which
they operate.
Henry Laurence Gantt
(1861 – 1919)

9. GANTT CHART SAMPLE

10. EARLY XX CENTURY

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

11. MIDDLE OF XX CENTURY

Industrial engineering is a branch of engineering dealing with the
optimization of complex processes or systems. It is concerned
with the development, improvement, implementation and
evaluation of integrated systems of people, money, knowledge,
information, equipment, energy, materials, analysis and synthesis,
as well as the mathematical, physical and social sciences together
with the principles and methods of engineering design to specify,
predict, and evaluate the results to be obtained from such
systems or processes.
Its underlying concepts overlap considerably with certain
business-oriented disciplines such as operations management.

12. MIDDLE OF XX CENTURY

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

13. 60S OF XX CENTURY

14. MAINFRAME OF 1960s

15. 1960s MATERIAL REQUIREMENTS PLANNING

Material Requirements Planning (MRP) is a time phased priorityplanning technique that calculates material requirements and
schedules supply to meet demand across all products and parts
in one or more plants.
MRP techniques focus on optimizing inventory.
MRP techniques are used to explode bills of material, to calculate
net material requirements and plan future production.
Information Technology plays a major role in designing and
implementing MRP systems and processes as it provides
information about manufacturing needs (linked with customer
demand) as well as information about inventory levels.

16. MATERIAL REQUIREMENTS PLANNING

MRP systems provide answers for several questions:
What items are required?
How many are required?
When are they required?
The main theme of MRP is “getting the right materials to the right
place at the right time”.

17. TRADITIONAL COMPONENTS OF MRP SYSTEMS

the master production schedule, which describes when each
product is scheduled to be manufactured
bill of materials, which lists exactly the parts or materials
required to make each product
production cycle times and material needs at each stage of the
production cycle time
supplier lead times

18. ALGORITHM OF MRP SYSTEMS

19. APPLYING OF MRP SYSTEMS

MRP is being used in a variety of industries where number of
products are made in batches using the same productive
equipment.
MRP is most valuable to companies involved in assembly
operations and least valuable to those in fabrication.
MRP does not work well in companies that produce a low number
of units annually. Especially for companies producing complex
expensive products requiring advanced research and design.
Experience has shown that lead times tend to be too long and too
uncertain, and the product configuration too complex for MRP to
handle. Such companies need the control features that networkscheduling techniques offer.

20. INDUSTRY APPLICATIONS AND EXPECTED BENEFITS OF MRP

Examples
Expected
Benefits
Assemble-tostock
Combines multiple component
parts into a finished product, which
is then stocked in inventory to
satisfy customer demand.
Examples: watches, tools,
appliances.
High
Fabricate-tostock
Items are manufactured by
machine rather than assembled
from parts. These are standard
stock items carried in anticipation of
customer demand. Examples:
piston rings, electrical switches.
Low
Industry Type

21. INDUSTRY APPLICATIONS AND EXPECTED BENEFITS OF MRP

Industry Type
Examples
Expected
Benefits
Assemble-toorder
A final assembly is made from
standard options that the customer
chooses. Examples: trucks,
generators, motors.
High
Fabricate-toorder
Items manufactured by machine to
customer order. These are generally
industrial orders. Examples:
bearings, gears, fasteners.
Low
Items fabricated or assembled
Manufacture-to- completely to customer machine
order
tools. Examples: turbine generators,
heavy machine tools.
High

22. INDUSTRY APPLICATIONS AND EXPECTED BENEFITS OF MRP

Industry Type
Process
Examples
Expected
Benefits
Industries such as foundries,
rubber and plastics, speciality
paper, chemicals, paint, drug, food,
processors.
Medium

23. REQUARIMENTS FOR IMPLEMENTATION OF A MRP SYSTEM

Availability of a computer based manufacturing system is a
must. Although it is possible to obtain material requirements
plan manually, it would be impossible to keep it up to date
because of the highly dynamic nature of manufacturing
environments.
A feasible master production schedule must be drawn up, or
else the accumulated planned orders of components might
“bump” into the resource restrictions and become infeasible.
The bills of material should be accurate. It is essential to update
them promptly to reflect any engineering changes brought to
the product. If a component part is omitted from the bill of
material it will never be ordered by the system.

24. REQUARIMENTS FOR IMPLEMENTATION OF A MRP SYSTEM

Inventory records should be a precise representation of reality,
or else the netting process and the generation of planned
orders become meaningless.
Lead times for all inventory items should be known and given to
the MRP system.
Shop floor discipline is necessary to ensure that orders are
processed in conformity with the established priorities.
Otherwise, the lead times passed to MRP will not materialize.

25. 1970s MANUFACTURING RESOURCE PLANNING

Manufacturing Resource Planning (MRP II) is a computer based
planning and scheduling system designed to improve
management’s control of manufacturing and its support functions.
MRP II systems provide answers for several questions:
What necessary to produce?
What necessary to have for that?
What is available?
What must be purchased?

26. LOGIC OF MRP II SYSTEMS

27.

MODULES OF MRP II SYSTEMS
1. Sales and Operation Planning
2. Demand Management
3. Master Production Scheduling
4. Material Requirement Planning
5. Bill of Materials
6. Inventory Transaction Subsystem
7. Scheduled Receipts Subsystem
8. Shop Flow Control
9. Capacity Requirement Planning
10. Input/output control
11. Purchasing
12. Distribution Resource Planning
13. Tooling Planning and Control
14. Financial Planning
15. Simulation
16. Performance Measurement

28. TWO-TIER SOFTWARE ARCHITECTURE

29. TERMINAL OF 1980s

30. 1980s TREE-TIER SOFTWARE ARCHITECTURE

31.

TREE-TIER
SOFTWARE ARCHITECTURE
1. Presentation Layer: Graphical User Interface (GUI) or browser
for data entry or accessing system functions
2. Application Layer: Business rules, functions, logic, and
programs acting on data received/transferred from/to the
database servers
3. Database Layer: Management of the organization's
operational or transactional data including metadata
(in most cases Relational Database Management Dystem
(RDBMS) with Structured Query Language (SQL))

32.

1990s ENTERPRISE
RESOURCE PLANNING

33. WEB BASED SOFTWARE ARCHITECTURE

Enterprise resource
planning (ERP)
Supply Chain
Management (SCM)
Customer
Relationship
Management (CRM)
Sales force
automation (SFA)
Advanced Planning
and Scheduling (APS)
Business Intelligence
(BI)
e-Business
Capabilities

34. WEB-ENABLED EXTENDED ERP SYSTEM

35. XXI CENTURY – SERVICE ORIENTED SOFTWARE ARCHITECTURE

36. TYPICAL STRUCTURE OF AN ERP SYSTEM

Executive
Information
Systems

37. THE WAYS OF SUPPORTING AN ORGANIZATION BY ERP SYSTEMS

support organizations by integrating information flows (such as
customer information, financial and accounting information,
human resources information, and supply chain information)
and making it available to the entire organization
integrate diverse primary business activities, functions,
processes, tasks, and work flows (such as accounting, finance,
and procurement) as well as secondary activities with primary
activities (such as inventory management)
server as a common data repository (master data) for
organizations (a data repository for an organization is that it
may define the format of the data, which makes communication
and interpretation of easier)
specify how organizations should conduct their business based
on a best business practice reference model

38. THE WAYS OF SUPPORTING AN ORGANIZATION BY ERP SYSTEMS

reduce the number of logical computer based information
systems and replace old legacy systems
deliver functionality per se – the core business processes
(such as sales and marketing, procurement, and production)
and support processes (such as controlling, human resource,
and finance) of an enterprise.
To achieve these benefits from an ERP implementation,
organizational changes are required, which are prompted by
business process reengineering, organizational transition to an
ERP system, retraining of entire departments, job redefinition, and
transformation of core processes.
ERP systems are often thereby assumed to be a technology,
since organizations have to align their business process to the
embedded business processes representing best practice, which
are assumed to generate organizational change.