EIN 6133 Enterprise Systems Engineering

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EIN 6133Enterprise Systems Engineering

• Fall 2007
• Chin-Sheng Chen
• Florida International University

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T5 Enterprise facets

• Element facets
• Strategy
• Competency
• Capacity
• Structure

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The ESE Framework Re-visit
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Readings References

• Readings
• HEA Chapters 4, 6, 8
• Reference
• What is strategy?, by Michael Porter, HBR,
  Nov-Dec, 1996.
• Strategy Maps by Kaplan and Norton, HBS, 2004
• Strategic management, 4th edition, by Burgelman,
  etc. , McGraw-Hill, 2004

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Enterprise facets strategy (1)

• Definition
• Michael Porter,1996, HBR
• Creating fit among a companys activities
• Selecting the set of activities in which an org.
  will excel to create a sustainable difference in
  the marketplace.
• The sustainable difference can be to deliver
  greater value to customers than competitors or to
  provide comparable value but at a lower cost than
  competitors
• Differentiation arises from both the choice of
  activities and how they are performed.
• A long-range plan in a hierarchical structure of
  goals and objectives, and a selected way of
  creating a fit between external environment, and
  internal resources and capabilities
• Kaplan and Norton (in Strategy Maps, 2004)
• Strategy describes how an org. intends to create
  sustained value for its shareholders.

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Enterprise facets strategy (2)

• Alternative views of strategy (classic)
• One ideal competitive position in the industry
• Benchmarking of all activities and achieving best
  practice
• Aggressive outsourcing and partnering to gain
  efficiencies
• Advantages that rest on a few key success
  factors, critical resources, and core
  competencies.
• Flexibility and rapid responses to all
  competitive and market changes.

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Enterprise facets strategy (3)

• Alternative views of strategy (sustainable
  competitive advantage)
• Unique competitive position for the company
• Activities tailored to strategy
• Clear trade-offs and choices vis-à-vis
  competitors
• Competitive advantage arises from fit across
  activities
• Sustainability comes from the activity system,
  not the parts.
• Operational effectiveness is a given.

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Enterprise facets strategy (4)

• Reconnecting with strategy by identifying
  companys core uniqueness
• Which of our product or service varieties are the
  most distinctive?
• Which of our product or service varieties are the
  most profitable?
• Which of our customers are the most satisfied?
• Which customers, channels, or purchase occasions
  are the most profitable?
• Which of the activities in our value chain are
  the most different and effective?

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Enterprise facets strategy (5)

• Strategy hierarchy
• Possible layers
• Corporate vision and goals
• Business unit strategy
• Functional tactics
• Purpose
• To ensure consistency up and down the
  organization
• Danger
• Being viewed as an elitist view of management
  from top down
• Opportunity
• Develop ways to harness the wisdom of anthill
  such as QCC (quality control circles)

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Enterprise facets strategy (6)

• Dominant schools of strategic mgt.
• Pragmatic knowledge
• A rational process of deliberate calculation and
  analysis designed to maximize profit by setting
  goals and cascading them down to actions and
  resources
• Conceptual knowledge
• A question-answer process to understand the
  nature of competition and make business decisions
  accordingly.
• Resource-based view
• A process that focuses on exploiting and
  deploying resources to sustain superior
  performance.

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Enterprise facets strategy (7)

• Schools of pragmatic strategic mgt.
• Design school
• Develop a deliberate process of conscious thought
• Planning school
• Formalize the deliberate process into a formal
  planning methodology with techniques and
  checklists
• Positioning school
• Shifting focusing on a strategy formation to
  strategic content

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Enterprise facets strategy (8)

• Positioning school of pragmatic strategic mgt.
• Five forces that determine the inherent profit
  potential of an industry and thus help a firm to
  find a product/market position
• Entry barriers
• Threat of substitution
• Bargaining power of suppliers
• Bargaining power of buyers
• Rivalry among industrial incumbents
• Decision making process
• Pick an industry based on its structural
  attractiveness
• Choose an entry strategy based on conjectures
  about competitors rational strategies.
• if not already possessed, acquire or otherwise
  obtain necessary resources to compete on the
  market.
• Decision is usually reduced to choosing a generic
  strategy such as cost leadership,
  differentiation, and focus to avoid being caught
  up in between (in the transition stage).

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Enterprise facets strategy (9)

• Schools of conceptual strategic mgt.
• To answer the following questions
• Why do firms differ?
• How do firms behave?
• What explains the success and failure for firms?
• How does the strategy making process affect
  strategic outcomes?
• How do differences persist?

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Enterprise facets strategy (10)

• Schools of conceptual strategic mgt.
• Transaction cost economics
• Efficiency is the only comparable advantage
• Managers must concentrate on their cost,
  especially the transaction costs of organizing
  and coordinating
• It is the force behind make-or-buy decisions,
  mergers, acquisitions, and strategic alliances.
• Chaos theory
• To address the issues of unpredictable, intense,
  and high-velocity-changes nature of modern
  industry
• Focus on internal response to chaos such as time
  pacing, continuous flow of competitive advantage
  and organizational structure
• Remain flexible in an uncertain world
• Game theory
• Use game theory tools to analyze the nature of
  competitive interaction between rival firms and
  to reveal how a firm can influence the behavior
  and action of rival firms and thus the market
  environment, viewing business as a series of
  moves and counter moves.
• Make decisions about marketing variables,
  capacity expansion, and reduction, entry and
  entry-deterrence, acquisitions, bidding, and
  negotiation.

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Enterprise facets strategy (11)

• School of resource-based strategic mgt.
• A firm is conceptualized as bundles of resources
  and capabilities, with which the firm competes
• They cannot be bought or sold in markets and must
  be developed rather than being taken as given.
• Thus the source of sustainable superior
  performance lies internally in the capacity to
  exploit and deploy resources.
• A firm must focus on its internal organization
  and place a focus on strategic positioning (for
  use of its resources)
• There is a shift from traditional schools (a
  portfolio of products or a network of moves) to
  the resources based view (portfolio of resources
  and competencies)

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Enterprise facets strategy (12)

• Strategy issues of system elements
• Work strategy
• Focuses vs. diversified products/services
• Leadership differentiation (Cost vs. lead time
  vs. quality)
• Decision strategy
• Corporate culture
• Organizational structure
• Resource strategy
• In-house vs. virtual resources
• Cultivation vs. hiring/firing
• Information strategy
• In-house development vs. acquisition
• Trade secret vs. patent

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Enterprise facets competency (1)

• Definition, competency
• The quality or condition of being legally
  qualified for or technically capable of.
• Also known as capability
• An attribute of a resource as skill, of
  information as know-how
• A building block for work and decision
• Common unit of elemental competency - operation
• An operation is a business activity that has a
  duration, start event, and end event.
• It requires resource(s), with a specific skill
  (ability) and following a fixed procedure, to
  perform the activity.

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Enterprise facets competency (2)

• Competencies (in terms of operation types) (1)
• Productive
• Engineering operations
• Engineering analysis, design, drafting, etc.
• Manufacturing operations
• Machining, forming, finishing, treatments,
  joining, assembly, etc.
• Maintenance
• Operational
• Production/service operations
• Operation planning, acquisitions (resources
  service), accounting, etc.
• Marketing/sales operations
• Administrative operations
• HR, PR, IT, IP, security, etc.

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Enterprise facets competency (3)

• Competencies (in terms of operation types) (2)
• Executive
• Monitoring operations
• Monitoring
• Auditing
• Control operations
• Quality control (IQC/IPQC, etc.)
• Shop floor control
• Approval (work plans including changes)
• Test

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Enterprise facets competency (4)

• Definition, flow
• A network of activities arranged in their logical
  sequence for a purpose, starting from one end and
  proceeding to the other.
• A flow is an aggregation (or network) of
  competency units of a varying size
• Each flow must have a system element that flows
  through the resources which perform an activity.
  The flowing element must be a resource or
  information. That is, a work (or decision) flow
  occurs via an agent of either material or
  information element.

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Enterprise facets competency (5)

• Related flow concepts
• Each system entity (element) has a life cycle of
  activities from birth to death (forming a flow).
• An entity may have (or be associated with) a
  variety of flows in its life cycle
• Workers may have flows of activities defined for
  going cafeteria, restroom, material retrieval,
  etc.
• Flows can be nested
• Competency analysis may start with decomposing
  work and flows existing in the company

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Enterprise facets competency (6)

• Competency and flow of system elements
• Work competency and flow
• Work competency
• Work flow (network of work activities)
• Decision competency and flow
• Decision competency
• Decision flow (network of decision activities)
• Resource competency and flow
• Resources competency
• Resources flow
• Information competency and flow
• Information competency
• Information flow

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Enterprise facets competency and flow (7)

• Work competency and flow
• Work competency
• Defined by productive competency units of a
  varying size
• Work flow
• Network of productive competency units
• Substantiated via one or more material (and/or
  information) flow between resources.

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Enterprise facets competency and flow (8)

• Decision competency and flow
• Decision competency
• Defined by managerial/executive competency units
  of a varying size
• Decision flow
• Network of managerial competency units
• Substantiated via a material (or information)
  flow between resources.
• A note on business process
• A work flow nested with decision flow(s)

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Enterprise facets competency (9)

• Resource competency and flow
• Resource competency
• Characterized with productive, managerial, or
  executive competency units of a varying size,
  which usually is operation.
• Resource flows
• Each resource may have its own flow(s) between
  other resources
• Critical flows
• Material flow
• Work flow, rework flow, scrap flow
• Human flows
• Material handling (involving one or more
  resources), human maintenance
• Cash flow
• Utilities flow
• Machine and tooling flow
• Maintenance, etc.

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Enterprise facets competency (10)

• Information competency and flow
• Information competency
• Characterized with productive, managerial, and
  executive competency units of a varying size,
  which usually is operation.
• Information flow
• Each information may have its own flow(s) between
  resources.
• Information may flow between resources due to
• its being worked on (similar to material and WIP)
  or
• its being used in support for an activity
  (similar to labor and machine)

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Enterprise facets capacity (1)

• Capacity, definition
• The quantity (amount) required for an enterprise
  element

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Enterprise facets capacity (2)

• Work capacity (requirement)
• The amount of work required to be done
• Depending on work forecast (or orders) in terms
  of its revenue, input, output, etc.
• Decision capacity (requirement)
• The amount of decision required to be made
• Depending on decision needs as imbedded in the
  business process design
• Resources capacity (requirement)
• The amount of resources required to perform
  productive, operational, and executive activities
• Information capacity (requirement)
• The amount of information required to perform
  business activities with (which may be limited by
  duplicity, license, and serving agents)

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Enterprise facets structure (1)

• Structure, definition
• The relationship (or organization) of intra/inter
  elements of an enterprise system
• The structure is shaped by companys strategy,
  competency and capacity.

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Enterprise facets structure (2)

• Work structure
• Work hierarchy
• Program (not a work order)
• Project
• Deliverable item
• Task
• Sub-task
• Operation
• Step
• Work constraints
• Hierarchical (managerial)
• Lateral (technical)

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Enterprise facets structure (3)

• Resources structure
• Resources hierarchy
• Company
• Division
• Factory (plant)
• Department
• Section
• Group
• Individual
• Structure types
• Functional
• Pure-project
• Matrix

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Enterprise facets structure (4)

• Decision structure
• Decision hierarchy
• Strategic
• Tactic
• Operational
• Decision processes are based on work and org.
  structure
• Each productive operation may be followed by a
  decision process (or activity)
• Thus each work hierarchy may be coupled with a
  hierarchy of decisions

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Enterprise facets structure (5)

• Information structure
• Production data
• Organized by work order
• Some production data may be translated into
  knowledge or engineering data after the work
  order is done.
• Engineering data
• Organized by
• Operation type or
• Business process
• Knowledge data
• Organized by
• Operation type or
• Business process

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T5 Homework

• Pick a company (or one of its divisions) you are
  familiar with, make a copy of its webpage,
  highlight (or specify) its mission, vision, and
  goals
• Develop a strategy for its vision/goal
• Identify its core competencies and break them
  down in a hierarchical fashion to the elemental
  competency level.
• Due date in two weeks