ERP by Mary Sumner

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ERP by Mary Sumner

• Chapter 1
• Table 1 -1 Historical Evolution of ERP Systems

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Independent vs. Dependent Demand
Finished product
E(1)
Component parts
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Basic Fixed-Order Quantity Model and Reorder
Point Behavior
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Material Requirements Planning

• Materials requirements planning (MRP) is a means
  for determining the number of parts, components,
  and materials needed to produce a product
• MRP provides time scheduling information
  specifying when each of the materials, parts, and
  components should be ordered or produced
• Dependent demand drives MRP
• MRP is a software system
• More information about MRP can be found in
  Chapter 6 Handout ERP System Production and
  Materials Management

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• The McGraw-Hill Companies, Inc., 2004

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Closed Loop MRP
Production Planning Master Production
Scheduling Material Requirements
Planning Capacity Requirements Planning
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Manufacturing Resource Planning (MRP II)

• Goal Plan and monitor all resources of a
  manufacturing firm (closed loop)
• manufacturing
• marketing
• finance
• engineering
• Simulate the manufacturing system

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ERP by Mary Sumner

• Chapter 2
• Table 2 -1 and 2- 2 Value Chain by Dr. Michael
  Porter (Harvard).
• We also use value chain in the SCM textbook by
  Chopra

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INFORMATION SYSTEMS AND BUSINESS STRATEGY

• Value Chain Model
• Highlights the primary or support activities that
  add business value
• A good tool for understanding strategy at the
  business firm level
• Primary Activities
• Directly related to the production and
  distribution of a firms products or services

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INFORMATION SYSTEMS AND BUSINESS STRATEGY

• Support Activities
• Make the delivery of primary activities possible
• Consist of the organizations infrastructure,
  human resources, technology, and procurement

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What is the relationship between value chain and
information technology?
Strategic question

• How can IT be used at each point in the value
  chain to lower costs, differentiate products, and
  change the scope of competition?
• Example Next slide

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INFORMATION SYSTEMS AND BUSINESS STRATEGY
The Firm Value Chain and the Industry Value Chain
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ERP by Mary Sumner

• Just-in-Time/Lean Manufacturing/Toyota Production
  System
• Pages 91, 96, 137
• Also required in the SCM textbook by Chopra

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House of Toyota
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Toyota Production System (TPS)Related Terms

• Ohno System
• MAN (Material as Needed) - Harley Davidson
• MIPS (Minimum Inventory Production Systems) -
  Westinghouse
• Stockless production - Hewlett Packard
• Zero inventory production system
• Lean Manufacturing/Production - MIT

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Push versus Pull

• Push system material is pushed into downstream
  workstations regardless of whether resources are
  available
• Pull system material is pulled to a workstation
  just as it is needed

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Traditional U.S. Manufacturing FirmPush (old
style MRP / Material Requirements Planning
System)

• The production of items at times required by a
  given schedule planned in advance

Work Station 1
WS 2
WS 3
Material
Information (Production Schedule)
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Pull (JIT) System

• The production of items only as demanded for use
  or to replace those taken for use.

Work Station 1
WS 2
WS 3
Material
Information (via Kanban/Card)
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Kanban

• Japanese word for card
• Pronounced kahn-bahn (not can-ban)
• Authorizes production from downstream operations
• Pulls material through plant
• May be a card, flag, verbal signal etc.
• Used often with fixed-size containers
• Add or remove containers to change production rate

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Triangular Kanban
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Kanban
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Figure S12.5
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Basic Fixed-Order Quantity Model and Reorder
Point Behavior
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Kanban

• The function of Kanban
• The function of Inventory Reorder Point (ROP)