Operations
Management
Operations Technology, the
Internet, and ERP
Supplement 7
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Outline
The Internet
Design Technology





Computer Aided Design (CAD)
Standard for the Exchange of Product Data (STEP)
Computer Aided Manufacturing (CAM)
Virtual Reality Technology
Computer-Integrated Manufacturing (CIM)
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Outline - continued
Production Technology








Numerical Control
Process Control
Vision Systems
Robots
Automated Storage and Retrieval Systems (ASRSs)
Automated Guided Vehicles
Flexible Manufacturing Systems (FMS)
Computer Integrated Manufacturing (CIM)
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Outline - continued
Technology in Services
Information Sciences in Operations



Transaction Processing
Management Information Systems
Artificial Intelligence
Enterprise Resource Planning (ERP)



Technology Issues in ERP
Advantages and Disadvantages of ERP Systems
ERP in the Service Sector
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© 2001 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458
Learning Objectives
When you complete this chapter, you should
be able to :
Identify or Define:
The Internet
Computer-aided design (CAD)
Computer-aided Manufacturing (CAM)
 Various production technologies
 Enterprise Requirements Planning (ERP)



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© 2001 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458
Learning Objectives
When you complete this chapter, you should
be able to :
Explain:
The Role of the Internet in Operations
Virtual Reality in Operations
Flexible Manufacturing Systems (FMS)
 Computer-Integrated Manufacturing (CIM)
 Manufacturing Uses of MIS
 How ERP Works
 Advantages and Disadvantages of ERP Systems



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© 2001 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458
Technology
Technology is not a cure-all, but managing
technology is certainly a major ingredient in
virtually all operations decisions, and
opportunities for its innovative use exist
throughout OM.
Excellent vehicle for obtaining competitive
advantage.
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The Internet
 Internet + Intranet (in-house Internet).
 Enables integration of traditional internal
information systems as well as enhancement of
communication between organizations.
 Internet-based systems tie together global design,
manufacturing, delivery, and after-services
activities.
 The Internet together with e-commerce are
reshaping how business thinks about delivering
value to its customer, interacting wiht suppliers, and
managing its employees.
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© 2001 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458
Using The Internet
 Boeing & Lufthansa put maintenance info online for
worldwide access
 Medical equipment manufacturer exchanges 3D
design info, in real time,with customers around the
world
 Robotics manufacturer has web-enabled factory
 Master Lock uses Internet to make info available to
suppliers
 Ronald Tool Co. builds products from customer specs
sent via the Internet
 Caterpillar Inc sells industrial parts through ecommerce
 State Street Bank uses the web to support global
customer relationships
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The in-house Internet: Intranet
In-house use, technical collaboration,
and transfer of information to and from the
customer are making both the Internet and
the Intranet powerful new operations tools:
Detailed global accessibility




to engineering data/drawings
to inventory and suppliers
to ordering and order status
to procedure and documentation.
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Design Technology
Computer-Aided Design (CAD)
Refers to the use of computers to
interactively design products and prepare
engineering documentation (drafting and
three-dimensional drawings)
Allows designers to save time and money by
shortening development cycles for virtually
all products. The payoff is particularly
significant because most product costs are
determined at the design stage.
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Engine
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CAD Drawing
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Engine
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CAD Drawing
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Design Tecnology. CAD Extensions
 Extensions:
 Design for Manufacture and Assembly (DFMA) enables testing of design integration before
manufacturing. Software that allows designers to
look at the effect of design on manufacturing of the
product.

3-D Object Modeling - enables the building of small
models of the product (prototypes). 3-D object
modeling builds up a model in very thin layers of
synthetic materials for evaluation. It avoids a more
lengthy and formal manufacturing process.
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CAD systems have moved to the Internet through e-commerce,
where they link computerized design with purchasing,
outsourcing, manufacturing, and long-term maintenance.
This move supports rapid product change and the growing
trend toward “mass customization”.
With CAD on the Internet, customers can enter a suppliers’s
design libraries and make design changes. The supplier’s
software can then automatically generate the drawings, update
the bill of material, and prepare instructions for the supplier’s
production process. The result is customized products
produced faster and cheaper.
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© 2001 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458
Design Technology
Standard for the Exchange of Product
Data (STEP)
Standard for exchange of CAD data.
Provides a format allowing the electronic
transmittal of three-dimensional data.
Includes 3-D CAD data.
Enhances collaboration using talent
wherever it is in the world reducing design
lead time and development cost. Ex. Ford
engineers are putting together designs on
three continents.
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© 2001 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458
Design Technology
Computer-Aided Manufacturing (CAM)
Refers to the use of specialized computer
programs to direct and control
manufacturing equipment
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© 2001 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458
Design Technology
Benefits of CAD and CAM
 Product quality
 Shorter design time
 Production cost reductions
 Database availability
 New range of capabilities
 Reduces need for “similar” parts
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© 2001 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458
Design Technology
Virtual Reality
Enables creation of a “virtual model”
Helps test integration of design
Enables user to “try product” before
manufacturing (also enables customer to try
product before purchase)
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Production Technology
 Numerically controlled machines
Numerical control
 Computer numerical control
 Direct numerical control

 Process control
 Vision systems
 Robots
 Automated storage and retrieval systems
 Automated guided vehicles
 Flexible manufacturing systems
 Computer integrated manufacturing
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© 2001 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458
Production Technology
Numerical Control
Numerical control (NC) - machine can be
controlled electronically
Computer Numerically Controlled (CNC) machine actually has its own
microprocessor and memory
Direct Numerical Control (DNC) - wired to a
central computer
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Production Technology
Process Control - Operation
 Is the use of information technology to monitor and
control a physical process. For example, process
control is used to measure the moisture content and
thickness of a paper.
 To determine and control temperatures, pressures,
and quantities in petroleum refineries,
petrochemical processes, cement plants, steel mills,
nuclear reactors and other product-focused
facilities.
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© 2001 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458
Production Technology
Process Control - Operation
 Sensors, often analog devices, collect data
 Analog devices read data on some periodic basis,
perhaps once a minute or once a second
 Measurements are translated into digital signals,
and transmitted to a digital computer
 Computer programs read the file (the digital data)
and analyze the data
 Output may be a: message on printer or console,
signal to a motor to change a value setting, warning
light or horn, process control chart, etc.
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Photo S7.7
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Production Technology
Vision Systems
Combine video and computer technology
Often used in inspection roles
Consistently accurate, do not become bored,
of modest cost
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Machine Vision System
•Image
Acquisition
•Image Analysis
•Image
Interpretation
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© 2001 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458
Production Technology
Robots
 Machines that hold,
move, or grasp items
 Perform monotonous or
dangerous tasks
 Used when speed,
accuracy, or strength
are
needed
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Industrial robots are classified
by the International Standards
Organization as:
Automatically controlled,
reprogrammable,
multipurpose manipulator
programmable in three or
more axes.
© 2001 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458
Robots
 A robot is a mechanical device that can perform
preprogrammed physical tasks. A robot may act
under the direct control of a human (eg. the robotic
arm of the space shuttle) or autonomously under
the control of a pre-programmed computer. Robots
may be used to perform tasks that are too
dangerous or difficult for humans to implement
directly (e.g. the space shuttle arm) or may be used
to automate repetitive tasks that can be performed
more cheaply by a robot than by the employment of
a human (e.g. automobile production).
 Movies: http://www.robots.com/index.html
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© 2001 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458
Types of Robots
Large articulated robot
Cartesian
(rectilinear)
Cylindrical
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Spherical
(polar)
Articulated
(revolute, jointed,
anthropomorphic)
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Where Used and Applied
• Welding
• Painting
• Surface finishing
• Aerospace and automotive industries
• Light assembly such as in the micro-electronics industries,
or consumer products industries
• Inspection of parts (e.g., CMM)
• Underwater and space exploration
• Hazardous waste remediation
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Robots
 Basic Guide: http://www.robotsltd.co.uk/robot-guide.htm
Industrial robots manufacturers:
Cincinnati Milacron Robots
Nachi Robots
Fanuc Robots
Panasonic Robots
Mitsubishi Robots
OTC Daihen Robots
Motoman Robots
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Production Technology
Automated Storage and Retrieval System
(ASRS). Automated Warehouseing
Computer-controlled warehouses that
provide for the automatic placement and
withdrawal of parts and prodcuts into and
from designated places in a warehouse.
These systems are also found in inventory
and test areas of manufacturing firms.
Video: http://www.retrotech.com/asrs.htm#
Further material:
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Production Technology
Automatic Guided Vehicles (AGV)
 Material handling
machines
 Used to move parts &
equipment in
manufacturing
 May be used to deliver
mail & meals in
service facilities
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© 1984-1994 T/Maker Co.
© 2001 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458
Where are AGVS used?
 Aerospace & Defense
 Automotive
 Chemical
 Food & Beverage
 Government
 Newsprint
 Electronics
 Plastics
 Primary Metals
 Recycling
 And more…
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Who uses, what used for, when
used?
Raw Materials
Manufacturing
Palletizing
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Warehousing
Docking
Trailer Loading
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AGV Systems
can be used
throughout the
entire
production
process and
offer many
advantages
relative to
other types of
material
handling
systems.
© 2001 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458
Current State
 Ergonomically
designed
 Laser-guided
navigation
 New "3D Eyes"
navigation for
Automatic Guided
Vehicles (Amerden)
 Satellite Drive
AGV Products,
Inc.
Siemens
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AGV Components
Navigation
Drive/Steering
Control
Communication
Safety Equipment
Power Supply
Simulation
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Benefits of AGVS
Reduced labor and associated costs...
Increased dependability and productivity...
Less product handling damage...
Increased safety...
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Cost
Typically an AGV will cost about $100,000
Maintenance costs are typically 3-5% of the
overall system price.
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Production Technology
Flexible Manufacturing Systems
(FMS)
 When a central computer provides instructions to
each workstation and to the material-handling
equipment (which moves material to that station),
the systems is known as an automated cell work:
FMS
 Is flexible because both the material-handling
deices and the machines themselves are controlled
by easily changed electronic signals (computer
programs): low volume with high variety.
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© 2001 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458
Production Technology
Flexible Manufacturing Systems
(FMS)
 Using automated
machines (DNC) &
materials handling
equipment together
 Often connected to
centralized computer
 Also called automated
work cell
Auto Tool
Chg.
Machine 1
Robot
or AGV
Computer
Auto Tool
Chg.
Machine 2
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© 2001 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458
Production Technology
FMS - Pros & Cons
 Advantages




Faster, lower-cost changes from one part to another
Lower direct labor costs
Reduced inventory
Consistent, and perhaps better quality
 Disadvantages




Limited ability to adapt to product or product mix changes
Requires substantial preplanning and capital
expenditures
Technological problems of exact component positioning
and precise timing
Tooling and fixture requirements
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© 2001 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458
Production Technology
Flexible Manufacturing Systems
General
purpose
Products
1000
Work cells
CIM
Flexible
Manufacturing
System
100
Focused
automation
10
Dedicated
automation
1
1
10
100
1000
10000
100000
1000000
Volume
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Production Technology
Computer Integrated Manufacturing (CIM)
 Manufacturing system
that combines CAM
with engineering (CAD),
& production &
inventory control &
shipping
 Computer-aided design
(CAD) creates code to
run DNC machines
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Top
Mgmt
CAD
PIC
DNC
Robots
AGV
CAM
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CIM
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Equipment Options and Utilization
General purpose machines
Numerical controlled machines
Automated tool changing
Information
Sciences
Computer numerical control
Direct numerical control
Robots, AVG’s
Flexible
Manufacturing
Systems
Computer integrated manufacturing
Typical
Equipment
Utilization 5%-25%
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20%-75%
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70%-90%
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Use of Information Technology at North
American Manufacturing Plants
Computer Aided Design
72
Bar Coding
72
Industrial Computers
62
Computer Numerical Control (CNC)
54
Electronic Data Interchange (EDI)
40
Robotics
28
Automated Materials Handling (AGVs)
Automated Storage & Retrieval
System (ASRS)
24
20
0
20
40
60
80
Plants with at least moderate experience (%)
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Technology Impacts Services
 Financial services
 Education
 Utilities and
government
 Restaurant and foods
 Communications
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 Hotels
 Wholesale/retail trade
 Transportation
 Health care
 Airlines
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© 2001 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458
Technology’s Impact on Services
Service Industry
 Financial
services
 Education
 Utilities &
Government
 Restaurants &
foods
 Communication
 Hotels
Example
 Debit cards, electronic funds transfer,
automatic teller
 Multimedia presentations, bulletin boards,
library catalogs, Internet
 Automated one-man garbage trucks, optical
mail scanners, airborne warning and control
 Optical checkout scanners, wireless orders
from waiter to kitchen, robot butchering
 Electronic publishing, interactive TV voice mail,
“notepad” computers, cellular phones
 Electronic check-in and checkout systems,
electronic key/lock systems
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Technology’s Impact on Services continued
Service Industry
 Wholesale/retail
 Transportation
 Health care
 Airlines
Example
 Point-of-sale, electronic communications
between store and supplier, bar-coded data,
automated security systems
 Automatic toll booths, satellite-directed
navigation
 MRI scanners, sonograms, patient monitoring,
on-line medical information
 Ticketless travel, computer scheduling
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Information Sciences in Operations
The information sciences are making a major
impact in additional areas that have
applications in operations:
Transaction processing
 Management Information Systems
 Artificial Intelligence

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Transaction Processing System
Addresses the many transactions that occur
within and between firms. Traditionally paper
transactions: payroll, order entry, invoicing,
receipt of checks, inventory, personnel
records.
Competitive advantage in speed, accuracy or
cost reduction. (To the extent that such
systems can be automated beyond those of
competitors)
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Automatic Identification Systems AIS
Many transaction processing systems rely on
electronic signal. We must get the data into
an electronic form
AIS are the technologies tha provide the
translation of data into electronic form: Bar
codes, radio frequencies, optical characters.
RFID: Refers to the technology that uses
devices attached to objects that transmit
data to an RFID receiver. An alternative to
bar coding. Advantages include data
capacity, read/write capability, and no line-ofsight requirements.
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RFID: Radio Frequency Identification
Device
Radio Frequency Identification (RFID) is an automatic
identification method, relying on storing and
remotely retrieving data using devices called RFID
tags or transponders. An RFID tag is a small object
that can be attached to or incorporated into a
product, animal, or person. RFID tags contain
silicon chips and antennas to enable them to
receive and respond to radio-frequency queries
from an RFID transceiver. Passive tags require no
internal power source, whereas active tags require a
power source.
IBM RFID Control center:
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MIS: Management Information System
A system dedicating to obtaining, formatting,
manipulating, and presenting data as
information to managers when needed.
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DSS, MIS and Transaction
Processing in OM
Manufacturing, distribution, and procurement planning
Manufacturing
control
Shop
floor
reporting
Distribution
control
Work order
processing
Quality
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Procurement
control
Raw
materials
Order
filling
DSS
MIS
Transaction
Warehouse processing
receiving
system
Procurement
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© 2001 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458
MIS & Transaction
Processing in OM
Manufacturing and Material Management
MIS
Manufacturing Control
Quality
Shop floor
reporting
Shop work
orders
PowerPoint presentation to accompany Operations
Management, 6E (Heizer & Render)
Material Control
Procurement
Inventory
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Transaction
processing
Warehouse
receiving
© 2001 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458
Expert Systems
Make decisions faster than the expert
Derive the benefits of having an expert at
their disposal without having the expert
present
Equal and surpass, at least in terms of
consistency, the human expert
Free the human expert for other work
Can be disseminated to numerous
nonexperts for education and training
PowerPoint presentation to accompany Operations
Management, 6E (Heizer & Render)
S7-65
© 2001 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458
How an Expert Scheduling System
Works
Advice, explanations
possible schedules
Database
Specific facts
describing
present status
of operations
Information
from factory
floor
Process
PowerPoint presentation to accompany Operations
Management, 6E (Heizer & Render)
Requests for
schedules
Inference Engine
Determine rules
to use in what
sequence to
respond to a
request
Operating
Manager
Knowledge Base
General rules for
classifying,
obtained from
experts
Models
Expert on
Scheduling
Heuristics
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© 2001 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458
To Gain Competitive Advantage
Through Technology
Have a strategic vision
Plan for a distant time horizon
Have a focused product line and know your
product and customer
Tie strong internal technical capabilities to
your strategy
Build learning organizations that can
effectively implement the changes necessary
for constructive use of technology
PowerPoint presentation to accompany Operations
Management, 6E (Heizer & Render)
S7-67
© 2001 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458
Enterprise Resource Planning
(ERP)
Packaged business software systems that
allow companies to:
Automate and integrate the majority of their
business processes
 Share common data and practices across the
entire enterprise
 Produce and access information in a real-time
environment

PowerPoint presentation to accompany Operations
Management, 6E (Heizer & Render)
S7-68
© 2001 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458
Example of an ERP System
Finance and
Accounting
Production and
Material
Management
Centralized ERP
Shipping
Database, Software,
and Servers
Human Resources
PowerPoint presentation to accompany Operations
Management, 6E (Heizer & Render)
S7-69
© 2001 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458
Advantages of ERP
 Provides integration of supply-chain, production and
administrative processes
 Creates commonality of databases
 Can incorporate improved, redesigned, “best
processes:
 Increases communication and collaboration
worldwide
 Helps integrate multiple sites and business units
 Is packaged with a software core that is off-the-shelf
coding
 Can provide a strategic advantage over competitors
PowerPoint presentation to accompany Operations
Management, 6E (Heizer & Render)
S7-70
© 2001 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458
Disadvantages of ERP
 Is very expensive to purchase, and even more costly
to customize
 Requires major changes in the company and its
processes to implement
 Is such a complex program that many companies
cannot adjust to it
 Involves an ongoing process for implementation,
which is often never completed
 Expertise in ERP is limited, with staffing an ongoing
problem
PowerPoint presentation to accompany Operations
Management, 6E (Heizer & Render)
S7-71
© 2001 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458