IE 101-Industrial Engineering Orientation
Fall 2009
Lecture on Information
Systems and
Technology
Prof.Dr.Taner ALTUNOK
Chapter 1
Management of the
Digital Firm
1.2
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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.
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Management Information Systems
Chapter 1 Managing the Digital Firm
WHY INFORMATION SYSTEMS?
Information Technology Capital Investment
1.4
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.
Figure 1-1
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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.
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Management Information Systems
Chapter 1 Managing the Digital Firm
WHY INFORMATION SYSTEMS?
The Interdependence between Organizations and
Information Systems
1.6
Figure 1-2
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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.
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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-toorder business model that other firms have not
been able to imitate.
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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.
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Management Information Systems
Chapter 1 Managing the Digital Firm
WHY INFORMATION SYSTEMS?
The Growth of the Information Economy
1.10
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.
Figure 1-3
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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
1.11
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Management Information Systems
Chapter 1 Managing the Digital Firm
WHY INFORMATION SYSTEMS?
Emergence of the Digital Firm (Continued):
• Agile sensing and responding to environmental
changes
• Seamless flow of information within the firm, and
with strategic partners
1.12
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Management Information Systems
Chapter 1 Managing the Digital Firm
WHY INFORMATION SYSTEMS?
The Emerging Digital Firm
1.13
Figure 1-4
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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
1.14
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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
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Management Information Systems
Chapter 1 Managing the Digital Firm
PERSPECTIVES ON INFORMATION SYSTEMS
Data and Information
1.16
Figure 1-5
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Management Information Systems
Chapter 1 Managing the Digital Firm
PERSPECTIVES ON INFORMATION SYSTEMS
Functions of an Information System
1.17
Figure 1-6
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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
1.18
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Management Information Systems
Chapter 1 Managing the Digital Firm
PERSPECTIVES ON INFORMATION SYSTEMS
The Business Information Value Chain
1.19
Figure 1-7
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Management Information Systems
Chapter 1 Managing the Digital Firm
PERSPECTIVES ON INFORMATION SYSTEMS
Information Systems Are More than Computers
1.20
Figure 1-8
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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
1.21
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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
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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.
1.23
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Management Information Systems
Chapter 1 Managing the Digital Firm
PERSPECTIVES ON INFORMATION SYSTEMS
Variation in Returns on Information Technology Investment
1.24
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.
Figure 1-9
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Chapter 2
Information
Systems in the
Enterprise
1.25
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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
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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
1.27
Figure 2-7
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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
1.28
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Management Information Systems
Chapter 2 Information Systems in the Enterprise
SYSTEMS FROM A FUNCTIONAL PERSPECTIVE
Manufacturing and Production Systems
1.29
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
© 2006 by Prentice Hall
Management Information Systems
Chapter 2 Information Systems in the Enterprise
SYSTEMS FROM A FUNCTIONAL PERSPECTIVE
Overview of an Inventory System
1.30
Figure 2-10
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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
1.31
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Management Information Systems
Chapter 2 Information Systems in the Enterprise
INTEGRATING FUNCTIONS AND BUSINESS PROCESSES:
Introduction to Enterprise Applications
The Order Fulfillment Process
1.32
Figure 2-12
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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
1.33
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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
1.34
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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.
1.35
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Management Information Systems
Chapter 2 Information Systems in the Enterprise
INTEGRATING FUNCTIONS AND BUSINESS PROCESSES:
Introduction to Enterprise Applications
Enterprise Application Architecture
1.36
Figure 2-13
© 2006 by Prentice Hall
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
1.37
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Management Information Systems
Chapter 2 Information Systems in the Enterprise
INTEGRATING FUNCTIONS AND BUSINESS PROCESSES:
Introduction to Enterprise Applications
Traditional View of Systems
1.38
Figure 2-14
© 2006 by Prentice Hall
Management Information Systems
Chapter 2 Information Systems in the Enterprise
INTEGRATING FUNCTIONS AND BUSINESS PROCESSES:
Introduction to Enterprise Applications
Enterprise Systems
1.39
Figure 2-15
© 2006 by Prentice Hall
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 & customerdriven business processes
1.40
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Mago.Net
BOM and Basic Manufacturing
1.41
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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
1.42
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BILL OF MATERIALS
The BOM is a list of particulars or parts or semifinished
that form an assembly.
A
The assembly means a finished product or a big part of it.
B
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.
1.43
D
C
E
F
G
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Studying BOM head fields
The BOM type can be an inventory item or a phantom.
1.44
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The Production Plan
•
The production plan is a document that describes for each item quantities to
produce.
Sales Orders
Inventory
Requirements
PRODUCTION PLAN
1.45
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The Production Plan
… otherwise, it is possible to create the Production Plan manually.
1.46
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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
1.47
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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.
1.48
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Production Development
The Production Development can be run directly by the Manufacturing Order.
By right clicking
The Production Development is run for the current MO and for all MOs hierarchically connected.
1.49
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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.
1.50
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Manufacturing Order Confirmation
With the MO Confirmation we can enter:
Production
Development
Produced quantities (partial too)
Scraped quantities
Load storages (storages set in the Manufacturing Parameters,
Storages tab are proposed)
JOB TICKET
The manufacturing order status
Created
MATERIALS PICKING
changes in
MO CONFIRMATION
Processing for partial quantities
Confirmed also if the MO is closed for partial
quantities
1.51
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Manufacturing Order Confirmation
The Confirmation can be run directly by the Manufacturing Order
By right clicking
The Confirmation is run for the current MO
1.52
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Confirmation by Bill of Lading
To enter scraps it is necessary to edit the Item status Scrap.
If some quantities are Confirming and other are scraps, the same row must be loaded
twice on the Bill of Lading, one with the Item status Confirming and another one with the
Item status Scrap.
1.53
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Variants
A variant is a modification to a standard BOM, it defines raw
materials or semifinished to be added, eliminated or modified to
obtain a particular BOM.
We can enter all BOMs we want, but to simplify the maintenance
of many BOMS, it is suggested to define the standard BOM only
one time and then to define variants.
1.54
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MAGO-MAGIC-INT
1.55
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What is Magic Documents?
• It’s the new Mago.Net module that, by using
the MS Office technology (Smart Tag), allows
the integration of Taskbuilder with MS Word
and MS Excel.
It is available both for Professional and Standard (only for
use, not for design) edition of Mago.Net.
1.56
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What does Magic Documents
allow?
• Use Mago.Net without Mago.Net!
• Create your own data entries only with the desired information, thanks to the
flexibility offered by the XTech profiles. The user can change the contents and
the layout of the data entry using the power of Office
• Show the reports using the power of Excel as an analysis tool
1.57
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Chapter 3
Information Systems,
Organizations,
Management, and
Strategy
1.58
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Management Information Systems
Chapter 3
Information Systems, Organizations, Management, and Strategy
INFORMATION SYSTEMS AND BUSINESS STRATEGY
Switching Costs and Lock-in Effects
• IT is used at the firm level to discourage customers
from switching to other suppliers, and “locking” them
into a firm’s channels.
• Switching cost is the expense incurred by a customer
or company for changing from one supplier or system
to another.
• Example: Baxter International
1.59
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Management Information Systems
Chapter 3
Information Systems, Organizations, Management, and Strategy
INFORMATION SYSTEMS AND BUSINESS STRATEGY
Stockless Inventory compared to Traditional and Justin-time Supply Methods
1.60
Figure 3-13
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1.61
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