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ERP by Mary Sumner. Chapter 1 Table 1 -1 Historical Evolution of ERP Systems. Independent Demand (Demand for the final end-product or demand not related to other items)  use forecasting). Dependent Demand (Derived demand items for component parts, subassemblies,

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erp by mary sumner

ERP by Mary Sumner

Chapter 1

Table 1 -1 Historical Evolution of ERP Systems

independent vs dependent demand

Independent Demand (Demand for the final end-product or demand not related to other items)  use forecasting)

Dependent Demand

(Derived demand items for component parts,

subassemblies,

raw materials, etc) => use MRP

Independent vs. Dependent Demand

Finished

product

E(1)

Component parts

basic fixed order quantity model and reorder point behavior

4. The cycle then repeats.

1. You receive an order quantity Q.

Number

of units

on hand

Q

Q

Q

R

L

L

2. Your start using them up over time.

3. When you reach down to a level of inventory of R, you place your next Q sized order.

Time

R = Reorder point

Q = Economic order quantity

L = Lead time

Basic Fixed-Order Quantity Model and Reorder Point Behavior
material requirements planning
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”
slide5

5

Firm orders

from known

customers

Forecasts

of demand

from random

customers

Aggregate

product

plan

Engineering

design

changes

Inventory

transactions

Master production

Schedule (MPS)

Material

planning

(MRP

computer

program)

Bill of

material

file

Inventory

record file

Secondary reports

Primary reports

Exception reports

Planning reports

Reports for performance control

Planned order schedule for inventory and production control

  • The McGraw-Hill Companies, Inc., 2004
closed loop mrp

No

Realistic?

Feedback

Feedback

Yes

Execute:

Capacity Plans

Material Plans

Closed Loop MRP

Production Planning

Master Production Scheduling

Material Requirements Planning

Capacity Requirements Planning

manufacturing resource planning mrp ii
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
erp by mary sumner8

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

slide9

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 firm’s products or services
slide10

INFORMATION SYSTEMS AND BUSINESS STRATEGY

  • Support Activities:
  • Make the delivery of primary activities possible
  • Consist of the organization’s infrastructure, human resources, technology, and procurement
slide11

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
slide12

Figure 3-11

INFORMATION SYSTEMS AND BUSINESS STRATEGY

The Firm Value Chain and the Industry Value Chain

erp by mary sumner13

ERP by Mary Sumner

Just-in-Time/Lean Manufacturing/Toyota Production System

Pages 91, 96, 137

Also required in the SCM textbook by Chopra

toyota production system tps related terms
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
push versus pull
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
traditional u s manufacturing firm push old style mrp material requirements planning system
Traditional U.S. Manufacturing Firm:Push (“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)

pull jit system
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)

kanban
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
triangular kanban

Part #

Part Description

Location

Date Triggered

Lot Size

Trigger (Reorder) Point

Tool #

Machine #

Triangular Kanban
basic fixed order quantity model and reorder point behavior23

4. The cycle then repeats.

1. You receive an order quantity Q.

Number

of units

on hand

Q

Q

Q

R

L

L

2. Your start using them up over time.

3. When you reach down to a level of inventory of R, you place your next Q sized order.

Time

R = Reorder point

Q = Economic order quantity

L = Lead time

Basic Fixed-Order Quantity Model and Reorder Point Behavior
kanban24
Kanban

The function of Kanban ≈

The function of Inventory Reorder Point (ROP)