1. IE 101-Industrial Engineering Orientation Fall 2009 Lecture on Information Systems and Technology Prof.Dr.Taner ALTUNOK

2. 1.2 © 2006 by Prentice Hall 1 Chapter Management of the Digital Firm

3. 1.3 © 2006 by Prentice Hall Management Information Systems Chapter 1 Managing the Digital Firm 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. Capital Management: WHY INFORMATION SYSTEMS?

4. 1.4 © 2006 by Prentice Hall Management Information Systems Chapter 1 Managing the Digital Firm Information Technology Capital Investment Figure 1-1 WHY INFORMATION SYSTEMS? 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.

5. 1.5 © 2006 by Prentice Hall Management Information Systems Chapter 1 Managing the Digital Firm Most businesses today could not operate without extensive use of information systems and technologies.Most businesses today could not operate without extensive use of information systems and technologies. IT can increase market share.IT can increase market share. IT can help a business become a high-quality, low-cost producer.IT can help a business become a high-quality, low-cost producer. IT is vital to the development of new products.IT is vital to the development of new products. Foundation of doing business: WHY INFORMATION SYSTEMS?

6. 1.6 © 2006 by Prentice Hall Management Information Systems Chapter 1 Managing the Digital Firm The Interdependence between Organizations and Information Systems Figure 1-2 WHY INFORMATION SYSTEMS?

7. 1.7 © 2006 by Prentice Hall Management Information Systems Chapter 1 Managing the Digital Firm 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. WHY INFORMATION SYSTEMS? Productivity:

8. 1.8 © 2006 by Prentice Hall Management Information Systems Chapter 1 Managing the Digital Firm 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-to- order business model that other firms have not been able to imitate. WHY INFORMATION SYSTEMS? Strategic Opportunity and Advantage:

9. 1.9 © 2006 by Prentice Hall Management Information Systems Chapter 1 Managing the Digital Firm 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. WHY INFORMATION SYSTEMS? Strategic Opportunity and Advantage:

10. 1.10 © 2006 by Prentice Hall Management Information Systems Chapter 1 Managing the Digital Firm The Growth of the Information Economy Figure 1-3 WHY INFORMATION SYSTEMS? 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.

11. 1.11 © 2006 by Prentice Hall Management Information Systems Chapter 1 Managing the Digital Firm Digitally enabled relationships with customers, suppliers, and employees Core business processes accomplished using digital networks Digital management of key corporate assets WHY INFORMATION SYSTEMS? Emergence of the Digital Firm:

12. 1.12 © 2006 by Prentice Hall Management Information Systems Chapter 1 Managing the Digital Firm Agile sensing and responding to environmental changes Seamless flow of information within the firm, and with strategic partners WHY INFORMATION SYSTEMS? Emergence of the Digital Firm (Continued):

13. 1.13 © 2006 by Prentice Hall Management Information Systems Chapter 1 Managing the Digital Firm The Emerging Digital Firm Figure 1-4 WHY INFORMATION SYSTEMS?

14. 1.14 © 2006 by Prentice Hall PERSPECTIVES ON INFORMATION SYSTEMS Management Information Systems Chapter 1 Managing the Digital Firm What Is an Information System? Technology perspective: 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

15. 1.15 © 2006 by Prentice Hall PERSPECTIVES ON INFORMATION SYSTEMS Management Information Systems Chapter 1 Managing the Digital Firm 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

16. 1.16 © 2006 by Prentice Hall PERSPECTIVES ON INFORMATION SYSTEMS Management Information Systems Chapter 1 Managing the Digital Firm Data and Information Figure 1-5

17. 1.17 © 2006 by Prentice Hall PERSPECTIVES ON INFORMATION SYSTEMS Management Information Systems Chapter 1 Managing the Digital Firm Functions of an Information System Figure 1-6

18. 1.18 © 2006 by Prentice Hall Management Information Systems Chapter 1 Managing the Digital Firm Rely on computer hardware and softwareRely on computer hardware and software Processing and disseminating informationProcessing and disseminating information Fixed definitions of data and proceduresFixed definitions of data and procedures Collecting, storing, and using informationCollecting, storing, and using information PERSPECTIVES ON INFORMATION SYSTEMS Computer-Based Information System (CBIS)

19. 1.19 © 2006 by Prentice Hall PERSPECTIVES ON INFORMATION SYSTEMS Management Information Systems Chapter 1 Managing the Digital Firm The Business Information Value Chain Figure 1-7

20. 1.20 © 2006 by Prentice Hall PERSPECTIVES ON INFORMATION SYSTEMS Management Information Systems Chapter 1 Managing the Digital Firm Information Systems Are More than Computers Figure 1-8

21. 1.21 © 2006 by Prentice Hall Management Information Systems Chapter 1 Managing the Digital Firm Sales and marketingSales and marketing ManufacturingManufacturing FinanceFinance AccountingAccounting Human resourcesHuman resources PERSPECTIVES ON INFORMATION SYSTEMS Major Business Functions Rely on Information Systems

22. 1.22 © 2006 by Prentice Hall Management Information Systems Chapter 1 Managing the Digital Firm Hardware: Physical equipmentHardware: Physical equipment Software: Detailed preprogrammed instructionsSoftware: Detailed preprogrammed instructions Storage: Physical media for storing data and the softwareStorage: Physical media for storing data and the software PERSPECTIVES ON INFORMATION SYSTEMS Information technology is one of the tools managers use to cope with change: The Technology Dimension of Information Systems

23. 1.23 © 2006 by Prentice Hall Management Information Systems Chapter 1 Managing the Digital Firm Communications technology: Transfers data from one physical location to anotherCommunications technology: Transfers data from one physical location to another Networks: Links computers to share data or resourcesNetworks: Links computers to share data or resources PERSPECTIVES ON INFORMATION SYSTEMS The Technology Dimension of Information Systems (Continued) Managers need to know enough about information technology to make intelligent decisions about how to use it for creating business value.

24. 1.24 © 2006 by Prentice Hall PERSPECTIVES ON INFORMATION SYSTEMS Management Information Systems Chapter 1 Managing the Digital Firm Variation in Returns on Information Technology Investment Figure 1-9 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.

25. 1.25 © 2006 by Prentice Hall 2 Chapter Information Systems in the Enterprise EnterpriseInformation Systems in the Enterprise Enterprise

26. 1.26 © 2006 by Prentice Hall Management Information Systems 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

27. 1.27 © 2006 by Prentice Hall Management Information Systems 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 Figure 2-7

28. 1.28 © 2006 by Prentice Hall Management Information Systems 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

29. 1.29 © 2006 by Prentice Hall Management Information Systems Management Information Systems Chapter 2 Information Systems in the Enterprise SYSTEMS FROM A FUNCTIONAL PERSPECTIVE SYSTEMDESCRIPTIONORGANIZATIONAL 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 Manufacturing and Production Systems

30. 1.30 © 2006 by Prentice Hall Management Information Systems Management Information Systems Chapter 2 Information Systems in the Enterprise Overview of an Inventory System Figure 2-10 SYSTEMS FROM A FUNCTIONAL PERSPECTIVE

31. 1.31 © 2006 by Prentice Hall Management Information Systems Management Information Systems Chapter 2 Information Systems in the Enterprise Business Processes and Information Systems Cross-Functional Business Processes: Transcend boundary between sales, marketing, manufacturing, and research and developmentTranscend boundary between sales, marketing, manufacturing, and research and development Group employees from different functional specialties to a complete piece of workGroup employees from different functional specialties to a complete piece of work Example: Order Fulfillment Process INTEGRATING FUNCTIONS AND BUSINESS PROCESSES: Introduction to Enterprise Applications

32. 1.32 © 2006 by Prentice Hall Management Information Systems Management Information Systems Chapter 2 Information Systems in the Enterprise The Order Fulfillment Process Figure 2-12 INTEGRATING FUNCTIONS AND BUSINESS PROCESSES: Introduction to Enterprise Applications

33. 1.33 © 2006 by Prentice Hall Management Information Systems Management Information Systems Chapter 2 Information Systems in the Enterprise Systems for Enterprise-Wide Process Integration Enterprise applications: Designed to support organization-wide process coordination and integrationDesigned to support organization-wide process coordination and integration INTEGRATING FUNCTIONS AND BUSINESS PROCESSES: Introduction to Enterprise Applications

34. 1.34 © 2006 by Prentice Hall Consist of Consist of : Enterprise systems Supply chain management systems Customer relationship management systems Knowledge management systems Management Information Systems Management Information Systems Chapter 2 Information Systems in the Enterprise Systems for Enterprise-Wide Process Integration (Continued) INTEGRATING FUNCTIONS AND BUSINESS PROCESSES: Introduction to Enterprise Applications

35. 1.35 © 2006 by Prentice Hall Management Information Systems Management Information Systems Chapter 2 Information Systems in the Enterprise 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.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.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. INTEGRATING FUNCTIONS AND BUSINESS PROCESSES: Introduction to Enterprise Applications

36. 1.36 © 2006 by Prentice Hall Management Information Systems Management Information Systems Chapter 2 Information Systems in the Enterprise Enterprise Application Architecture Figure 2-13 INTEGRATING FUNCTIONS AND BUSINESS PROCESSES: Introduction to Enterprise Applications

37. 1.37 © 2006 by Prentice Hall Management Information Systems Management Information Systems Chapter 2 Information Systems in the Enterprise Traditional “Silo” View of Information Systems Within the business: There are functions, each having its uses of information systemsThere are functions, each having its uses of information systems Outside the organization’s boundaries: There are customers and vendorsThere are customers and vendors Functions tend to work in isolation INTEGRATING FUNCTIONS AND BUSINESS PROCESSES: Introduction to Enterprise Applications

38. 1.38 © 2006 by Prentice Hall Management Information Systems Management Information Systems Chapter 2 Information Systems in the Enterprise Traditional View of Systems Figure 2-14 INTEGRATING FUNCTIONS AND BUSINESS PROCESSES: Introduction to Enterprise Applications

39. 1.39 © 2006 by Prentice Hall Management Information Systems Management Information Systems Chapter 2 Information Systems in the Enterprise Enterprise Systems Figure 2-15 INTEGRATING FUNCTIONS AND BUSINESS PROCESSES: Introduction to Enterprise Applications

40. 1.40 © 2006 by Prentice Hall Management Information Systems Management Information Systems Chapter 2 Information Systems in the Enterprise Benefits of Enterprise Systems Help to unify the firm’s structure and organization: One organizationHelp to unify the firm’s structure and organization: One organization Management: Firm wide knowledge-based management processesManagement: Firm wide knowledge-based management processes Technology: Unified platformTechnology: Unified platform Business: More efficient operations & customer- driven business processesBusiness: More efficient operations & customer- driven business processes INTEGRATING FUNCTIONS AND BUSINESS PROCESSES: Introduction to Enterprise Applications

41. 1.41 © 2006 by Prentice Hall Mago.Net BOM and Basic Manufacturing

42. 1.42 © 2006 by Prentice Hall 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

43. 1.43 © 2006 by Prentice Hall The BOM is a list of particulars or parts or semifinished that form an assembly. The assembly means a finished product or a big part of it. 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. BILL OF MATERIALS

44. 1.44 © 2006 by Prentice Hall Studying BOM head fields The BOM type can be an inventory item or a phantom.

45. 1.45 © 2006 by Prentice Hall The production plan is a document that describes for each item quantities to produce. Sales Orders Inventory Requirements PRODUCTION PLAN The Production Plan

46. 1.46 © 2006 by Prentice Hall The Production Plan … otherwise, it is possible to create the Production Plan manually.

47. 1.47 © 2006 by Prentice Hall 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 Mago.Net Basic Manufacturing

48. 1.48 © 2006 by Prentice Hall MANUFACTURING ORDER 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. Sale Orders Inventory requirements

49. 1.49 © 2006 by Prentice Hall Production Development The Production Development can be run directly by the Manufacturing Order. The Production Development is run for the current MO and for all MOs hierarchically connected. By right clicking

50. 1.50 © 2006 by Prentice Hall Materials picking To define a Manufacturing Storage, it is necessary to set the Enable Picking from this Storage for Production checkbox. During the Production Development all components are picked, also if not available (according to the country localization).

51. 1.51 © 2006 by Prentice Hall Production Development JOB TICKET MATERIALS PICKING MO CONFIRMATION Manufacturing Order Confirmation With the MO Confirmation we can enter: Produced quantities (partial too) Scraped quantities Load storages (storages set in the Manufacturing Parameters, Storages tab are proposed) The manufacturing order status Created changes in Processing for partial quantities Confirmed also if the MO is closed for partial quantities

52. 1.52 © 2006 by Prentice Hall Manufacturing Order Confirmation The Confirmation can be run directly by the Manufacturing Order The Confirmation is run for the current MO By right clicking

53. 1.53 © 2006 by Prentice Hall 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.

54. 1.54 © 2006 by Prentice Hall 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. Variants

55. 1.55 © 2006 by Prentice Hall MAGO-MAGIC-INT

56. 1.56 © 2006 by Prentice Hall 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.

57. 1.57 © 2006 by Prentice Hall 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

58. 1.58 © 2006 by Prentice Hall 3 Chapter Information Systems, Organizations, Management, and Strategy

59. 1.59 © 2006 by Prentice Hall INFORMATION SYSTEMS AND BUSINESS STRATEGY 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 Management Information Systems Chapter 3 Information Systems, Organizations, Management, and Strategy Switching Costs and Lock-in Effects

60. 1.60 © 2006 by Prentice Hall INFORMATION SYSTEMS AND BUSINESS STRATEGY Stockless Inventory compared to Traditional and Just- in-time Supply Methods Figure 3-13 Management Information Systems Chapter 3 Information Systems, Organizations, Management, and Strategy

61. 1.61 © 2006 by Prentice Hall