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ERP-The Dynamics of Supply Chain and Process Management.Pdf ERP Avraham Shtub • Reuven Karni ERP The Dynamics of Supply Chain and Process Management Second Edition Avraham Shtub Reuven Karni Faculty of Industrial Department of Industrial Engineering & Management Engineering & Management Technion - Israel Institute of Technology Shenkar College of Engineering & Design 32000 Haifa 52526 Ramat Gan Israel Israel [email protected] [email protected] ISBN 978-0-387-74523-7 e-ISBN 978-0-387-74526-8 DOI 10.1007/978-0-387-74526-8 Springer New York Dordrecht Heidelberg London Library of Congress Control Number: 2009933263 © Springer Science+Business Media, LLC 2010 All rights reserved. This work may not be translated or copied in whole or in part without the written permission of the publisher (Springer Science+Business Media, LLC, 233 Spring Street, New York, NY 10013, USA), except for brief excerpts in connection with reviews or scholarly analysis. Use in connection with any form of information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed is forbidden. The use in this publication of trade names, trademarks, service marks, and similar terms, even if they are not identified as such, is not to be taken as an expression of opinion as to whether or not they are subject to proprietary rights. Printed on acid-free paper Springer is part of Springer Science+Business Media (www.springer.com) We would like to dedicate this book to our loving wives Doreen Karni and Ailona Shtub, to Reuven Karni’s sister, Avis Goldberg and to Avy Shtub’s late brother, Israel Shtub. Contents Preface ....................................................................................................................xi Authors’ Acknowledgements .............................................................................xiii 1 Introduction ................................................................................................... 1 1.1 The Theme of this Book ....................................................................... 1 1.2 Operations Management Defined ......................................................... 1 1.3 The Need for Integrated Production and Order Management .............. 3 1.4 Summary: Viewpoints of Enterprise Operation ................................... 5 1.5 Operations Management Frameworks ..................................................6 1.6 Modeling in Operations Management .................................................. 7 1.7 Modeling in Process Management ....................................................... 9 1.8 The Dynamic Aspect: Simulation and Systems Dynamics ................ 10 1.9 Overview of the Book ........................................................................ 12 Problems .............................................................................................17 2 Organizations and Organizational Structures ........................................ 19 2.1 Functional and Project Organizations, Typical Goals and Performance Measures ................................................................. 19 2.2 The Job Shop, Flow Shop, and Group Technology ........................... 25 2.3 Operations Management and Its Interface with Other Functional Areas: Restructuring the Order-Fulfillment Process .......................... 28 Problems .............................................................................................. 29 3 Enterprise Process Modeling ..................................................................... 31 3.1 The Reference Model Approach to Enterprise Process Modeling ...... 31 3.2 Basic Concepts in Enterprise Process Modeling................................. 31 3.3 An Example of a Business Process .................................................... 35 3.4 Enterprise Modeling Principles .......................................................... 35 3.5 Enterprise Functionalities ...................................................................36 3.6 A Procedure for the Design of an Enterprise-Specific Process Model .................................................................................................. 44 3.7 A Case Study: “Hotel Front Desk” ..................................................... 53 Problems .............................................................................................56 vii viii Contents 4 Information and Its Use ............................................................................. 59 4.1 From Data Collection to Decisionmaking .......................................... 59 4.2 Information Systems: The Data Base and the Model Base ................ 61 4.3 The Accounting Information System .................................................63 4.4 Quality of Information ........................................................................65 4.5 Forecasting ..........................................................................................66 Problems .............................................................................................71 5 Marketing Considerations ......................................................................... 73 5.1 Manufacturing Policies: Make to Stock, Make to Order, Assemble to Order, Engineer to Order ............................................... 73 5.2 The Master Production Schedule ........................................................ 76 5.3 Lead Time and Time-Based Competition .......................................... 78 5.4 Quality and Its Management: Quality-Based Competition ................ 81 5.5 Cost Considerations and Cost-Based Competition ............................ 82 Problems .............................................................................................85 6 Purchasing, Outsourcing and Inventory Management .......................... 87 6.1 The Need for Purchasing and Outsourcing ........................................ 87 6.2 Purchasing and Outsourcing – Make or Buy Decisions ..................... 88 6.3 Supplier Management .........................................................................90 6.4 Inventory Management – Benefit and Cost Considerations ............... 93 6.5 Inventory Management – Models and their Assumptions ................. 97 6.6 The Dynamics of the Order-Fulfillment Process – Early Studies .............................................................................................. 101 Problems ...........................................................................................102 7 Scheduling ................................................................................................. 105 7.1 The Job Shop: Implementing Priority Rules ................................... 105 7.2 Scheduling the Flow Shop ................................................................ 111 7.3 The Just-in-Time Approach ..............................................................113 7.4 The Dynamic Shop: Expediting and Changing Priorities ................ 116 7.5 The Drum Buffer Rope Approach .................................................... 117 Problems ...........................................................................................121 8 Design of Business Processes ................................................................... 123 8.1 Process Design and Process Modeling ............................................ 123 8.2 Process Perspectives (Process Viewpoints) ..................................... 123 8.3 Business Process Design Procedure ................................................. 125 8.4 Business Process Design Example ................................................... 134 8.5 New Process Design ........................................................................ 135 8.6 Comparison of the Current and New Processes ............................... 144 8.7 Context-Dependent Processes ..........................................................145 Problems ...........................................................................................147 Contents ix 9 The Integrated Order-Fulfillment Process Using MRP ........................ 151 9.1 Operations Management Frameworks ............................................. 151 9.2 Evolution of Computer-based Operations Management Strategies .......................................................................................... 152 9.3 The Material Requirements Planning Concept ................................ 153 9.4 The Product (Engineering) Data: The Bill of Material .................... 154 9.5 Logistic (Order) Data: The Master Production Schedule and Inventory Data ...........................................................................157 9.6 Gross to Net and Time-phasing – MRP Logic.................................. 159 9.7 Capacity Considerations.................................................................... 162 Problems ...........................................................................................167 10 The integrated Order-Fulfillment Process Using ERP ......................... 169 10.1 Cross-Enterprise Processes in the Integrated Order-Fulfillment Process ............................................................................................ 169 10.2 The Role of Management in the Integrated Order-Fulfillment Process ............................................................................................ 169 10.3 The Hierarchy of Goals and the Road Map to the Goal ................. 173 10.4 Establishing Control: Identifying Problems ..................................
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