Advanced Manufacturing Laboratory, Industrial Enginnering Dep ...

Advanced Manufacturing Laboratory, Industrial Enginnering Dep ...

ERP (21-550) Advanced Manufacturing Laboratory Department of Industrial Engineering Sharif University of Technology Session #6 Course Description Instructor Omid Fatahi Valilai, Ph.D. Industrial Engineering Department, Sharif University of Technology Email: [email protected] , Tel: 6616-5706 Website: Sharif.edu/~fvalilai Class time Sunday-Tuesday Wednesday 16:30-18:30 09:00-12:00

Course evaluation Mid-term Final exam Quiz Exercise ERP Lab (30%) (40%) (5%) (10%) (15%)

Advanced Manufacturing Laboratory, Department of Industrial Engineering, Sharif University of Technology ERP (21-550), Session #6 2 Course Description (Continued ) Mid-term session: Sunday : 8th Azar 1394, 16:30 ~ 18:00 Final Exam: Sunday: 27th Dey 1394, 09:00 ~ 10:30 Reference: Shtub, A., Enterprise Resource Planning (ERP)- The dynamics of operations management, 2002, Kluwer Academic Publishers Ptak, Carol A., ERP Tools, Techniques, and Applications for Integrating the Supply Chain, 2004, The CRC Press

Fui, F., Nah, H., Enterprise Resource Planning, 2002, IRM Press Advanced Manufacturing Laboratory, Department of Industrial Engineering, Sharif University of Technology ERP (21-550), Session #6 3 Course Description (Continued ) Mid-term session: Sunday : 8th Azar 1394, 16:30 ~ 18:00 Final Exam: Sunday: 27th Dey 1394, 09:00 ~ 10:30 Reference: Daniel E. Oleary, Enterprise Resource Planning Systems Systems, Life Cycle, Electronic Commerce, and Risk, 2000, Cambridge University Press Advanced Manufacturing Laboratory, Department of Industrial Engineering, Sharif University of Technology

ERP (21-550), Session #6 4 Course Description (Continued..) Contents: Enterprise Management Operations Management The Evolution of ERP Systems: A Historical Organizations and organizational structures

Scheduling Purchasing and inventory management Marketing considerations ERP selection and implementation Advanced Manufacturing Laboratory, Department of Industrial Engineering, Sharif University of Technology ERP (21-550), Session #6 6 Course Description (Continued..) Contents: Enterprise Management History of Enterprise Resource Planning The Theory of Constraints and ERP Sales and Operations Planning

Buffer Resource Strategy Enterprise Resource Management Integrating the Supply Chain to Reap the Rewards Strategic Sourcing and Procurement Advanced Manufacturing Laboratory, Department of Industrial Engineering, Sharif University of Technology ERP (21-550), Session #6 7 Enterprise Management Contents: The Theory of Constraints and ERP The different mentality between executives and information system professionals has caused the two areas to develop in different directions. The Enterprise Resource Planning (ERP) information system may provide the bridge for better mutual understanding as it touches a basic element in management that really needs support.

Advanced Manufacturing Laboratory, Department of Industrial Engineering, Sharif University of Technology ERP (21-550), Session #6 8 Enterprise Management Contents: The Theory of Constraints and ERP TOC deals with the problem of managing and improving complex systems using a holistic, logical, and win/win approach. It challenges the following three basic assumptions relating to how we are currently trying to manage and improve: Every local improvement is an improvement for the system as a whole. Every problem needs to be addressed directly and independently to improve the system as a whole. In order for one part in the system to win, another must lose. Advanced Manufacturing Laboratory, Department of Industrial Engineering, Sharif University of Technology

ERP (21-550), Session #6 9 Enterprise Management Contents: The Theory of Constraints and ERP How should one assess the true benefits of any new technology? The Theory of Constraints (TOC) suggests the following six questions for checking the value of any new technology like ERP What Is the Main Power of the New Technology? What Limitation Does the New Technology Diminish? What Rules Helped Us to Accommodate the Limitation? What Rules Should We Use Now? Do the New Rules Require Any Change in the Way We Use the Technology? How Do We Cause the Change? Advanced Manufacturing Laboratory, Department of Industrial Engineering, Sharif University of Technology

ERP (21-550), Session #6 10 Enterprise Management Contents: The Theory of Constraints and ERP The holistic approach of TOC suggests the simplification of the complexity of the organization by different means than by letting every function behave almost independently. TOC developed out of an information system called optimized production technology (OPT) developed in the late 1970s and early 1980s. This is one of the oldest finite-capacity schedulers for manufacturing organization and it is still available today. The special case of OPT is that its developers had found out that the underlining principles of the software conflict with some managerial norms. The conflict was devastating to the proper implementation of this new management approach. Advanced Manufacturing Laboratory, Department of Industrial Engineering, Sharif University of Technology

ERP (21-550), Session #6 11 Enterprise Management Contents: The Theory of Constraints and ERP Four basic principles/assumptions constitute the core of TOC: The organization has a goal it wishes to maximize indefinitely. An organization can achieve more than the sum of its parts acting as if it is independent. The performance of an organization is constrained by very few variables. Complex as the human-based organization can be, it is still subject to cause-effect relationships. Advanced Manufacturing Laboratory, Department of Industrial Engineering, Sharif University of Technology ERP (21-550), Session #6

12 Enterprise Management Contents: The Theory of Constraints and ERP Using the four basic principles and applying common sense logic, Dr. Goldratt developed the five focusing steps of TOC. Identify the systems constraints. Decide how to exploit the systems constraints. Subordinate everything else to the above decisions. Elevate the systems constraints. Go back to Step 1 but do not allow inertia to cause a system constraint. Advanced Manufacturing Laboratory, Department of Industrial Engineering, Sharif University of Technology ERP (21-550), Session #6

13 Enterprise Management Contents: The Theory of Constraints and ERP Four specific TOC techniques: Shop floor planning method Control system Multi-project planning and control method TOC management accounting approach Advanced Manufacturing Laboratory, Department of Industrial Engineering, Sharif University of Technology ERP (21-550), Session #6 14

Enterprise Management Contents: The Theory of Constraints and ERP TOC emerged from the shop floor. The Drum-Buffer-Rope (DBR) methodology is a shop-floor planning scheme that has replaced the OPT method on how to schedule the resources. Advanced Manufacturing Laboratory, Department of Industrial Engineering, Sharif University of Technology ERP (21-550), Session #6 15 Enterprise Management Contents: The Theory of Constraints and ERP TOC emerged from the shop floor. The Drum-Buffer-Rope (DBR) methodology is a shop-floor planning scheme that has replaced the OPT method on how to schedule the resources.

Later, a control methodology called Buffer Management was developed to complement the planning mechanism. In the 1990s, a parallel effort was carried out to develop a TOC methodology for project management, called the critical chain. The most important of all is the unique way TOC is treating the global financial measurement and its impact on management accounting. A TOC methodology for distribution networks was developed to establish a better solution that reduces both the overall inventories in the network and shortages, improving the service level as well as sales. Advanced Manufacturing Laboratory, Department of Industrial Engineering, Sharif University of Technology ERP (21-550), Session #6 16

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