Intranets and
Manufacturing
Sistem e-Business
(MG-652)
Jurusan Manajemen
Outline
1. Defining the terminology
2. Emerging Business Requirements
3. Manufacturing Information Systems
4. Intranet-Based Manufacturing
5. Logistics Management
6. Electronic Data Interchange (EDI)
7. Summary
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Discrete vs Process Manufacturing Market
Integrated Logistics
Agile Manufacturing
Customer-Driven
Manufacturing
Rapid Internal Response
to Demand Changes
Terminology
Real-Time
Decision Support
Types of Manufacturing
Information Systems
Manufacturing
Resource Planning
Enterprise
Resource Planning
Manufacturing
Execution Systems
Business
Requirements
eBusiness and
Manufacturing
Efficiently Managing
Supply Chain Complexity
Customer-Driven
Manufacturing
Manufacturing
Information Systems
Traditional Logistic Management
Case Study :
Microsoft Corp. Integrated Logistics
Modern Logistics Function
Intranet-Based
Manufacturing
Forecasting
Logistics
Management
Purchase contract management
Purchasing
Inteligent Process
Management
Electronic Data Interchange (EDI)
Purchase order management
Receiving and warehouse management
Distribution requirements planning
Distribution
Management
Warehouse management
Transport and fleet management
Labor management
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(1) Defining the
terminology
• Logistics serves as a tool for identifying
and effectively managing interfirm
linkages in the supply chain (see Fig. 1).
• Essential to optimizing the supply chain is
the integration of key inbound and
outbound logistics operations to reduce
order cycle time, improve service levels,
and reduce operating costs.
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• Achieving these strategic goals demands
efficient management of logistics
operations that focus on optimum
utilization of products, materials,
resources, and space.
• The logistics function can be divided
into:
–
–
–
–
Supplier management.
Inventory management.
Distribution management.
Warehouse management.
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Elements of Logistics
Management
Logistics
Management
Inventory
Management
Purchasing
Management
Distribution
Management
Supplier
Management
Requisition
Management
Cash / Invoice
Management
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Warehouse
Management
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Supplier Management
• The goal is to simplify routine
transactions, reduce paper handling, and
provide an electronic communications
framework for daily procurement
activities.
• Firms can electronically communicate
purchase orders, delivery schedules, and
associated invoiceless payments to their
internal and external suppliers.
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• The trend in purchasing is to reduce the
number of suppliers and get them to
become partners in business in a win/win
relationship.
• The benefits are seen in reduced purchase
order (PO) processing costs, increased
numbers of POs processed by fewer
employees, and reduced order processing
cycle times.
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Inventory Management
• The goal is to shorten the order-ship-bill
cycle.
• When a majority of partners are
electronically linked, information that was
faxed or mailed in the past can now be sent
instantly.
• The inventory management solution should
enable the reduction of inventory levels,
improve inventory turns, and eliminate outof-stock occurences.
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Distribution
Management
• The goal is to move documents related to
shipping (bills of lading, purchase orders,
advanced ship notices, and manifest claims).
• Paperwork that typically took days to cycle
in the past can now be sent in moments and
contain more accurate data, thus allowing
improved resources planning.
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Warehouse
Management
• The goal is to automate the warehouse
distribution process, from receiving and
put-away to picking and deployment.
• The goal is to optimize activity in all the
functional areas: warehouse
administration, receiving, product storage,
picking, and shipping.
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Agile Manufacturing
• Manufacturers are stressing quality and
speed.
• Product configurability (must be flexible to
support needed material control
techniques):
– Manufacturing data management. (the definition
and use of product structure, components,
costs).
– Configuration management. (automates the
configuration and order-entry processes).
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Production
Execution Systems
• PES software tracks the five
essential elements of the
manufacturing plant floor -materials, equipment, personnel,
specifications/work instructions, and
facility conditions in real-time -- and
correlates the data for visibility and
control of manufacturing operations.
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PES software has the following components:
• Master production scheduling -- identifies future
production and procurement.
• Material requirements planning (MRP).
• Capacity planning (CAP) -- identify capacity
bottlenecks, so that adjustment can be made.
• Shop floor control (SFC) -- provides current status
of jobs, work-inprocess, process, etc.
• Quality management system (QMS) -- implement
quality assurance and quality control functions
(integrates with all functions).
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(2) Emerging Business
Requirements
Emerging requirements for manufacturing or
logistics systems can be generalized into three
categories:
1. The changes created by customer behavior.
2. The applications that reflect accepted business
practices addressing current business trends and
strategies.
3. The underlying information technology that
enables the above applications.
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Customer-Driven
Manufacturing
• Customers dictate how business is done today.
• Customes determine what is built, how it is built,
and when it is delivered.
• Even the design of many products today is
influenced by the customer, not the supplier.
• The companies must recognize trends, react, and
make the transition to customer-driven
manufacturing. (flexible manufacturing).
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Rapid Internal Response
to Demand Changes
• Customers expect manufacturers to respond
quickly to changing demands
• This has forced many manufacturing
companies into organizational and operational
restructuring.
• The use of MRP with multiple simulations to
make products with ease, speed, and reducing
costs. -- serve customers better.
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Efficiently Managing Supply
Chain Complexity
• Manufacturers need to efficiently manage
supply chains that are more complex than
ever before.
• With production efficiency already high in
many organizations, one way to increase
profits is to reduce inventory, purchasing,
and distribution costs.
• Technologies (EDI, bar-coding, etc) required
to support the supply-chain management.
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(3) Manufacturing
Information Systems
The characteristics of the informations
systems depend on the type of manufacturing
operations, and can be characterized as
discrete, batch process, continuous process,
or hybrid (combining more than one form).
• Batch: fast-food, pharmaceutical, chemical.
• Continuous: oil refining companies.
• Hybrid: specialty chemical companies.
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Discrete vs Process
Manufacturing Market
Process manufacturers differ from their
discrete cousins in 4 respects:
1. Manufacturing methods.
2. Packaging requirements.
3. Assets allocation.
4. Product consistency.
Discrete products: automobiles, airplane, etc.
Process products: pepsi cola, fries, chips, etc.
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Process Manufacturing
Industry: Key Challenges
3 key challenges that will define success or failure
for process manufacturing firms are:
1. Flexible response -- must be able to respond
quickly to market trends by supplying their
customers with high-quality, low-cost products.
(EDI telecommunications).
2. Cost reduction and traceability -- Just-in-Time
techniques in order to optimize scheduling.
3. Product consistency/quality -- monitoring the
consistency of products.
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Types of Manufacturing
Information Systems
• The goal of applying computer automation to
the manufacturing environment is improved
efficiency and lowered costs, both direct
and indirect.
• There are several different computer
software applications that are designed for
various stages of the product life cycle,
from computer-aided design to computerassisted production on the plant floor.
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Manufacturing Resource
Planning
• MRP systems contain functions for planning
production and purchase orders using basic planning
rules to project capacity and material requirements
for a specific jobs.
• Be able to create dispatch lists and track working
process and job costs.
• MRP is based on the assumption that orders would
be collected, grouped together for material
requirements (weekly master production schedule MPS).
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Enterprise Resource
Planning
• ERP is strong in support for multiple plants, multiple
suppliers, and multiple currencies, and it will schedule an
entire multisite, global organization, including such
functions as plant management, inventory control, and
order processing.
• ERP systems have evolved from primarily
business/accounting systems into something more fully
integrated with both plant-floor operations and the larger
concerns of the enterprise, especially logistics
managements.
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Manufacturing Execution
Systems (MES)
• MES are factory floor performance monitoring
systems that complement the planning systems.
• MES allows companies to track, monitor, and control
the five essential elements of production: materials,
equipment, personnel, work instructions, and
facilities.
• MES improves the efficiently of the manufacturing
operation and, as such, speeds the time to market.
• Improve manufacturing performance: cost, quality,
service, and regulatory pressures.
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The Future Integrated
Systems
The challenge for the future (and why Intranets are
useful) lies in integrating the three elements in a single
framework:
• Resource planning: MRP, ERP, and cost accounting
systems.
• Manufacturing execution: the factory-level
coordinating and tracking systems.
• Distributed control: the factory floor devices and
process control systems.
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(4) Intranet-Based
Manufacturing
3 critical concepts in the standard system design
[PSFT96]:
• Customer/demad-driven manufacturing.
• Real-time decision support and advanced planning
and scheduling.
• Intelligent process management - proactive
notification and event-driven problem solving.
EDI, fax, e-mail, web pages, phone call, shared
resources, synchronized data, communications.
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(5) Logistics Management
• Logistics management is concerned with the
strategy and management of the movement and
storage of materials and products from
suppliers, distribution, retail outlets, and
customers.
• The scope is the physical movement of good
starts with the sources of supply and ends at
the point of consumption.
• Problem w/ traditional logistics mgt: too much
inventory, too slow to react, and one size fits
all.
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The Modern Logistics
Function
• Forecasting. (inventory management).
• Purchasing: purchase contract mgt,
purchase order mgt, receiving &
warehouse mgt.
• Distribution management: distribution
requirement planning (DRP), physical
inventory mgt (PIM), warehouse mgt,
transport & fleet mgt, and labor mgt.
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(6) Electronic Data
Interchange (EDI)
• Computer-to-computer exchange of business
information has become an increasingly popular
form of electronic commerce.
• EDI enables firms to exchange business
information faster, more cheaply, and more
accurately than using paper-based systems.
• EDI used in manufacturing, shipping, warehousing,
utilities, pharmaceuticals, construction,
petroleum, metals, banking, government, health
care, etc.
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• EDI consists of standardized electronic-message
formats (transaction sets) for business
documents such as requests for quotations,
purchase orders, purchase change orders, bill of
lading, receiving advices, and invoices.
• To move to EDI, a company must have
computerized accounting records and establish
trading partners who agree to exchange EDI
transactions.
• Benefits of EDI: improved in overall record
keeping quality, reduced inventory, better
information for mgt decision making.
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EDI in Action
• See Fig. 2. Document Flow without
EDI.
• See Fig. 3. Document Flow with EDI.
• Compare the differences !
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Document Flow
without EDI
Buyer
Purchase request
initiated in the
organization
Seller
Finance
department
Finance
department
Payment
Purchase
department
O rder
delivery
Inventory and
warehousing
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Bill
Paper-based
mailroom
Receiving
department
Paper-based
mailroom
Product
delivery
Shipping
department
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O rder
confirmation
Sales department
Manufacturing
department
33
Document Flow with EDI
Buyer
Purchase request
initiated in the
organization
Seller
Finance
department
Finance
department
Billing
details
Payment details
Purchase-order
delivery
Purchase
department
EDI-capable
computer
EDI-capable
computer
Sales department
Shipping
department
Manufacturing
department
Automatedorder onfirmation
Inventory and
warehousing
Receiving
department
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Why Has EDI
Adoption Lagged?
The limitations of EDI:
• High costs.
• Limited accessibility.
• Rigid requirements
• Partial solutions.
• Closed world.
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(7) Summary
• This chapter discussed the interplay between
electronic commerce and manufacturing in order
to ensure higher quality, reduced costs, and
increased responsiveness.
• The logistics function as part of a cohesive supplychain infrastructure.
• Needs to be devoted to integrated enterprisewide business processes, supported by information
systems that provide supply-chain visibility,
intelligent planning, and scheduling and execution
controls.
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End of Session
Thank You
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