BUSOBA 3230: IoT/Technology in Operations

BOOK

0

Internet of Things (IoT)

• Refers to the billions of devices that are connected to the Internet.

• These devices are constantly collecting and storing data.

• The data is used to integrate the information to create a digital intelligence.

Enterprise Resource Planning (ERP)

• A computer system that integrates application programs in accounting, sales, manufacturing, and the other functions in a firm. This integration is accomplished through a database shared by all the application programs.

What do ERP systems do?

• Support supply and demand planning and control.
• Provide real time data to support better decision making.
• Improve efficiency of transaction process.
• Foster cross functional integration.
• Provide improved insights into how a business should be run.

Finance/ERP

• Provides a common platform for financial data capture, a common set of numbers, and processes, facilitating rapid reconciliation of the general ledger.
• It automatically captures basic accounting transactions from the source of the transaction.

Manufacturing and Logistics/ERP

• Largest and most complex.
• Typical components include: Sales and operations planning, materials management, plant maintenance, quality management, production planning and control, project management.

Sales and Marketing/ERP

• Supports activities like customer management, sales order management, forecasting, and more.
• Are increasingly implemented globally, allowing firms to manage sales process worldwide.

Human Resources/ERP

• Supports the capabilities needed to manage, schedule, pay, hire, and train people who make an organization run.

Three Functional Areas That Make Up The Internal Supply Chain Of A Manufacturing Enterprise

Purchasing, manufacturing, and sales and distribution.

Purchasing

Concerned with minimizing materials costs.

Manufacturing

Concerned with minimum production costs.

Sales

Concerned with selling the greatest amount.

Distribution

Concerned with minimum distribution and warehouse costs.

LEC

0

Functional Silo

All functions would suboptimize their own area instead of optimizing results of the overall company.

Functional Silo Approach

Purchasing, manufacturing, and distribution.

Purchasing PT 1

• Responsible for buying all material to support manufacturing operations
• Wishes to know what quantities are going to be needed over the long term

Purchasing PT 2

• Solicits bids for the best price for each material
• The main criterion is simply the cost of the material

Manufacturing

• Making the product at the lowest possible cost is classic metric (key performance indicator KPI)
• Long production runs lead to lower unit costs and high inventories

Distribution

Job is moving product from the manufacturing site to the customer at lowest possible cost

There's a more coordinated approach facilitated by the use of

an ERP system.

Implications If Areas Works Independently/Purchasing

• Will buy the largest quantities possible.
• Will result in large amounts of inventory.

Implications If Areas Works Independently/Manufacturing

• Maximize production volumes.
• Spread fixed cost over many units (economies of scale)
• This results in high WIP and FG.
• Response time to unexpected demand increases.

Implications If Areas Works Independently/Distribution

• Try to fully load every truck.
• Minimize transportation cost.
• Results in large amounts of inventory in distribution centers.

Implications If Areas Works Independently/Sales

• They might sell product that cannot be delivered on time.
• Overpromise, under deliver (literally)

ERP stands for

Enterprise Resource Planning System

ERP System

Comprehensive software to integrate both planning and execution across the various functions.

ERP System More Info.

• Single database
• Transactions processed in real time
• Data entered by one functional area, updates all other areas
• Transaction Processing
• Decision Support

Transaction Processing

Posting and tracking of activities that document the business.

Decision Support

Helps the user make intelligent judgements about how to run the business.

ERP Modules

Finance, Manufacturing and Logistics, Sales and Marketing, and Human Resources.

Module/Finance

Captures basic accounting transactions at the source.

Module/Manufacturing and Logistics

• Sales and operations planning
• Materials management
• Maintenance
• Quality management
• Production planning and control
• Project management

Module/Sales and Marketing

• Customer and sales management
• Forecasting

Module/Human Resources

• Managing, scheduling, paying, hiring, training people.

Performance Metrics to Evaluate Integrated System Effectiveness/Three major functional areas make up the internal supply chain of a manufacturing enterprise

• Procurement cycle
• Manufacturing cycle
• Sales and distribution cycle

Procurement Cycle

• Purchase cost of material
• Accounts payable

Manufacturing Cycle

• Raw materials inventory
• Work in process
• Finished goods inventory

Sales and Distribution Cycle

• Distribution inventory
• Accounts receivable

18 th Century: Industry 1.0:

Mechanization

Late 19th Century: Industry 2.0

Mass Production

Mid 20 th Century: Industry 3.0

Automation

21 st Century Industry 4.0

Digitization

Operations has always been driven by

technology starting with mechanism in the 18th century.

Industry 4

• Fourth Industrial Revolution
• Integration of technologies to create factories or facilities where machines, products and people work together and communicate effortlessly

Internet of Things

• A network of physical objects embedded with sensors and software.
• Allows connection and data exchange with other devices and systems over the internet.
• Ex. Food robots, placing orders on iPad

Smart Factories

• About AI, automation, and data coming together to change the way operations happen.
• CATL, global leader in energy.

Industry 4 Scope

• Smart Manufacturing
• Technology Integration
• Cyber-Physical Systems
• Human/Machine Collaboration
• Sustainability and Efficiency
• Security and Data Integrity

Smart Manufacturing

• All driven by sensors
• RFID (Radio Frequency Identification)
• Robots
• Automated Guided Vehicles (AGVs)
• AI visual inspection.

Technology Integration

Internet of things for data collection.

Cyber Physical Systems

• Combo of physical and software.
• Digital twin (discussed in video).

Human/Machine Collaboration

• Keep human
• AI helps and augment decision making
• Human remains in control