Chapter 7: Production Information Systems

Production Systems, Manufacturing Information Systems and Technology

The fast development of technology has affected not only the people but also the companies. High technology has changed the way of doing business and the inner and outer operations of the companies have changed entirely. Here, production department is very important for the changes made by the company and many of the high technology changes have started from production department. Production department must use high technology to gather data and use it for its operations while trying to increase effieciency and effectiveness.

Production can be defined as transformation of tangible and intangible inputs into goods or services. It can be explained elaborately as the transformation or conversion of a set of inputs, such as raw materials, labor, knowledge, into one or more outputs such as tables, cars, banking services.

Before explaining the production system, it is more convenient to explain what the system is. System is a collection of interacting, interrelated or interdependent elements or components that are organized for a common purpose. In the frame of this purpose, systems have also outputs which are released to environment so the orther system can use them as inputs. Organizations can be seen as systems that procure and transform inputs into outputs which are subsequently discharged into their external environment. It is generally emphasized that all companies are to some degree open systems as opposed to closed systems. Beacause as we all know if a company’s purpose is to gain Money, it should have relationship with customers or other companies. This point is crucial for their survival. They are expected to produce product or services. Without being an open system, this is not possible. That is, a typical company (system) depends on other systems for its inputs and thus cannot exist in isolation.

From this point of wiev, transformation or conversion of set of inputs into one or more outputs can be description of organizations as production systems. Products which are the outputs of a production system can be tangible goods, intangible services, or a combination. Goods are tangible items and they can be touched or held. Services are intangible products that satisfy some need of a consumer, including the enhancement of a good.

Manufacturing information systems support the production function that includes all activities concerned with the planning and control of the processes producing goods or services. Therefore, to effectively plan and control their operations, production information systems must be used by firms such as banks, retailers and transportation companies and service companies. Information systems used for operations management and transaction processing support all firms that must plan, monitor and control inventories, purchases and the flow of goods and services.

For the technology Hard technology and soft technology are two main categories. Computers, computer chips and microprocessors, communication lines, sensors, robots are some examples for the hard technology. Database systems, artificial intelligence programs, and voice-recognition softwares are some examples for the soft technology.

Information technology is vital both to manufacturing and service operations because efficiency of using information technologies affect entire value chain of the organizations, All elements of the organization can benefit from electronic transaction capability in order to immediately recognize and react to changes in demand and supply.

Integrated Operating Systems

Satisfaction of customer services or efficient value chain performance requires integration of essential processes and systems within the organization through operating systems. Moreover, by means of these systems, timely and right information is shared throughout the value chain. Since it has became a strategic priority and the key in terms of competitive advantage and long-term survival, today, companies must consider implementing an integrated operating system throughout their systems. IOS are changing the way of doing business in the global business world by providing faster, better, and more customized goods and services at lower prices.

Enterprise resource planning (ERP) systems provide the integration of the company internally and externally in order to meet the needs and requirements of the customers and have a competitive advantage in the market. These systems have served as a cross-functional enterprise backbone that integrates and automates many internal business processes and information systems within the manufacturing, logistics, distribution, accounting, finance and human resource functions of a company.

The ERP system contains a series of modules that are designed for different departments such as manufacturing, financial - accounting, purchasing, sales, etc. Here The Sales Module of the ERP system gives a company the chance of organizing and tracking the sales process in an effective manner due to configuration multiple option and tracking of sales covered channels. The Logistic Module from the ERP system enables planning and streamlining processes of supply, storage and redistribution of goods within a company or delivery of goods to customers. The Controlling ERP Module allows the planning of financial parameters and provides both, proactive capabilities for early warning in case of negative exceeding and complex analysis tools to determine the influence factors.

To fully understand the nature of ERP, its evoluation should be examined. It is pointed that there are 4 phases related to that evoluation. Phase I Material requirements planning (MRP) is an inventory management system which is planned to help companies in scheduling and placing orders for items of dependent demand. Dependent demand items represent components of finished goods, such as raw materials, component parts, and subassemblies for which level of production of the final product is main source to adjust the amount of inventory needed. There are three main questions to be answered by MRP: what is needed? how much is needed? and when is it needed? Phase II - Closed Loop Material Requirements Planning (MRP-CL) has information feedback feature by which plans can be checked and adjusted in a system for planning the production and controling inventory. Master production schedule helps closed loop MRPs synchronize the purchasing or materials procurement plans. Phase III – Manufacturing Resource Planning (MRP II) is a method providing effective planning of all resources of a manufacturing company. Preferably MRP II addresses operational planning in units, financial planning in dollars and has simulation capabilities to respond to "what-if" type of questions. In this system there are three additional elements: S&OP (Sales & Operations Planning), Financial Interface, Simulation. Phase IV - Enterprise Resource Planning (ERP).

Supply chain management (SCM) can be described as management of all activities within supply chain to maximize customer value and achieve a sustainable competitive advantage. Fundamentally, supply chain management helps a company get the right products to the right place at the right time, in the proper quantity and at an acceptable cost. One of the outcomes of information technology for supply chain management is electronic data interchange (EDI). EDI involves the electronic exchange of business transaction documents over the Internet and other networks between supply chain trading partners. Internet helps companies manage many aspects of their global supply chains icluding sourcing, transportation, communications and international finance. With Internet all supply chain members can communicate easily and do their operations effectively and efficiently

Customer relations management (CRM) is the management tool that helps firms gain maximum value from both firm and its customers by focusing on relationship through capturing and integrating data about customers from all over the organization. After capturing and integrating data, CRM system reinforces data, analyses the data and then sends the results to other systems and customer touch points which are interaction methods such as telephone, e-mail, customer service desk, Web site, social media accouts and retail store. Touch points become vital, because mostly firms have a marketing orientation and focus on the customers and their current and future needs. Sales Force, Customer Service and Support, Marketing and Customer loyalty are main modules used in CRM system

Advances in Manufacturing by Information Technology and Industry 4.0

A flexible manufacturing system (FMS) is system of automated parts and machines arranged in a sequence and connected by an automated material handling system and conrtolled by a computer system. This systems are expected to provide flexibility with efficiency. One of the most imprtant aspects of FMS is its efficiency coming from reductions in setup and queue time. In addition, when compared with traditional manufacturing systems, FMS enable firms to reduce their capital investment.

Computer integrated manufacturing systems (CIMS) have begun to emerge as an essential discipline underpinning moves towards the "Factory of the Future". CIM systems offer use of computer in the design of products, in the design of the manufacturing process and in the management and operation of the manufacturing system, which extends its scope compared to traditional approach to manufacture. CIM is a combination of different applications and technologies like computer-aided design (CAD), computer-aided manufacturing (CAM), computeraided engineering (CAE), robotics, manufacturing resource planning and enterprise management solutions.

E-manufacturing is a system methodology that enables the manufacturing operations to successfully integrate with the functional objectives of an enterprise through the use of Internet, tether-free such as wireless, web and predective technologies. E-manufacturing means giving the company agility to react quickly to changes in the market, tecnology and customers by operating as a virtual enterprise as an effective part of an extended supply chain.

By the beginning of industrialization, technological leaps have led to paradigm shifts which today are ex-post named “industrial revolutions”. There are 4 revolutions which are known as the First, the Second, the Third and the Fourth industrial revolution. While the digital revolution that has been occurring since the middle of the last century, now the Fourth Industrial Revolution is building on the Third one. It is characterized by the combination of technologies that is changing the border lines between the physical, digital, and biological spheres. Transformation toward 4th Generation Industrial Revolution (Industry 4.0) based on Cyber-Physical System-enabled manufacturing and service innovation is now led by developed countries like Germany. By integrating more software and embedded intelligence in industrial products and systems, intertwining intelligent algorithms with electronics and tether-free intelligence can be moved further by predictive technologies.

Big Data and Analytics, Autonomous Robots, Simulation, Horizontal and Vertical System Integration, The Industrial Internet of Things, Cybersecurity, The Cloud, Additive Manufacturing and Augmented Reality are nine advances some of which are already used in manufacturing, forming the foundation for Industry 4.0. On the other hand, time, cost, flexibilty and intergration are the main benefits provided by Industry 4.0.