Information Systems and Common Business Processes

Objectives

In this session, you will learn to:

Identify the phases of production planning
Identify the phases of production management
Determine how Information Systems can be used in production
planning and management

Ver. 1.0 Slide 1 of 25

Information Systems and Common Business Processes
Production Planning

Production planning involves the systematic scheduling of

workers, materials, and machines for manufacturing
products efficiently, economically, and timely.
Production planning is based on forecasted demand and
the resources are planned based on the forecast level.
The different levels of forecasts taken into consideration
during production planning include:
Long-term forecasts
Medium-term forecasts
Short-term forecasts

Ver. 1.0 Slide 2 of 25

Information Systems and Common Business Processes
Phases of Production Planning

The phases of production planning are:

1. Material Requirement Planning
2. Selecting the production process
Material Requirement Planning (MRP):
MRP is an inventory control process used to calculate the
amount of raw materials necessary to manufacture a specific
product.
MRP requires the following two types of information:
Structural
Planned

Ver. 1.0 Slide 3 of 25

Information Systems and Common Business Processes
Phases of Production Planning (Contd.)

The main inputs for MRP come from the following sources:
Master Production Schedule
Bill of Materials (BOM)
Inventory Records
The outputs from MRP include:
Schedule for Orders
Purchase Order
Reports

Ver. 1.0 Slide 4 of 25

Information Systems and Common Business Processes
Phases of Production Planning (Contd.)

The following figure displays the inputs and outputs for

MRP.

Ver. 1.0 Slide 5 of 25

Information Systems and Common Business Processes
Phases of Production Planning (Contd.)

The following data flow diagram depicts the process of

MRP.

Microsoft Word
Document

Ver. 1.0 Slide 6 of 25

Information Systems and Common Business Processes
Phases of Production Planning (Contd.)

Selecting the production process:

To improve product quality, an organization must have a
well-designed process to create a product that caters to the
needs of its customers.
Production process categories:
The production process can differ based on the type of the
product.
The different production process categories are:
Project
Job shop
Batch Processing
Mass Production
Continuous Flow

Ver. 1.0 Slide 7 of 25

Information Systems and Common Business Processes
Phases of Production Planning (Contd.)

Production process technologies:

Manufacturing organizations use different types of technologies
in their production process.
The production process technology includes:
Manual: Highly human intensive and require high skilled labor to
produce a good product
Automated: Work automatically without any human involvement
The following data flow diagram depicts the process of
selecting the production process.

Microsoft Word
Document

Ver. 1.0 Slide 8 of 25

Information Systems and Common Business Processes
Production Management and its Phases

Production management:
It is a process wherein based on customer requirement,
production unit needs to manage the complete process to
address customer requirement.
The following figure displays the production management
process.

Ver. 1.0 Slide 9 of 25

Information Systems and Common Business Processes
Production Management and its Phases (Contd.)

The production management process consists of the

following phases:
1. Creating Purchase Requisition
2. Creating Purchase Order
3. Ordering Raw Material
4. Sequencing
5. Manufacturing and Distributing the Finished Goods

Ver. 1.0 Slide 10 of 25

Information Systems and Common Business Processes
Production Management and its Phases (Contd.)

The following data flow diagram depicts the process of

managing the Production Order.

Microsoft Word
Document

Ver. 1.0 Slide 11 of 25

Information Systems and Common Business Processes
Production Management and its Phases (Contd.)

Problem Statement 5.1:

Refer to the WoodHouse Inc. scenario given in the chapter.
Task:
Categorize the following costs as direct cost, indirect cost, or
overhead cost:
The cost of table
Property tax paid for the outlet
The cost of depreciation and the wear and tear of equipment
The cost of transportation
The cost of maintenance of raw materials in the store room

Ver. 1.0 Slide 12 of 25

Information Systems and Common Business Processes
Production Management and its Phases (Contd.)

Problem Statement 5.2:

Refer to the WoodHouse Inc. scenario given in the chapter.
Task:
Categorize the following items as goods-in-progress, raw
material, and finished goods in the context of Woodhouse Inc.:
Tabletops
Table legs
Nails
Varnish
Tables
Wood logs

Ver. 1.0 Slide 13 of 25

Information Systems and Common Business Processes
Production Planning and Management Using Information Systems

The use of Information Systems enable the integration

between various business processes for planning,
scheduling, and monitoring the production process.
Information System is used for creating the following
artifacts:
Business Plan
Aggregate Production Plan
Master Production Schedule
BOM
Material Requirements Plan

Ver. 1.0 Slide 14 of 25

Information Systems and Common Business Processes
Production Planning and Management Using Information Systems (Contd.)

Business Plan: The management first prepares a business

plan based on the following data:
The Sales and Marketing department provides product design
specifications to the Production department for review and
feasibility check.
The Sales and Marketing department also provides the
forecast details for the current year.
The Finance and Accounts information system provides the
Budget details.

Ver. 1.0 Slide 15 of 25

Information Systems and Common Business Processes
Production Planning and Management Using Information Systems (Contd.)

Aggregate Production Plan: An aggregate production plan

identifies the overall gross requirements of resources such
as workforce and machinery.
The Production department creates a production plan using
the following information:
Inventory details
Business plan details

Ver. 1.0 Slide 16 of 25

Information Systems and Common Business Processes
Production Planning and Management Using Information Systems (Contd.)

Master Production Schedule: The Master Production

Schedule provides a weekly production schedule to the
production units.
The Master Production Schedule is created using the
following information:
Stock availability information from the Supply Chain
Management information system
Production plan information from the Manufacturing information
system
The Manufacturing information system that analyzes the
available resources

Ver. 1.0 Slide 17 of 25

Information Systems and Common Business Processes
Production Planning and Management Using Information Systems (Contd.)

Material Requirements Plan: The Material Requirements

Plan creates a plan related to the requirement of raw
materials for production.
The Material Requirements Plan is created using the
following information:
The Manufacturing information system provides the details of
Master Production Schedule.
The Supply Chain Management information system provides
the details of stock availability.
The Master Production Schedule and inventory details are
used to identify the quantity and order time of raw materials.

Ver. 1.0 Slide 18 of 25

Information Systems and Common Business Processes
Production Planning and Management Using Information Systems (Contd.)

BOM:
Is prepared in order to send details of components, such as
handles, tires, and seats.
Contains the components details which are reviewed by the
Manufacturing information system.

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Information Systems and Common Business Processes
Quality Control

Quality control processes ensure that the finished product

meets the customer needs and perceptions. This process
involves the following monitoring tasks:
Checking the quality of the raw materials received and
updating the information in the SCM information system
Checking the status of the machine used in the production
process and updating the same in the Manufacturing
information system
Examining the skill sets of workers and updating the facts in
the HR information system
Examining the end product by cross checking it with the
specifications

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Information Systems and Common Business Processes
Demo: Production Planning and Management

Problem Statement:
CRONUS India Ltd. is the biggest manufacturer of bicycles in
India. The company has implemented the Microsoft Business
Solutions-Navision to record the daily tasks of all business
units. You are working as a part of the Production Team. Your
team has been given the following tasks:
Plan the production of the Front Hubs with the following
information:
Sales Order no: 109001
Location code: Green
Qty: 200
Item No: 1150
Process the Production Order
How will you perform the specified tasks?

Ver. 1.0 Slide 21 of 25

Information Systems and Common Business Processes
Demo: Production Planning and Management (Contd.)

Solution:
To plan the production of the 200 Front Hubs and to process
the Production Order through to completion, the production
team needs to perform the following tasks:
Identify and create demand from the Sales Order
Plan the production process
Release the Production Order
Procure the components and raw materials
Post the completed items
View the completed order

Ver. 1.0 Slide 22 of 25

Information Systems and Common Business Processes
Summary

In this session, you learned that:

Production planning and management helps organizations to
develop and implement strategies so that goods are produced
cost-effectively and with minimum resources.
The phases of production planning are:
Material Requirement Planning
Selecting the production process
Material Requirements Planning (MRP) is a computerized
inventory control process used to calculate the amount of raw
materials necessary to manufacture a specific product.
MRP starts with the items listed on the master production
schedule, determines the quantity of all components and
materials required to manufacture those items, and schedules
the supply of materials for production.

Ver. 1.0 Slide 23 of 25

Information Systems and Common Business Processes
Summary (Contd.)

The different levels of forecasts taken into consideration during

production planning include:
Long-term forecasts
Medium-term forecasts
Short-term forecasts
The main inputs for MRP come from three sources:
Master production schedule
Bill of Materials
Inventory record
The outputs from MRP include:
Schedule for Orders
Purchase Order
Reports

Ver. 1.0 Slide 24 of 25

Information Systems and Common Business Processes
Summary (Contd.)

The different production process categories include the

following:
Project
Job shop
Batch
Mass production
Continuous flow
Production using Information Systems simplifies many
activities needed to manufacture products.

Ver. 1.0 Slide 25 of 25