ASSIGNMENT



 GAGANPREET SINGH



 
520946919





MBA-SEMESTER-III



 
ENTERPRISE RESOURCE PLANNING


  OM0002-SET-1


 02971

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Installing an ERP system has many advantages ± both direct and indirect. The direct
advantages include improved efficiency, information integration for better decision
making, faster response time to customer queries, etc. The indirect benefits include better
corporate image, improved customer goodwill, customer satisfaction, and so on. The
following are some of the direct benefits of an ERP system:

· Business Integration

· Flexibility

· Better Analysis and Planning Capabilities

· Use of Latest Technology

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The first and most important advantage lies in the promotion of integration. The reason
why ERP packages are considered to be integrated is the automatic data updating
(automatic data exchange among applications) that is possible among the related business
components. Since conventional company information systems were aimed at the
optimization of independent business functions in business units, almost all were weak in
terms of the communication and integration of information that transcended the different
business functions. In the case of large companies in particular, the timing of system
construction and directives differs for each product and department/function and
sometimes, they are disconnected. For this reason, it has become an obstacle in the shift
to new product and business classification. In the case of ERP packages, the data of
related business functions is also automatically updated at the time a transaction occurs.
For this reason, one is able to grasp business details in real time, and carry out various
types of management decisions in a timely manner, based on that information.

  

The second advantage of ERP packages is their flexibility. Different languages,

currencies, accounting standards and so on can be covered in one system and and
functions that comprehensively manage multiple locations of a company can be packaged
and implemented automatically. To cope with company globalization and system

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unification, this flexibility is essential, and one can say that it has major advantages, not
simply for development and maintenance, but also in terms of management.

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Yet another advantage is the boost to the planning functions. By enabling the
comprehensive and unified management of related business and its data, it becomes
possible to fully utilize many types of decision support systems and simulation functions.
Furthermore, since it becomes possible to carry out, flexibly and in real time, the filing
and analysis of data from a variety of dimensions, one is able to give the decision-makers
the information they want; thus enabling them to make better and informed decisions.




 

The fourth advantage is the utilization of the latest developments in Information

Technology (IT). The ERP vendors were very quick to realize that in order to grow and
to sustain that growth, they had to embrace the latest developments in the field of
Information Technology. Therefore, they quickly adapted their systems to take advantage
of the latest technologies like open systems, client/server technology, Internet/Intranet,
CALS (Computer-Aided Acquisition and Logistics Support), electronic-commerce, etc. It
is this quick adaptation to the latest changes in Information Technology that makes the
flexible adaptation to changes in future business environments possible. It is this
flexibility that makes the incorporation of the latest technology possible during system
customization, maintenance and expansion phases.

As has been stated above, ERP includes many of the functions that will be necessary for
future systems. However, undertaking reforms to company structures and business
processes, so as to enable the full use of these major features, is the greatest task for
companies that will use them. It is necessary to take note that casually proceeding with
the implementation of ERP, merely for reasons of system reconstruction or preparation
for the year 2000, is likely to result in turning the above mentioned advantages into
disadvantages.

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ERP packages, if chosen correctly, implemented judiciously and used efficiently, will
raise the productivity and profits of companies dramatically. But many a company fails in
this because of a wrong product, incompetent and haphazard implementation and
inefficient or ineffective usage.

To work successfully, the ERP solutions need a lot of factors to click. There should be
good people who know the business. The vendor should be good and his package should
be the one best suited for the. company¶s needs. The ERP consultants should be good.
The implementation should be planned well and executed perfectly. The end-user training
should be done so that the people understand the system, and the effect of their efforts on
the overall success of the program.

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The introduction of the ERP system will dramatically change the job descriptions and
functions of many employees. Employees who were earlier doing the work of recording
information will, overnight, be transformed into decision-makers. For example, in the
past an order entry clerk¶s job was to enter the orders that came to him. With the
implementation of a good ERP system, the order entry clerk becomes an action initiator.
As soon as he enters the order into the system, the information is passed on to the sales,
distribution and finance modules. The distribution module checks whether the item is in
stock and if available, the item is dispatched and the information is sent to the finance
module. If the items are not in stock, then the manufacturing module is given the
information, so that production can start. The customer is informed about the status of his
order. If the items are shipped, the finance module prepares the invoice and sends it to the
customer. All these actions take place automatically as soon as the order entry clerk
enters the information regarding the order into the system. Thus the order entry clerk is
transformed from a data entry operator to a decision-maker whose actions can trigger a
chain of actions.

Many employees find this transformation difficult to accept. If the employees are not
given proper training, well in advance, then the systems will fail. Another factor is the
fear of unemployment. When procedures become automated, the people who were doing
those jobs become redundant. So it is quite natural to have resistance from the employees.
But the same employees can be trained in the new system and can work in more
challenging and stimulating environments. For this also, the employees have to be told, in
advance, as to what will happen and should be given ample time and training to make the
transformation. Without support from the employees, even the best system will fail. So it
is very important that the management should take the necessary steps, well in advance,
to alleviate the fears of, and provide necessary training to their employees.

 

 





In regard to the application packages, many products have been developed thus far and
are selling well. So, how do conventional application packages and ERP packages differ?

The first answer to this question is that ERP packages cannot only handle individual
business functions such as accounts and inventory, but also the entire range of business
functions necessary for the company¶s operations.

The second difference is that ERP packages are targeted at everything from small
businesses to the largest organizations, and that they can be composed of a highly flexible
decentralized database and an information system cluster linked by a network.

The third difference is global adaptation, represented by ERP packages¶ multilingual and
multi-currency capacity. In the present day, when companies, irrespective of their size
and market share, are manufacturing and selling in various areas of the world, the
globalisation of management platforms is being hastened, along with the global
adaptation of enterprise information systems.

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ERP is an abbreviation for p
 

  and means, the techniques and
concepts for the integrated management of businesses as a whole, from the viewpoint of
the effective use of management resources, to improve the efficiency of an enterprise.

ERP systems serve an important function by integrating separate business functions ±

materials management, product planning, sales, distribution, finance and accounting and
others ± into a single application. However, ERP systems have three significant
limitations:

1. Managers cannot generate custom reports or queries without help from a programmer
and this inhibits them from obtaining information quickly, which is essential for
maintaining a competitive advantage.

2. ERP systems provide current status only, such as open orders. Managers often need to
look past the current status to find trends and patterns that aid better decision-making.

3. The data in the ERP application is not integrated with other enterprise or division
systems and does not include external intelligence.

There are many technologies that help to overcome these limitations. These technologies,
when used in conjunction with the ERP package, help in overcoming the limitations of a
standalone ERP system and thus, help the employees to make better decisions. Some of
these technologies are:

· Business Process Reengineering (BPR)

· Management Information System (MIS)

· Decision Support Systems (DSS)

· Executive Information Systems (EIS)

· Data Warehousing

· Data Mining

· On-line Analytical Processing (OLAP)

· Supply Chain Management

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Out of the above technologies MIS, DSS and EIS are forerunners of the ERP systems.
Once the ERP system and the other technologies (like Data Warehousing, Data Mining,
OLAP, etc.) are integrated, the MIS or DSS will become redundant as their functions will
be taken care of by the new systems and they will be slowly phased out from the scene.

With the competition in the ERP market getting hotter and hotter, and ERP vendors
searching for ways to penetrate new market segments and expand the existing ones,
tomorrows ERP systems will have most of these technologies integrated into them. In this
session we will see how each of these technologies are related to ERP systems.

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BPR has been around for quite some time and a lot has been written about it in both, the
practitioner trade press and the academic research journals. However, the controversy
still remains about whether there is any accurate description of BPR, or BPR is just a fad
± an appealing label to tag on to whatever your company is doing, to suggest that your
latest and greatest work is µin vogue.¶ But if reengineering is to continue in the long run,
then it must do more than advertise its considerable successes to date. It must become
more proactive and inclusive with regard to human, organizational and motivational
change issues.

Dr Michael Hammer defines BPR as â 
  

    

 
  


 


 




 
  

 

 

 â One of the main tools
for making this change is the

 
 (IT). Any BPR effort that fails to
understand the importance of IT, and goes through the pre-BPR analysis and planning
phases without considering the various IT options available, and the effect of the
proposed IT solutions on the employees and the organization, is bound to crash during
takeoff.

We have seen that the ERP systems help in integrating the various business processes of
the organization with the help of modern developments in IT. With a good ERP package,
the organization will have the capability of achieving dramatic improvements in critical
areas such as cost, quality, speed and so on. So many BPR initiatives end up in the ERP
implementation.

‘

 



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In the past, most payroll systems were data processing systems that did little more than
process time sheets, print payroll checks and keep totals of annual wages and deductions.
This was the case with most other departmental information systems. As managers began
to demand more and better information about the working of the organization, the data
processing systems evolved into management information systems. For example, a
human resource MIS system is capable of predicating the average number of worker sick
days, the amount that must be given as bonus, the overtime allowances, and so on.

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MIS is a computer-based system that optimises the collection, collation, transfer and
presentation of information throughout an organization, through an integrated structure of
databases and information flow.

The major differences between a management information system and a Data Processing
system are:

· The integrated database of the MIS enables greater flexibility in meeting the information
needs of the management.

· The MIS integrates the information flow between functional areas (accounting,
marketing, manufacturing, etc.) whereas data processing systems tend to support a single
functional area.

· MIS caters to the information needs of all levels of management whereas data
processing systems focus on departmental-level support.

· Management¶s information needs are supported on a more timely basis with the MIS
(with its on-line query capability) than with a data processing system.

The main characteristics of. the management information system are:

· The MIS supports the data processing functions of transaction handling and record
keeping.

· MIS uses an integrated database and supports a variety of functional areas.

· MIS provides operational, tactical and strategic levels of the organization with timely,
but for the most part structured information (ad-hoc query facility is not available).

· MIS is flexible and can be adapted to the changing needs of the organization.

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Managers spend a lot of time and effort in gathering and analysing information before
making decisions. Decision support systems were created to assist managers in this task.
Decision support systems are interactive information systems¶, that rely on an integrated
set of user-friendly software and hardware tools, to produce and present information
targeted to support management in the decision-making process. On many occasions,
decision-makers can rely on their experience to make quality decisions. However,
decision-makers, especially at the top management levels, are often confronted with
complex decisions. The analysis of such complex decisions which involve many factors
can be difficult for a human being. These types of decisions, and the need for complex
information analysis required for such decision-making, led to the evolution of decision
support systems.

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A DSS can help close the information gap and allow managers to improve the quality 6f
their decisions. To do this, the DSS hardware and software employ the latest
technological innovations, planning and forecasting models, 4th generation languages and
even artificial intelligence. In many cases, DSS facilitates the decision-making process,
helping the decision-makers to choose between alternatives. Some decision support
systems can automatically rank the alternatives, based on the criteria given by the
decision-maker. DSS also help in removing the monotony and tedium of gathering and
analysing data.

Management Information Systems are best at supporting decisions that involve structured
problems such as when to reorder the raw materials, how much to order and the like. In
contrast, DSS are designed to support decision-making processes involving semi-
structured and unstructured problems. Here, the role of the DSS is to help managers in
getting the information they want in the way they want. For example, a manager wants to
reduce cycle time. He might look at various facts like the availability of raw materials,
skilled personnel, the average machine down time, and so on. So there is no way the
system can anticipate what the manager wants. DSSs are capable of helping the managers
in making such decisions.

The main characteristics of a DSS are:

· A DSS is designed to address semi-structured and unstructured problems.

· The DSS mainly supports decision-making at the top management level.

· DSS is interactive, user-friendly can be used by the decision-maker with little or no

assistance from a computer professional.

· DSS makes general-purpose models, simulation capabilities and other analytical tools
available to the decision-maker.

A DSS does not replace the MIS; instead a DSS supplements the MIS. There are distinct
differences between them. MIS emphasises on planned reports on a variety of subjects;
DSS focuses on decision-making. MIS is standard, scheduled, structured and routine;
DSS is quite unstructured and is available on request. MIS is constrained by the
organizational system; DSS is immediate and user-friendly.

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The line dividing DSS and EIS is very thin. EIS can be considered as a better and
sophisticated DSS. Top-level executives and decision-makers face many problems and
pressures. They have to make the right decisions at the right time to take the company
forward. In today¶s competitive world, reaction times are shrinking and time to make
decisions is very less. EIS is a decision support system especially made for senior-level
executives. An EIS is concerned with how decisions affect an entire organization. An EIS
takes the following into consideration:

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· The overall vision and mission of the company and the company goals

· Strategic planning and objectives

· Organizational structure

· Crisis management/Contingency planning

· Strategic control and monitoring of overall operations

Executive decision-making also requires access to outside information from competitors,

governmental regulations, trade groups, news gathering agencies, and so on. A high
degree of uncertainty and a future orientation is involved in most executive decisions.
Successful EIS are easy to use, flexible and customisable and use the latest technological
innovations.

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If operational data is kept in the databases of the ERP system, it can create a lot of
problems. As time passes, the amount of data will increase and this will affect the
performance of the ERP system. So it is better to archive the operational data once its use
is over. When I say µthe use is over¶, it does not mean that the archived data is useless.
On the contrary, it is one of the most valuable resources of the organization. However
once the operational use of the data is over, it should be removed from the operational
databases. For example, once the financial year is over, the daily transactional data can be
archived. Figure 3.1 shows what happens if the data is not archived.

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It is evident from the figure that even though the operational data volume is nearly the
same each year, since the data is not archived, the total amount of data that is stored in
the operational database will go on increasing. Figure 3.2 shows the effect of keeping this
huge amount of data in the operational database.

It is clear from the above graph that as the volume of the data in the database increases,
the performance of the database and the related applications decreases.

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From the above discussions, it is evident that we should separate the operational data
from the non-operational data. I am not using the term archive data, because if the non-
operational data, is archived, there is little or no use for it. But this data is a very valuable
resource and is too precious to be kept in some archive. It is in this situation that a data
warehouse comes in handy.

The primary concept of data warehousing is that the data stored for business analysis can
be accessed most effectively by separating it from the data in operational systems. The
most important reason for separating data for business analysis, from the operational data,
has always been the potential performance degradation on the operational system that can
result from the analysis processes. High performance and quick response time is almost
universally critical for operational systems. The reasons to separate the operational data
from the analysis data have not significantly changed with the evolution of the data
warehousing systems, except that now they are considered more formally during the data
warehouse building process. Advances in technology and changes in the nature of
business have made many of the business analysis processes much more complex and
sophisticated. In addition to producing standard reports, today¶s data warehousing
systems support very sophisticated online analysis, including multi-dimensional analysis.

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We are living in the information age. The importance of collecting data that reflects ones
business, or of activities that achieve competitive advantage, are widely recognised now.
Powerful systems for collecting data and managing it in large databases are available in
most organizations. However, the major bottleneck of converting this data into effective
information is the difficulty faced in extracting knowledge about the system from the
collected data. Modeling the investigated system discovering relations that connect
variables in a database are the subjects of data mining.

Data mining is the process of identifying valid, novel, potentially useful and ultimately
comprehensible information from databases that is used to make crucial business
decisions. Modern data mining systems self learn from the previous history of the
investigated system, formulating and testing hypotheses about the rules, which the system

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obeys. When concise and valuable knowledge about the system of interest has been
discovered, it can and should be incorporated into some decision support system which
helps the manager make wise and informed business decisions.

The main reason for needing automated computer systems for intelligent data analysis is
the enormous volume of existing and newly appearing data that require processing. The
amount of data accumulated each day by various businesses, scientific and governmental
organizations around the world is daunting. Research organizations, academic institutions
and commercial organizations create and store huge amounts of data each day. It
becomes impossible for human analysts to cope with such overwhelming amounts of
data.

Two other problems that surface when human analysts process data are:

· The inadequacy of the human brain when searching for complex multi-factorial
dependencies in the data

· The lack of objectiveness in analysing the data

A human expert is always a hostage of the previous experience of investigating other

systems. Sometimes this helps, sometimes this hurts, but it is almost impossible to get rid
of this fact.

One additional benefit of using automated data mining systems is that this process has a
much lower cost than hiring an army of highly trained (and paid) professional
statisticians. While data mining does not eliminate human participation in solving the
task completely, it significantly simplifies the job and allows an analyst, who is not a
professional in statistics and programming, to manage the process of extracting
knowledge from data.

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According to Business Intelligence Ltd (http://www.OLAPReport.com), OLAP can be

defined in five words ± Fast Analysis of Shared Multidimensional Information.

FAST means that the system is targeted to deliver most responses to users within about
five seconds, with the simplest analysis taking no more than one second and very few
taking more than 20 seconds. ANALYSIS means that the system can cope with any
business logic and statistical analysis that is relevant for the application and the user, and
keep it easy enough for the target user. SHARED means that the system implements all
the security requirements for confidentiality (possibly down to cell level) and, if multiple
write access is needed, concurrent update locking at an appropriate level.
MULTIDIMENSIONAL means that the system must provide a multidimensional
conceptual view of the data, including full support for hierarchies and multiple
hierarchies. INFORMATION is refined data that is accurate, timely and relevant to the
user.

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Simply put, OLAP describes a class of technologies that are designed for live ad-hoc data
access and analysis. While transaction processing (OLTP) generally relies solely on
relational databases, OLAP has become synonymous with multidimensional views of
business data. These multidimensional views are supported by multidimensional database
technology and provide the technical basis for calculations and analysis required by
Business Intelligence applications.

OLAP technology is being used in an increasingly wide range of applications. The most
common are sales and marketing analysis; financial reporting and consolidation; and
budgeting and planning. Increasingly however, OLAP is being used for applications such
as product profitability and pricing analysis; activity based costing; manpower planning;
and quality analysis, or for that matter any management system that requires a flexible,
top down view of an organization.

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A supply chain is a network of facilities and distribution options that performs the
function of procurement of materials, transformation of these materials into intermediate
and finished products, and the distribution of these finished products to customers.
Supply chains exist in both service and manufacturing organizations, although the
complexity of the chain may vary greatly from industry to industry and firm to firm.

Traditionally, marketing, distribution, planning, manufacturing, and the purchasing

organizations along the supply chain operated independently. These organizations have
their own objectives which are often conflicting. Marketing¶s objective of high customer
service and maximum sales revenue conflict with manufacturing and distribution goals.
Many manufacturing operations are designed to maximise throughput and lower costs
with little consideration for the impact on inventory levels and distribution capabilities.
Purchasing contracts are often negotiated with very little information beyond historical
buying patterns. The result of these factors is that there is not a single, integrated plan for
the organization ± there are as many plans as businesses. Clearly, there is a need for a
mechanism through which these different functions can be integrated together. Supply
chain management is a strategy through which such integration can be achieved.

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Basically JIT means to produce goods and services when needed, not
1 early and not too late. It is time based and often has quality and efficier targets. JIT is a
production philosophy and not a technology. This is due the fact that it looks at the whole
of the production system, and goes far p inventory control. The JIT system has been
called numerous names, fr zero defects and synchronous production to stockless
production at Hew Packard. The JIT system also uses the pull method of scheduling
material flow (Kanban). A JIT system aims to make goods available just in time, and
these can be parts, products or subassemblies and achieve some of the following benefits:

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· Increased flexibility

· Parts reduction

· Increased quality

· Simplicity of system

The increased flexibility allows a company the ability to react to changing events, i.e.
change in customer orders, or design modifications. Increased productivity means that the
shortest time and minimum of resources are needed to make a product. The overall
objective of JIT is to produce parts in lot sizes of one, but this is not economically
feasible due to the set-up cost being higher as compared to the carrying cost.

At the heart of JIT, is a set of tools and techniques. To achieve the aims of JIT a
disciplined approach is needed which incorporates three principles applied to the
organization:

· Elimination of Waste

· Total Quality Management (TQM)

· Total Employee Involvement

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Waste elimination is basically removal of any activity that is not value-added, but first it
has to be identified. These activities don¶t increase product value and are costly to the
company. Examples of non-value-adding activities include traditional production
methods, i.e. inspection of parts, holding stock, inventories, time, etc. Waste can be
eliminated from these activities by removal of defects and by not over producing hence,
make-to-order.

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TQM eliminates waste by eliminating defects. In a JIT environment, the aim is to prevent
defects from occurring, and this is achieved by detecting problems at their source. The
whole organization is involved in the process, right from the stages of manufacturing,
product development and purchasing. Manufacturing uses statistical process control
(SPC) and in-process testing (to allow detection at source), while product development
ensures that new products can be manufactured to specification. Purchasing makes sure
th; the parts that are bought are of the required quality.

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Total employee involvement has management providing the leadership which results in
employees wanting to be involved in the processes. Opportunity provided through
education and training, and work teams.

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Most manufacturing companies view the making of a product as continuous ± from

design, manufacture, and distribution to sales and customer service. For many companies,
the heart of this process is the Kanban, a Japanese term for Visual record¶, which directly
or indirectly drives much of tool manufacturing organization. It was originally developed
at Toyota in tl 1950s as a way of managing material flow on the assembly line. Over the
pa three decades the Kanban process, which is a highly efficient and effective factory
production system, has developed into an optimum manufacturing environment leading
to global competitiveness.

The Kanban process of production is sometimes incorrectly described as simple just-in-

time management technique, a concept that attempts to maintain minimum inventory.
The Kanban process involves more than fine tuning production and supplier scheduling
systems, where inventories are minimised by supplying the components only when
needed in production, and work progress in closely monitored. It also encourages
industrial reengineering such as a µmodule and cellular production¶ system, and group
production techniques, where team members are responsible for specific work element
and employees are encouraged to effectively participate in continuously in proving the
Kanban processes within the Kaizen (continuous improvement concept.

The Japanese refer to Kanban as a simple parts-movement system it depends on cards and
boxes/containers to take parts from one work station to another on a production line.
Kanban stands for Kan-card, Ban-signal. The essence of the Kanban concept is that a
supplier or the warehouse should or deliver components to the production line as and
when they are needed, so that there is no storage in the production area. Within this
system, workstation located along production lines only produce/deliver desired
components when they receive a card and an empty container, indicating that more parts
be needed in production. In case of line interruptions, each work station will only produce
enough components to fill the container and then stop. In addition, Kanban limits the
amount of inventory in the process by acting as an authorisation to produce more
inventory. Since Kanban is a chain process in which orders flow from one process to
another, the production or delivery of components is pulled to the production line. In
contrast to the traditional forecast oriented method where parts are pushed to the line.

The advantages of Kanban over the traditional push system are:

· A simple and understandable process

· Provides quick and precise information

· Low costs associated with the transfer of information

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· Provides quick response to changes

· Limit of over-capacity in processes

· Avoids overproduction

· Minimises waste

· Maintains control

· Delegates responsibility to line workers

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JIT is continuously seeking to reduce inventory levels of work in process (WIP), raw-
materials and finished goods. Therefore, less space is required with lower inventories so
there is less chance of the product becoming damaged, spoiled or obsolete. Material
handling of lots can be automated, and operations can be placed closer together,
enhancing communication and teamwork. The following are some of the benefits of a
properly implemented JIT system:

·  

   This can be done through small batch sizes, which achieves faster
throughput. Flexibility is a prerequisite, if small batch sizes are to be kept. A flexible
workforce means that the operators must be multi-skilled which is done through training.
The worker should also be free to move from low demand to high demand areas.

· 

   JIT continuously seeks to reduce inventory levels of raw materials,
work in process and finished goods. Lower inventory means less space and less chance of
the product being obsolete, damaged or spoiled. Work in process inventories are reduced
as a firm implements the µpull system¶. Raw material reduction is a key part of the JIT
system and requires a sound relationship with the supplier. Inventories can be reduced if
products are produced, purchased, delivered in small lots. To avoid unnecessary
production delays, materials must arrive just before they are needed, they must be correct
material and must satisfy the quality specifications.

·  


 When operating a JIT system, disruption has a minimum impact, so
quality problems need to be eliminated. Benchmark: Quality Function Deployment, and
service design can be used for device operations. Service employees need to learn the
value of providing defect free services.

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 Product mix or volume changes as planned by Master
Production Schedule (MPS), can be accomplished by adjust the number of cards in the
system. Production orders are prioritised by the cards on a post. Production orders for
parts that are running low are moved in front of parts that have more supply.

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Many companies fail to understand what JIT is and what it can mean to th because they
fail to implement it properly. Most importantly, they need to aware of the tasks,
resources, time scale and costs. For this, the system need the full backing of the top
management. The JIT system will also fail if an adequate education programme is not
provided. If careful planning process and control improvements are not strictly followed,
they will result JIT not being realised. The planning stage will require dedication and t:
and may also require the assistance of an external consultant(s). All above must be
integrated with moves towards JIT purchasing, or again, JIT will not be achieved. The
JIT system should not be viewed as a one scheme but as an on going continuous process.

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An increasingly popular tool for product design is Computer-Aided-Des (CAD). CAD

systems are computer programs or integrated packages for we station hardware and
software, that allow the user to draw and easily mo¶ product designs on a computer
screen. Advanced CAD systems provide signers with at least three major benefits.

· "



 
 CAD systems allow the designer to view a product from
different perspectives, including three-dimensional rotations, and various cross-sections.
The designer can also make proportional changes in scale, or change the angle of an arc
with the click of a computer mouse rather than having to redraw the entire product.

· 
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 Some CAD systems can store the design characteristics
of existing products and components. Then, for example, if a company needs a gear for a
new product, the designer can enter the relevant information about the gear, such as its
diameter, tooth pattern, and required hardness, into the CAD system. The CAD system
determines whether the company is already using an identical or sufficiently similar gear,
in which case a new one is unnecessary. If not, a gear that has similar properties may
exist. The designer can then use the design of this similar gear as a starting point for the
new gear. This capability not only promotes the use of common components but also
reduces design time.

·  "





 One of the most time-consuming aspects of
design for highly technical products is calculating whether or not product specifications,
such as strength, heat resistance or aerodynamic drag, are satisfied. These calculations
can be programmed into some CAD systems so that whenever the designer changes the
design (by altering the shape or material to be used), these performance characteristics
are recalculated automatically and compared to the product requirements. This is
sometimes called Computer-Aided-Engineering (CAE).

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The overall benefits of CAD systems can be substantial. The features described above
reduce development time and cost, and they improve product quality because more
design options can be evaluated in greater detail more quickly. For example, Motorola
used three-dimensional CAD to produce its award-winning MicroTac pocket sized
cellular phone two years ahead of the competition. It is not uncommon for CAD systems
to reduce product cycle times by 10-50%.

Even greater time and cost reductions have resulted from recent advances whereby,
CAD-engineered designs are converted automatically into software programs for
computerised production machines. These are called Computer-Aided-Design/Computer-
Assisted-Manufacturing (CAD/CAM)
systems. This automatic conversion eliminates the costly and time consuming steps of
having a person convert design drawings into a computer program for computer-
controlled production equipment, such as robots or machine tools. CAD and CAD/CAM
systems are not used by large automotive or electronics companies alone. Future
Enterprises, the largest maker of wedding jewellery in the United States, reported that its
CAD/CAM system reduced the time required to design and make jewellery from five
months to one week.

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