Lecture 1 –

Fundamentals of Systems Thinking

IE2141 Systems Thinking and Dynamics

Dr. LI Haobin, Senior Lecturer

Department of Industrial Systems Engineering and Management (ISEM)
College of Design and Engineering
National University of Singapore

IE2141 Systems Thinking and Dynamics – ISEM Department, National University of Singapore
 1.1 – Why Learn Systems Thinking?

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 Industrial Systems Engineering
and Management

Who are we?

Industrial Engineers
System Engineers
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 Who are Industrial & Systems Engineers?

▪ Various roles of Designers and Engineers

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 Industrial Systems Engineering
and Management

Who are we?

Industrial Engineers
System Engineers
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 Why to Learn Systems Thinking?
▪ Example of urban transportation in mega cities

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 Why to Learn Systems Thinking?
▪ Interdisciplinary consideration

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 Why to Learn Systems Thinking?
▪ Good system solutions, E.g.
▪ COE with validity period, road and fuel tax, ERP
▪ Well designed road network
▪ Shared parking facility
▪ Subsidised public transit

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 What is Systems Thinking?
Systems thinking is the ability to understand and analyse complex
systems as a whole, rather than focusing on individual
components or parts.

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 Importance for Designers and Engineers

▪ Understanding complex systems

▪ Considering system functionality and goals
▪ Dealing with dynamic changes in systems
▪ Optimizing decision-making and solutions
▪ Promoting interdisciplinary collaboration

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 Highlights on Learning Outcome
▪ Concepts and Principles of Systems Thinking
▪ Behaviour-Over-Time Graphs (BOTGs)
▪ Causal Loop Diagrams (CLDs)
▪ Stock-Flow Diagrams (SFDs)
▪ System Dynamics (SD) Simulation
▪ System Case Studies
▪ System Dynamics Team Projects
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 1.2 – Definition of Systems

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 What is a System?
▪ A system is a group of interacting or interrelated elements that
act according to a set of rules to form a unified whole.
▪ A system, surrounded and influenced by its environment, is
described by its boundaries, structure and purpose and
expressed in its functioning.

Source: Alexander Backlund (2000). "The definition of system". In:

Kybernetes Vol. 29 nr. 4, pp. 444–451.
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 How to Define a System?
▪ Elements / Parts
▪ Interaction / Interrelation / Structure
▪ Boundaries / Environment
Elements / Parts
▪ Purpose / Functions
Boundaries
▪ Input / Output
Input Output

(Dependency on (Purpose / Functions)

Surroundings)

Interaction / Interrelation / Structure

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 Examples of Systems
▪ Human Body Systems

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 Examples of Systems
▪ Computer Systems

Software System Hardware System

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 Examples of Systems
▪ Industrial Systems

Container Port System Warehouse System

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 Examples of Systems
▪ Natural / Technological Eco-Systems

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 Examples of Systems
▪ Social Systems

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 Systems vs. Collections
▪ Collection is a set of items or amount of material procured or
gathered together while system is a collection of “organized” things

Elements / Parts Elements / Parts

Boundaries Boundaries

Input Output

(Dependency on (Purpose / Functions)

Environment)

Interaction / Interrelation / Structure

System Collection

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 Systems vs. Collections
▪ Collection is a set of items or amount of material procured or
gathered together while system is a collection of “organized” things
▪ Examples of Collections:

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 1.3 – Boundary of Systems

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 Boundary of Systems
▪ A limit to the system’s internal components and processes
(i.e., elements and their interactions).
▪ Internal to which it has integrity
▪ Integrity gives the system autonomy Elements / Parts

(consideration of feedback) Boundaries

Input Output
(Dependency on (Purpose / Functions)
Surroundings)

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Interaction / Interrelation / Structure 23
 Example – Boundary for IE2141
Specific time, location, and Group of participating
content range students

IE2141 Course

Input Output

Teaching methods, activities Entire lifecycle

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 Inputs of System
The material, energy, information, or other resources that flow
into the system from the external environment.
orvallsets .
inter/constrat
Boundaries

Input Output
(Dependency on (Purpose / Functions)
Surroundings)

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 Example – Inputs for IE2141

Students

Teachers IE2141 Course

Teaching Materials Output

Objectives and Content

Environment and Demands

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 Outputs of System
The material, energy, information, or other products that flow out
of the system to the external environment

Boundaries

Input Output
(Dependency on (Purpose / Functions)
Surroundings)

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 Example – Outputs of IE2141

Learning Outcomes

IE2141 Course Assessment Results

Input Feedback and Improvement

Teaching Experience

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 Elements and Boundaries
▪ PESTLE
▪ Political
▪ Economic / Financial
▪ Socio-Cultural / Societal Elements / Parts
▪ Technological Boundaries
▪ Legal
▪ Environmental Input Output
(Dependency on (Purpose / Functions)
Surroundings)

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 Elements and Boundaries
▪ Political Factors relate to the pressures brought by political
institutions
▪ Elections and political trends
▪ Internal political issues
▪ Inter country relationships
▪ Local commissioning processes
▪ Corruption, Bureaucracy
▪ Wars, terrorism and conflicts
▪ Government policies
▪ Lobbying and pressure groups

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 Elements and Boundaries
▪ Economic Factors relate to economic policies and structures
▪ Local economy
▪ Taxation, inflation, interest
▪ Economy trends seasonality issues
▪ Industry growth
▪ Import / export ratios
▪ International trade
▪ International exchange rates

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 Elements and Boundaries
▪ Social Factors relate to the cultural aspects that affect the demand of
products and how business operates
▪ Demographics
▪ Media views of the industry
▪ Work ethic
▪ Brand, company, technology image
▪ Lifestyle trends
▪ Consumer buying patterns
▪ Ethical issues
▪ Advertising and publicity

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 Elements and Boundaries
▪ Technological Factors relate to the technological aspects,
innovations, barriers and incentives
▪ Emerging technologies
▪ Maturity of technology
▪ Technology legislation
▪ Research and Innovation
▪ Information and communications
▪ Competitor technology development
▪ Intellectual property issues

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 Elements and Boundaries
▪ Legal Factors relate to the laws, regulation and legislation that will
affect the way businesses operate
▪ Current legislation
▪ International legislation
▪ Employment law
▪ Consumer protection
▪ Health and safety regulations
▪ Tax regulations
▪ Competitive regulations
▪ Industry specific regulations

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 Elements and Boundaries
▪ Environmental Factors relate to the aspects of climate and
natural environment
▪ Environmental regulations
▪ Ecological regulations
▪ Reduction of carbon footprint
▪ Sustainability
▪ Impact of adverse weather

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 Elements and Boundaries
▪ PESTLE
▪ Political
▪ Economic / Financial
▪ Socio-Cultural / Societal Elements / Parts
▪ Technological Boundaries
▪ Legal
▪ Environmental Input Output
(Dependency on (Purpose / Functions)
Surroundings)

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 Setting Clear Boundaries
▪ First Step in understanding and analysing a system
▪ Help us focus on key factors, avoiding over-complexity in the analysis
▪ Outputs – Identify the main goals and outcome
▪ Inputs – Identify dependency, potential improvements and
optimizations
▪ Facilitate
▪ development of simulation model,
▪ formulation and analysis

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 1.4 – Elements of Systems

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 Identify Elements of Systems

As our understanding of the system deepens, we will gradually

uncover its internal structure. Over time,
▪ Discover additional elements Elements / Parts

▪ Remove insignificant elements Boundaries

▪ Interactions undergo reassessment

Output
Input

Interaction / Interrelation / Structure

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 Clues for Identifying Elements of Systems

▪ Constituent Units: The constituent units are the fundamental

components of a system.
Elements / Parts

Boundaries

Input Output
(Dependency on (Purpose / Functions)
Surroundings)

Interaction / Interrelation / Structure

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 Clues for Identifying Elements of Systems

▪ Functions and Roles: Every component has a specific function or

role within the system.
Elements / Parts

Boundaries

Input Output
(Dependency on (Purpose / Functions)
Surroundings)

Interaction / Interrelation / Structure

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 Clues for Identifying Elements of Systems

▪ Hierarchy and Levels: Units or elements of a system can be

organized and categorized according to a hierarchical structure.
Boundaries

Input Output
(Dependency on (Purpose / Functions)
Surroundings)

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 Clues for Identifying Elements of Systems

▪ Dependencies and Interactions: Dependencies and interactions

exist between the elements of a system, where changes in some
elements are determined by the states and trends of others.

Boundaries

Input Output
(Dependency on (Purpose / Functions)
Surroundings)

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 Clues for Identifying Elements of Systems

▪ Material and Information Flow: By considering the flow of

materials and information in a system, we can define and
delineate its elements more comprehensively.

Boundaries

Input Output
(Dependency on (Purpose / Functions)
Surroundings)

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 Filtering and Selection
▪ Do these elements fall outside the boundaries we previously
delineated?
Boundaries

Input Output
(Dependency on (Purpose / Functions)
Surroundings)
Is interaction
minor enough?
New
input? Or, Extend the boundary?

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 Filtering and Selection
▪ Although certain elements may exist within the boundaries we
defined for the system, their interactions with the remaining
elements might be very weak.

Boundaries

Input Output
(Dependency on (Purpose / Functions)
Surroundings)

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 Quantifying System Elements
System Elements Quantifiable Numerical Values
By quantifying system elements, we can
▪ describe the system's composition and structure more precisely
▪ observe and summarize the trends of these elements over an
extended period
▪ reduce subjectivity and speculation in the analytical process

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 Quantifying System Elements
▪ In system modeling, various system variables can be employed
to represent the system. Here are a few common examples of
system variables:
▪ Component Quantity
▪ Component Size or Complexity
▪ Intensity or Correlation
▪ Performance Metrics
▪ Cost or Resources

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 Interaction among Elements
▪ Clarifying the interactions between them and prominently
marking these on a diagram
Elements / Parts

Boundaries

Input Output
(Dependency on (Purpose / Functions)
Surroundings)

Interaction / Interrelation / Structure

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 1.5 – Sub-Systems

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 Sub-Systems
▪ A system that is part of a larger system.

Elements / Parts

Boundaries
Sub-System 1

Input Output

(Dependency on (Purpose / Functions)

Environment)

Interaction / Interrelation / Structure Sub-System 2

System (Parent)
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 Sub-Systems
▪ A system that is part of a larger system.

Indifferent
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 Sub-Systems
▪ A system that is part of a larger system.

Boundaries
Sub-System 1
Boundaries Input
Output
Input Output Output Input

(Dependency on
Input
Environment)
Sub-System 2

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 Characteristics of Sub-Systems

▪ Relative Independence
▪ Functional Consistency
▪ Interface Definition
▪ Scalability and Maintainability

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 Why Sub-Systems?
In summary, defining sub-systems contributes to improving
▪ modularization,
▪ maintainability,
▪ distribution of work scope and collaboration,
▪ extensibility, and
▪ fault isolation,
in a system.

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 Steps in Identifying Sub-Systems

1. Understand Functions and Requirements of Parent System

2. Identify less-dependent Modules within the System
3. Define the Boundaries of Sub-Systems
4. Determine the Interfaces Between Sub-Systems
5. Define the Functions and Responsibilities of Sub-Systems

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 Hierarchical Structure

Source System
Wider System

Target System

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 Feedback and Control Systems
▪ A control system possessing monitoring feedback, the deviation
signal formed as a result of this feedback being used to control the
action of a final control element in such a way as to tend to reduce
the deviation to zero (Mayr, Otto 1970).

Environment Parent System

𝑋′ 𝑡 Goal Deviation Action 𝑋 𝑡 𝑌 𝑡 𝑌′ 𝑡

Controller Sub-System
System
(Discrepancy) (Decision)

Perceived State Feedback

Observer

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 Feedback and Control Systems
▪ Example – Air-Con System

Room
Environment (outdoor temperature) Air-Con

𝑋′ 𝑡 Goal Deviation Action 𝑋 𝑡 𝑌 𝑡 𝑌′ 𝑡

(temperature
IC Chip Compressor
System
(specific room (electricity/ (cool
temperature) difference) power) air)
Perceived State Feedback
(sensible temperature) Sensor (room temperature)

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 Coupling of Sub-Systems
▪ A coupled system consists of sub-systems, including control
systems, connected in series or in parallel
S6 S5

C2 C1 S1 S2 S7

S3
S4

O1

O2

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 1.6 – Stakeholder

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 Sub-Systems of Persons and/or Groups

Source System
Wider System

Target System

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 Stakeholders
▪ Stakeholders are persons, groups, and organizations who may be
affected by or have an effect on a system, or its sub-systems.

Who may have 𝑋 𝑡 System / 𝑌 𝑡 Who may be

an effect on a affected by the
system input Sub-System output system

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 Stakeholders
▪ Types of stakeholders of a system

Beneficiary
Sponsor / Implementer
Payer
Monetary
input /output
Orders /
instruction Orchestrator
System /
Regulator
Rules Sub-System
Ideas / opinions
Interests
Advisor /
Marginalized Consultant
Interested
Groups Parties

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 Stakeholders
▪ Examples of stakeholders of a system
Society / A Wider System
Governments Community Owners

Consumer
Suppliers Advocates

Environ- Industry /
mentalists
System / Associations
Sub-System
Financial
Competitors
Institutions
Special Interests
Media
Groups
Union / Labor Management

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 Stakeholders & Audience
▪ Typically, the audience for system study is ONE of the key
"stakeholders" of the system.
▪ They might provide significant inputs to the system, receive
important outputs from it, or be a crucial sub-system essential
to the system's functionality.

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 Boundary by Stakeholders
▪ Which stakeholders are included in the system and which
stakeholders remain outside its boundaries?
Input

Input Output
(Dependency on (Purpose / Functions)
Surroundings)
Output
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 Let's protect the environment
Lecture notes are subject to change before
the class for further improvement

THANK YOU
The preparation of this module has been made possible by
the support from IE2141 teaching team, and the past
teaching materials developed by A/Prof. Aaron Chia.

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