Management Information Systems By Effy Oz & Andy Jones

1. Management Information SystemsByEffy Oz & Andy Jones Chapter 3: Business Functions and Supply Chains www.cengage.co.uk/oz

2. Objectives • Identify various business functions and the role of ISs in these functions • Explain how ISs in the basic business functions relate to each other • Articulate what supply chains are and how information technology supports management of supply chains

3. Objectives (continued) • Enumerate the purposes of customer relationship management systems • Explain the notion of enterprise resource planning systems

4. Effectiveness and Efficiency • Information technology makes work more effective, more efficient, or both • Effectiveness: the degree to which a goal is achieved • Efficiency: the relationship between resources expended and benefits gained in achieving a goal • Productivity: efficiency of human resources

5. Effectiveness and Efficiency (continued) • Productivity increased with software applications • Customer relationship management system: serves customers better and faster • Service continues after delivery of goods as customer service • Often combined with supply management systems to make enterprise resource planning system

6. Effectiveness and Efficiency (continued)

7. Effectiveness and Efficiency (continued)

8. Accounting • Purpose is to track every financial transaction • Make sure company is pulling a profit • Accounts payable and receivable track who owes who what • Balance sheet: picture of financial situation • Includes profit-and loss report

9. Accounting (continued) • Accounting information system pulls information from transaction processing system • Automatically routes purchases to accounts payable • Generates reports on demand or on schedule • Cost-accounting systems accumulate data about costs involved in producing specific products

10. Accounting (continued)

11. Finance • Firm’s health is measured by its finances • Information systems improve financial management • Financial managers try to manage money as efficiently as possible

12. Finance (continued) • Financial managers have any goals • Collect payables as soon as possible • Making payments at the latest time allowed by contract or law • Ensuring that sufficient funds are available for day-to-day operations • Taking advantage of opportunities to accrue highest yield on funds possible

13. Finance (continued)

14. Cash Management • Financial information systems help managers track company finances • Cash management systems: deal specifically with cash • Electronic funds transfer: huge cash transactions • From one bank to another

15. Investment Analysis and Service • Investor’s goal is buy asset and sell higher • Must know current prices of securities in real time • Information systems provide investors and clients with financial news, stock prices, and exchange rates • Factors to consider in investing are variability, expected return, and liquidity

16. Engineering • Time to market: time between generating an idea for product and completing a prototype • Engineering includes designing and building the prototype • Brainstorming: group meeting and collaborating to generate ideas • Minimizing time to market is key to maintain competitive edge • Information systems contribute significantly to minimizing time to market

17. Engineering (continued) • Computer-aided design: tools to create, modify and store designs and drawings • Rapid prototyping: creating one-of-a-kind products to test design in three dimensions • Takes hours rather than days or weeks to produce product • Computer-aided manufacturing: systems that instruct machines to manufacture parts and assemble product

18. Engineering (continued)

19. Supply Chain Management • Supply Chain: procurement of raw materials, processing materials, and delivering goods • Processing goods also known as manufacturing • Supply Chain Management: monitoring, controlling, facilitating supply chains • CAD systems often automatically transfer data to CAM systems • IT helps scheduling, planning, allocating, analysing manufacturing operations

20. Material Requirements and Purchasing • Material requirements planning (MRP): Inventory control • Determines when inventory needs to be restocked • Can predict future need based on demand forecasts • Bill of materials: raw material and subcomponent demands • Economic order quantity: optimal quantity to be bought

21. Manufacturing Resource Planning • Manufacturing resource planning: plans entire manufacturing process • Uses master production schedule • Master production schedule: specifies how production capacity is used to meet customer demands • Just-in-time manufacturing: suppliers ship parts directly to assembly lines • Saves storage costs

22. Monitoring and Control • Information systems help control manufacturing processes • Controlling processes ensures quality

23. Shipping • Performed by manufacturer or shipping company • Many variables that affect cost and speed of shipping • Sophisticated software to optimize shipping efficiency necessary to stay competitive • Vehicles equipped with computers and satellite communication

24. RFID in SCM • Radio frequency identification: allows recording of information about product • Electronic product code: replaces universal product code with much more information • Info includes date of manufacturing, plant location, expiration date, destination • Ensures genuineness of products

25. Customer Relationship Management • Customer Relationship Management: supporting relationships with customers • Supports three areas • Marketing • Sales • Customer service

26. Customer Relationship Management (continued)

27. Market Research • To promote products successfully, organisations must perform market research • Market research: discover populations and regions that are most likely to purchase product • Conduct interviews with consumers and retailers • Statistical models predict sales volumes of different products

28. Targeted Marketing • Targeted Marketing: promote to people most likely to purchase products • Database technology allows smaller companies to use targeted marketing • Can direct promotions to customers most likely to buy • Spam: cheap method of advertising involving sending mass e-mail communications

29. Targeted Marketing (continued) • Database management systems sort consumers • Telemarketing: marketing over the telephone • PC connected to large database • Computer telephony integration: allows computer to use telephone line as input • Data mining: using large data warehouses to find trends on consumer habits

30. Customer Service • Web-based customer service provides automated customer service 24/7 • Saves labour costs • Saves paper costs • Consists of FAQs, tracking systems, maintaining customer profiles • Artificial intelligence used to emulate a real-life customer service representative

31. Salesforce Automation • Equips traveling salespeople with information technology • Makes sales presentations more efficient • Let salespeople present different options for products and services on net

32. Human Resource Management • Employee record management • Promotion and recruitment • Training • Evaluation • Compensation and benefits management

33. Human Resource Management (continued) F

34. Employee Record Management • Keep personnel records to satisfy laws • Payroll and tax calculation • Human Resource information systems are now digitised • Saves space, time and costs

35. Promotion and Recruitment • Select best-qualified person for position • Selection process automated with IS • Intranet: interorganisational network that supports Web applications • Helps HR manager post position vacancy announcements • Automated recruiting and selection software saves costs of publishing help wanted ads

36. Training • Improving employee skills • Multimedia software training replacing classrooms and teachers • Training software emulates situations where employee must act • Information technology reduces training costs dramatically

37. Evaluation • Employee ability must be periodically evaluated by supervisors • Often is a subjective process, which is a problem • Evaluation software tries to solve this problem by standardising evaluation process • Provide tools to aid in fairly evaluating every employee

38. Compensation and Benefits Management • Compensation includes salary, hourly pay, and bonus • Programs calculate pay and taxes • Automatically generates payslips and performs direct deposits • Programs help manage benefits • Benefits database accessible through intranet

39. Interorganisational Supply Chain Management Systems • Inventory is decreasing while gross domestic product is increasing • Money saved from inventory can be spent elsewhere • Reduction in inventory attributed to supply chain management systems • Streamline operations throughout chain • Newer SCM systems connect multiple organisations

40. Interorganisational Supply Chain Management Systems (continued)

41. The Importance of Trust • Supply chain systems work best when all businesses are sharing information • Trust between allied companies facilitates collaboration • Risk of disclosing important figures is present • Risk of taking advantage of demand figures is present

42. The Musical Chairs of Inventory • Small enterprises do not use SCM systems • Affects more powerful organisation that small enterprise is linked to • Inventory turns: the number of times the business sells its inventory • When SCM of companies are not linked, supplier requirements unknown so companies must overstock inventory • One company sits with lean inventory while other stands, hence musical chairs

43. Collaborative Logistics • Web allows organisations from different industries to collaborate • Businesses combine freight, sharing trucks • Optimize logistics by connecting SCM systems • SCM systems help collaborative warehousing • Share warehouse space

44. Enterprise Resource Planning • Replace old, disparate information systems with enterprise applications • Enterprise resource planning: • Manages daily operations • Complex • Require special tailoring for specific organisations • Relatively expensive

45. Summary • Effectiveness is the degree to which a task is accomplished • Efficiency is the ratio of output to input • Productivity is the measure of people’s efficiency • Information systems have been integrated into accounting services • Financial information systems help managers track cash

46. Summary (continued) • Computer-aided design systems help engineers design new projects • Computer-aided manufacturing systems direct machines that assemble parts • Supply chain management systems optimize workload, speed, and cost in supply chains • Customer relationship management includes the entire cycle of relationships with customers

47. Summary (continued) • Human resource management systems facilitate staff selection and record keeping • Multiple companies’ SCM systems can be linked, facilitating cooperation, which requires trust • Installing an enterprise resource planning system can encompass all business processes