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Business Functions and Supply Chains

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					     Chapter 3: Business
 Functions and Supply Chains




Management Information Systems, Fifth Edition
               Objectives
• Identify various business functions and
  the role of IS in these functions
• Explain how IS in the basic business
  functions relate to each other
• Articulate what supply chains are and
  how information technology supports
  management of supply chains


                Management Information Systems, Fifth Edition   2
               Objectives
• Enumerate the purposes of customer
  relationship management systems
• Explain the notion of enterprise resource
  planning systems




                Management Information Systems, Fifth Edition   3
Effectiveness and Efficiency

Information technology makes
work more effective, more
efficient, or both




         Management Information Systems, Fifth Edition   4
            Effectiveness:

• the degree to which a goal is achieved
• The measure of how well a job is
  performed
   – Example: An advertising campaign. A
     company could spends millions of
     dollars on commercials and billboards
     to get a product out there. That example
     would be effective.
                Management Information Systems, Fifth Edition   5
                 Efficiency
• the relationship between resources
  expended and benefits gained in
  achieving a goal
  – Example: One system is more efficient than
    another if its operating costs are lower for the
    same or better quality product
  – Or if its product quality is greater for the same
    or lower cost.


                  Management Information Systems, Fifth Edition   6
             Productivity
• efficiency of human resources
• The fewer labor hours needed to
  perform a job, the greater the
  productivity
  – Productivity improves when fewer workers
    are required to produce the same amount of
    output
  – When the same number of workers produces
    a greater amount of output.
                Management Information Systems, Fifth Edition   7
   Effectiveness and Efficiency
• 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
                 Management Information Systems, Fifth Edition   8
Effectiveness and Efficiency




    Figure 3.1: Business activities consist of customer relationship management,
                 supply chain management, and supporting functions
                          Management Information Systems, Fifth Edition            9
Effectiveness and Efficiency




    Figure 3.2: Information systems in different business functions are interdependent


                            Management Information Systems, Fifth Edition                10
                 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
                    Management Information Systems, Fifth Edition   11
                Accounting
• 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
                  Management Information Systems, Fifth Edition   12
                     Accounting




Figure 3.3: Accounting information systems include features that reflect up-to-date
                performance of the organization in financial terms

                           Management Information Systems, Fifth Edition              13
                  Finance
• Firm’s health is
  measured by its
  finances
• Information systems
  improve financial
  management
• Financial managers
  try to manage money
  as efficiently as
  possible

                Management Information Systems, Fifth Edition   14
                   Finance
• 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

                 Management Information Systems, Fifth Edition   15
                           Finance




Figure 3.4: Financial information systems help manage cash and investment portfolios




                         Management Information Systems, Fifth Edition                 16
         Cash Management
• Financial information systems help
  managers track company finances
• Cash management systems: Information
  system that helps reduce the interest and
  fees that organizations have to pay when
  borrowing money and increase the yield
  that organizations can receive on unused
  funds.
• Electronic funds transfer: electronic
  transfer of cash from an account in one
               Management Information Systems, Fifth Edition   17
  bank to an account on another bank.
     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
                 Management Information Systems, Fifth Edition   18
               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 and creative solutions
• Minimizing time to market is key to maintain
  competitive edge
• Information systems contribute significantly to
  minimizing time to market
                 Management Information Systems, Fifth Edition   19
               Engineering
• 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

                 Management Information Systems, Fifth Edition   20
           Engineering




Figure 3.5: Engineering information systems aid engineers in designing
             new products and simulating how they operate

                   Management Information Systems, Fifth Edition         21
   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,
  analyzing manufacturing operations
                 Management Information Systems, Fifth Edition   22
   Material Requirements and
          Purchasing
• Material requirements planning: 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


                   Management Information Systems, Fifth Edition   23
       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
                           Management Information Systems, Fifth Edition   24
     Monitoring and Control
• Information systems help control
  manufacturing processes
• Controlling processes ensures quality




                Management Information Systems, Fifth Edition   25
                     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
                      Management Information Systems, Fifth Edition   26
             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

                 Management Information Systems, Fifth Edition   27
       Customer Relationship
           Management
• Customer
  Relationship
  Management:
  supporting
  relationships with
  customers
  – Supports three areas
     • Marketing
     • Sales
     • Customer service

                     Management Information Systems, Fifth Edition   28
Customer Relationship
    Management




Figure 3.10: Customer relationship management systems help marketing, sales, and customer service
    departments target interested customers, learn from their experiences, and serve them better


                             Management Information Systems, Fifth Edition                          29
             Market Research

• To promote products successfully, organizations
  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




                    Management Information Systems, Fifth Edition   30
         Targeted Marketing

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


                  Management Information Systems, Fifth Edition   31
         Targeted Marketing

• 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


                 Management Information Systems, Fifth Edition   32
          Customer Service
• Web-based customer service provides
  automated customer service 24/7
  – Saves labor costs
  – Saves paper costs
  – Consists of FAQs, tracking systems,
    maintaining customer profiles
• Artificial intelligence used to emulate a
  real-life customer service representative

                 Management Information Systems, Fifth Edition   33
       Salesforce Automation
• Equips traveling
  salespeople with
  information technology
• Makes sales
  presentations more
  efficient
• Let salespeople present
  different options for
  products and services on
  net

                 Management Information Systems, Fifth Edition   34
Human Resource Management
• Employee record
  management
• Promotion and
  recruitment
• Training
• Evaluation
• Compensation and
  benefits
  management
              Management Information Systems, Fifth Edition   35
Human Resource Management




                                           F
    Figure 3.11: Human resource management information systems help managers
              optimize promotion and recruitment, training, and evaluation

                        Management Information Systems, Fifth Edition          36
Employee Record Management
• Keep personnel records to satisfy laws
• Payroll and tax calculation
• Human Resource information systems are
  now digitized
  – Saves space, time and costs




                 Management Information Systems, Fifth Edition   37
   Promotion and Recruitment
• Select best-qualified person for position
• Selection process automated with IS
• Intranet: interorganizational network that
  supports Web applications
  – Helps HR manager post position vacancy
    announcements
• Automated recruiting and selection
  software saves costs of publishing help
  wanted ads
                Management Information Systems, Fifth Edition   38
               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

               Management Information Systems, Fifth Edition   39
                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 standardizing evaluation
  process
  – Provide tools to aid in fairly evaluating every
    employee
                  Management Information Systems, Fifth Edition   40
   Compensation and Benefits
        Management
• Compensation includes salary, hourly pay,
  and bonus
• Programs calculate pay and taxes
  – Automatically generates paychecks and
    performs direct deposits
• Programs help manage benefits
  – Benefits database accessible through intranet

                 Management Information Systems, Fifth Edition   41
   Interorganizational 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
  organizations
                   Management Information Systems, Fifth Edition   42
Interorganizational Supply
Chain Management Systems




      Figure 3.12: A shared supply chain management system
                 Management Information Systems, Fifth Edition   43
     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
                Management Information Systems, Fifth Edition   44
The Musical Chairs of Inventory
• Small enterprises do not use SCM systems
  – Affects more powerful organization 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
                 Management Information Systems, Fifth Edition   45
      Collaborative Logistics
• Web allows organizations from different
  industries to collaborate
• Businesses combine freight, sharing trucks
  – Optimize logistics by connecting SCM
    systems
• SCM systems help collaborative
  warehousing
  – Share warehouse space

                Management Information Systems, Fifth Edition   46
 Enterprise Resource Planning
• Replace old, disparate information
  systems with enterprise applications
• Enterprise Resource Planning: manages
  daily operations
  – Complex
  – Require special tailoring for specific
    organizations
  – Relatively expensive

                  Management Information Systems, Fifth Edition   47
                  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


                  Management Information Systems, Fifth Edition   48
                Summary
• 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


                 Management Information Systems, Fifth Edition   49
                Summary
• 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
                 Management Information Systems, Fifth Edition   50
      Ethical Considerations
• Consumer Privacy
• Who Owns / Controls the Information
• Consumer Beware!
• Eight Issues Concerning Privacy
• Never E-Mail Social Security Number
• Never E-Mail Credit Card Number
• Be Careful With Personal Information

               Management Information Systems, Fifth Edition   51
                    Eats2Go
• How Is IT Being Utilized?
  –   Accounting
  –   Management
  –   Manufacturing
  –   Marketing
  –   Payroll Administration
• Quickbooks

                   Management Information Systems, Fifth Edition   52
              Case Studies
• Wachovia Bank
  – Sales Tracking
    • Clients
    • Modeling & Forecasting
• Canada Post
  – ERP – Human Resources Module
    • Employer Benefits
    • Employee Benefits


                  Management Information Systems, Fifth Edition   53
       Video: Krispy Kreme
• How do they use technology?
  – Making product
  – Employees
  – Standardization




                Management Information Systems, Fifth Edition   54
       Outside Investigation
• Supply Chain Management
  – http://www.cio.com/enterprise/scm
  – http://www.supply_chain.org




                Management Information Systems, Fifth Edition   55
     Excel / Lab Assignments
• For Next Week
  – Student – Tutorial 6 – Review Assignment
  – Computer Lab
    • Excel – Multiple Worksheets & Functions
       – Excel Tutorial 6 – Java Cafe
  – Open Computer Labs
    • Fridays 12-2PM in Business 214




                     Management Information Systems, Fifth Edition   56
• The difference between efficient and
  effective is that efficiency refers to how
  well you do something, whereas
  effectiveness refers to how useful it is.
• For example, if a company is not doing
  well and they decide to train their
  workforce on a new technology. The
  training goes really well - they train all
  their employees in record time and tests
  show they have absorbed the training
                 Management Information Systems, Fifth Edition   57

				
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posted:9/21/2011
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