Information Technology For Management 4th Edition

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Chapter 7, 8
Basic Information Systems

• Information Technology For Management 4th Edition
• Turban, McLean, Wetherbe
• John Wiley Sons, Inc.

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Functional Areas in a Business

• Compensation
• Vacation
• Skills/Training

• A/R
• A/P
• Payroll
• General Ledger

• Receiving
• Fulfillment
• Process control
• Purchasing

• Cash Management
• Asset Management
• Budgeting

• Retail Pricing
• Sales Promotions
• Sales Force Management.
• Customer Loyalty
• Interactive Marketing

• Order Taking
• CRM
• Self-service

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Functional Areas Value Chain Perspective
The value chain model, views activities in
organizations as either primary (reflecting the
flow of goods and services) or secondary
(supporting the primary activities). The
organizational structure of firms is intended to
support both of these types of activities.
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Functional Areas Supply Chain Perspective
The supply chain is a business process that links
all the procurement from suppliers, the
transformation activities inside a firm (the
value chain) and the distribution of goods or
services to customers via wholesalers and
retailers.
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Functional Information Systems
Functional information systems support the
organization, processes and business model.

• Composed of smaller systems A functional
  information system consists of several smaller
  information systems that support specific
  activities performed in the functional area.
• Integrated or independent The specific IS
  applications in any functional area can be
  integrated to form a coherent departmental
  functional system, they can be integrated across
  departmental lines to match a business process or
  be completely independent.
• Interfacing Functional information systems may
  interface internally with each other to form the
  organization-wide information system or
  externally systems outside the organization.
• Supportive of different levels Information
  systems applications support the three levels of
  an organizations activities operational,
  managerial, and strategic

Enterprise Wide Environment All business units.
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Functional Information Systems
Data Analysis and statistical forecasting.
Datamining ops that support management
Dynamic and what-if features.
Integrated
Clerical documents, schedules, mail, manuals, etc.
Back office administrative tasks and ops.
Business transactions, events and processes.
Support of the business and customers.
Operation Level of the company is normally highly
structured and predefined.
Run The Company
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Supply and Value Chains
Supply chain refers to the flow of materials,
information, payments, and services from raw
material suppliers, through factories and
warehouses (Value Chain), to the final consumer
(Demand Chain). It includes tasks such as
purchasing, payment flow, materials handling,
production planning control, logistics
warehousing, inventory control, and distribution.
When it is managed electronically it is referred
to as an e-supply chain.

• Supply Chain Flows
• Materials flows are all physical products, new
  materials, and supplies that flow along the
  chain.
• Information flows relates to all data associated
  with demand, shipments, orders, returns and
  schedules.
• Financial flows include all transfers of money,
  payments, credit card information, payment
  schedules, e-payments and credit-related data.

Supply Chains contribute to increased
profitability and competitiveness
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Supply Chains Components

• The supply chain involves three segments
• Upstream, where sourcing or procurement from
  external suppliers occur
• Internal, where packaging, assembly, or
  manufacturing take place
• Downstream, where distribution or dispersal take
  place, frequently by external distributors.
• It also includes the movement of information and
  money and the procedures that support the
  movement of a product or a service.
• Organizations and individuals are also part of
  the chain.

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Supply Chains Classifications

• There are several major types of supply chain
• Integrated make-to-stock
• Continuous replenishment
• Build-to-order
• Channel assembly.

Value Chain
Supply Chain
Demand Chain
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Supply Chain Problems
Adding value along the chain is essential for
competitiveness, however problems exist
especially in complex or long chains and in cases
where many business partners are involved. These
problems are due to uncertainties and the need to
coordinate several activities, internal units,
and business partners.

• Demand forecasts are a major source of
  uncertainties
• Competition
• Prices
• Weather conditions
• Technological development
• Customer confidence
• Uncertainties exist in delivery times
• Machine failures
• Road conditions
• Shipments
• Quality problems may also create production delays

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Supply Chain Problems continued
The bullwhip effect refers to erratic shifts in
orders up and down the supply chain because of
poor demand forecasting, price fluctuation,
order batching, and rationing within the
chain. Even slight demand uncertainties and
variability become magnified if each distinct
entity, on the chain, makes ordering and
inventory decisions with respect to its own
interest above those of the chain. Distorted
information can lead to tremendous
inefficiencies, excessive inventories, poor
customer service, lost revenues, ineffective
shipments, and missed production schedules.
A common way to solve the bullwhip problem is by
sharing information along the supply chain
through EDI, extranets, and groupware
technologies. For example employing a
vendor-managed inventory (VMI) strategy, the
vendor monitors inventory levels and when it
falls below the threshold for each product this
automatically triggers an immediate shipment.
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Supply Chain Solutions
Information sharing among supply chain partners
(c-commerce) sometimes referred to as the
collaboration supply chain is one method to
overcome problems in the flow. Others are

• Optimal Inventory Levels
• Supply Chain Coordination and Collaboration
• Supply Chain Teams
• Performance Measurement and Metrics
• Various IT-Assisted Solutions
• wireless technology
• optimal shipping plans
• strategic partnerships with suppliers
• just-in-time

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ERP and Supply Chains
Enterprise Resource Planning
ERP or enterprise systems control all major
business processes with a single software
architecture in real time.

• It is comprised of a set of applications that
  automate routine back-end operations
• such as financial management
• inventory management
• Scheduling
• order fulfillment
• cost control
• accounts payable and receivable,
• It includes front-end operations such as
• POS
• Field Sales
• Service
• It also increases efficiency, improves quality,
  productivity, and profitability.

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Enterprise Resource Planning
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ERP Reality

• Complete systems can cost tens of millions of
  dollars
• Implementation can take several years
• Companies may lose flexibility

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What is SAP? Systems Applications and Products
in Data Processing

• SAP is the leading global provider of
  client/server business application solutions
• SAP is the number one vendor of standard business
  applications software
• SAP is the fifth largest independent software
  supplier in the world

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Electronic Commerce

• Interorganizational Systems
• Business-to-business
• Electronic storefront

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Market ExchangeInterorganizational Structure

• Vertical integration
• Multiple activities in the same firm
• Risk range of expertise required
• Selective sourcing
• Some outsourced activities
• Risk control of outsourcer
• Virtual corporation
• Coordination of separate activities
• Risk loss of core competency

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Questions

• Do we benefit from electronic commerce?
• Do we use information to add value to customers?
• Are we managing the product/service channel?
• Have we redesigned business with our partners to
  take advantage of technology and provide security
• Do we have partners with shared vision and common
  purpose?
• Do we have the right infrastructure?

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External / Internal Hosting

• Outside (Cheaper)
• minimize bandwidth and hardware problems
• use external experts
• installed infrastructure
• little additional staffing required
• Inside (More Control)
• dependent on third party reliability
• possible single vendor software solutions
• possible single vendor payment scheme

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External / Internal Hosting

• External better at storefronts
• but requires close integration with core business
• Internal better at business to business
• but often creates a self-contained replicated
  system that can be outsourced

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Payment

• Credit Cards
• SET (Secure Electronic Transaction) with http
• Electronic Checks
• Public/private key transactions with banks
• Electronic Cash
• 3rd party software to create virtual cash
• EDI/EFT
• Value added network using 3rd party. Common in
  business to business.

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Infrastructure Drivers