Management Information Systems Chapter Nine Achieving Operational Excellence and Customer Intimacy:...

Management Information Systems

Chapter Nine

Achieving Operational Excellence and Customer Intimacy: Enterprise Applications

Md. Golam KibriaLecturer, Southeast University

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Enterprise Business Systems E-business means using the Internet, other

networks, and IT to support Electronic commerce Enterprise communications and collaboration Web-enabled business processes

E-commerce is the buying, selling, and marketing of products, services, and information over the Internet and other networks

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Transaction Processing Systems Cross-functional information systems that

process data resulting from the occurrence of business transactions Transactions include sales, purchases, deposits,

withdrawals, refunds, and payments Online transaction processing (OLTP) is a real-

time system that captures transactions immediately

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The Transaction Processing Cycle

Enterprise Systems/ ERPEnterprise Resource Planning ( ERP)

Enterprise systems, also known as ERP, which are based on a suite of integral software modules and a common database.

The database collects data from many different divisions and departments in a firm, and from a large number of key business processes in Manufacturing and Productions, Sales and Marketing, Finance and Accounting, and Human Resources,

Making the data available for applications that support nearly all of an organization’s internal activities.

Why ERP is Required?Typical Business Process:

Finance & Accounting

Customer

Sales

HR

Shop Floor Execution

Production Planning

Inventory

Vendors

Key Observations:

A typical enterprise has many departments These departments continuously communicate and

exchange data with each other The success of any organization lies in effective

communication and data exchange within the departments as well as associated third party such as Vendors, Outsourcers, and customers.

Types of Enterprise Systems

Decentralized Systems Centralized Systems or ERP

Decentralized Systems

Data is Maintained locally at the individual departments Departments do not have access to data of other

departments

Problems with Decentralized Systems

Finance & Accounting

Customer

Sales

HR

Shop Floor Execution

Production Planning

Inventory

Vendors

Loss of Revenue and Customer Dissatisfaction

Data Maintenance cost goes up

Material and Inventory cost increases

Labor cost increase

Loss of reputation and may face legal action

Centralized Systems

Data is maintained at a central location and is shared with various departments

All departments have access in data of all departments

Benefits of Centralized Systems/ ERP

Finance & Accounting

Customer

Sales

HR

Shop Floor Execution

Production Planning

Inventory

Vendors

Increase revenue and customer delight

No data duplicationLabor cost decreases

Payments on-time, no legal action

Key Benefits of ERP Eliminates the duplication, discontinuity, and

redundancy in data Provides information across departments in real

time Provides control over various processes Increases productivity, better inventory

management, promotes quality, reduced material cost, effective human resources management, reduced overheads what boosts profit.

Better customer interaction, increased throughput, improved customer service.

Supply Chain Management SystemsWhat is Supply Chain

A firm’s supply chain is a network of organizations and business processes for procuring raw materials, transforming these materials into intermediate and finished products, and distributing the finished products to customer. It links suppliers, manufacturing plants, distribution centers, retail outlets, and customers.

Management Information Systems

Supply Chain Management SystemsNIKE’S SUPPLY CHAIN

This figure illustrates the major entities in Nike’s supply chain and the flow of information upstream and downstream to coordinate the activities involved in buying, making, and moving a product. Shown here is a simplified supply chain, with the upstream portion focusing only on the suppliers for sneakers and sneaker soles.

© Prentice Hall 201115

Upstream supply chain: Firm’s suppliers, suppliers’ suppliers, processes for

managing relationships with them Downstream supply chain:

Organizations and processes responsible for delivering products to customers

Information Systems and Supply Chain Management

Inefficiencies cut into a company’s operating costs Can waste up to 25% of operating expenses

Just-in-time strategy: Components arrive as they are needed Finished goods shipped after leaving assembly line

Safety stock Buffer for lack of flexibility in supply chain

Bullwhip effect Information about product demand gets distorted as it passes

from one entity to next across supply chain

How IS Facilitates SCM? Decide when and what to produce, store, and move Rapidly communicate orders Track the status of orders Check inventory, transportation, and warehousing

costs Track shipments Plan production based actual customer demand Rapidly communicate changes in product design

Customer relationship Management