Transcript Chapter 1 (MIS by Oz and Jones)

Chapter 3b: Business Functions
and Supply Chains(p101-115)
Business Functions:
CRM,
HR,
Supply Chain  ERP
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Revision:
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Page 15:
Each business function is like a puzzle piece.
Each piece is important and should fit well
with adjacent pieces, but the entire picture
should always be kept in view.
OR: One of an IS’s most important
contributions to the sound workings of an
organization is the automation of information
exchange among subsystems  ERP
Revision (continued):
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Example: Customer’s orders taken via the
web site by the Sales Department, should be
AUTOMATICALLY routed to the
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Manufacturing and
Shipping units
And processed by their OWN IS for their
specific purpose.
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Introduction to CRM:
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No company can survive without selling its
products or services:
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Providing products that customers want
Marketing efforts to pinpoint demographic groups,
features that consumers desire
Providing efficient/effective ways to execute a sale to
a customer
IS support the sale effort  IS support
customer services
CRM:
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Customer Relationship Management:
supporting relationships with customers
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Supports three areas
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Marketing
Sales
Customer service
Market Research:
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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
Targeted Marketing
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Targeted Marketing: promote to people most
likely to purchase products
Principle: to define the prospective customer
as accurately as possible
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Can direct promotional spending to customers most
likely to buy your products
Internet: Mass communication of unsolicited
promotional email  SPAM
Marketing (continued):
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To define target markets companies collect data
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Database technology manipulate data pools
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Sales transactions
Loyalty cards
Buy databases with info about organizations/individual
Sort and categorize consumers by
Age, gender, income, previous purchases of related products, or
other combinations
Marketing (continued):
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With this vast information, corporations can
prepare electronic dossiers on the
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Interest
Tastes
Buying habits of customers
‘Market of one’
Marketing (continued):p104
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Telemarketing: marketing over the telephone
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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
Set-top box….’personalize marketing’
Customer Service
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Web-based customer service provides
automated customer service 24/7
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Saves labor costs
Saves paper costs
Let customers pay their bills electronically: invoice
to payment cycle is 41days, now it is 6 days
Customer Service (continued)
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Artificial intelligence used to emulate a real-life
customer service representative for FAQ
Sales force automation:
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Equips traveling salespeople with information
technology (example PDA)
Makes sales presentations more efficient
Let salespeople present different options for
products and services on net
Human Resource Management
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Employee record management
Promotion and recruitment
Training
Evaluation
Compensation and benefits management
Employee Record Management
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Keep personnel records to satisfy laws
Payroll and tax calculation
Human Resource information systems are now
digitized
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Saves space, time and costs
Promotion and Recruitment
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Select best-qualified person for position
Selection process automated with IS
Intranet: inter-organizational network that
supports Web applications
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Helps HR manager post position vacancy
announcements
Automated recruiting and selection software
saves costs of publishing ads
Training
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Improving employee skills
Multimedia software training replacing
classrooms and teachers
Training software emulates situations where
employee must act
Information technology reduces training
costs dramatically
Evaluation
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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
Compensation and Benefits
Management
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Compensation includes salary, hourly pay, and
bonus
Programs calculate pay and taxes
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Programs help manage benefits
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Automatically generates pay slips and performs
direct deposits
Benefits database accessible through intranet
Inter-organizational Supply Chain
Management Systems:p111-115
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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
The Importance of Trust
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Supply chain systems work best when all
businesses are sharing information
Trust between allied companies facilitates
collaboration
Nissan UK: parts come from UK and Europe,
and the systems are linked to Nissan’s
Production Control System
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97% of parts are delivered on time
98% of cars are completed well within time
Distrust:
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Risk of disclosing important figures is
present, like taking advantage of demand
figures:
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GM and Goodyear
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If Comp A buys from Comp B and has access to
Comp B’s demand figures, it might disclose the
information to competitors, stirring competition
forcing prices down!
Goodyear can have lower inventory if it knows the
demand schedule for tyres.
Goodyear:
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It could then calibrate its own order for raw
materials
Manufacturing capacity to suit GM
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It could replenish the client’s inventory of
tyres before GM run out of them OR
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Save money and pass some of the savings to its
client in the form of cheaper products
It could deliver it straight to the assembly line, just
as needed and save warehouse costs!
The Musical Chairs of Inventory
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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 per year:
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Example:
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Sales revenue/average value of inventory
GM has an increase of 55%
Goodyear decreased in the same period by 21%
Why?
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GM avoided buying tyres from Goodyear
until they needed them on the assembly line
Goodyear did not have that information when
the tyres will be needed and kept overstock!
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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
Collaborative Logistics
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Web allows organizations from different
industries to collaborate
Businesses combine freight, sharing trucks
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SCM systems help collaborative
warehousing
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Optimize logistics by connecting SCM systems
Share warehouse space
Enterprise Resource Planning
Study p115
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Replace old, disparate information systems
with enterprise applications, supporting all or
most of the business activities.
Enterprise resource planning: manages
daily operations
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Complex
Require special tailoring for specific organizations
Relatively expensive
Summary
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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
Summary (continued)
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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
Summary (continued)
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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