Management Information Systems

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1 Faculty of Foundry Engineering Virtotechnology Management Information Systems Classification, elements, and evolution

2 Agenda Information Systems (IS) IS introduction Classification Integrated IS 2

3 Information systems - challenges Design competitive and efficient system. Create a system that supports the achievement of business goals. Determine the economic value of the information system. Design a system that people can control, understand and use in a responsible manner. 3

4 Information systems... specific nervous system of the organization that integrates the elements of the management system [Koźmiński A.K., Piotrowski W.]... multi-level structure, which allows for the transformation of input information... into the desired information output [Kisielnicki J., Sroka H.]... includes computer processing and/or manual procedures that provide... information [Shim J.K.]... formal, computer system created... in order to provide the information necessary for decision-making [Turban E.] 4

5 Information systems Information system Technology Data Procedures People hardware software DBMS telecommunication inside outside = What? Where? How? When? Who? Why? workers clients suppliers 5

6 Information systems The primary objective of IS collects data, processes them into information and then supports transforming the information into the knowledge Data The numbers that represent the facts, observations, things, events, activities, and transactions Information Processed data, organized and interpreted Knowledge Understanding or object model derived from the information on it All IS support decision making 6

7 Information systems Technology view Based on computer hardware and software. Processing and distribution of information by electronic means. Business view Organizational approach based on information technology, developed to meet the challenges stemming from the environment. Important tool for creating enterprise value. 7

8 Information systems The growing role of information systems IS IS IS IS Inventory systems Databases Computerization of all key functions E-business

9 Information systems - classification Source: Laudon J.P., Laudon K.C., Management Information Systems 8/e. Prentice Hall

10 Information systems - classification Executive Support Systems (ESS) Decision Support Systems (DSS and ISS) Management Information Systems (MIS) Knowledge Work Systems (KWS) Office Automation Systems (OAS) Transaction Processing Systems (TPS) 10

11 Information systems Strategic level systems ESS 5-year sales forecasting 5-year investment planning 5-year budget forecasting Profit planning Personnel planning DSS, ISS Seles region analysis Management level systems Production planning Costs analysis Price/profit analysis Contract costs analysis MIS KWS OAS Sales management Inventory control Mid-term budgeting Capital investment analysis Knowledge level systems Performance appraisal CAD, RP, CAM, CIM Word processing, image processing, document management systems, desktop publishing, TM, commumication, calculations Operational level systems TPS Taking orders Orders tracking Production scheduling Material movement control Cash management Securities trading Payrolls Registration of invoices Employee record keeping Training tracking Sales and marketing Manufacturing Finance Accounting Human Resources 11

12 Information systems - TPS A system that records company transactions, in which a transaction is defined as an exchange between two or more business entities. TPS automates daily routine and repetitive tasks that are critical to to the conduct of the business, such as preparing a payroll, billing customers, inventory control or order tracking. Data collected from this operation feed the MIS and DSS systems. 12

13 An example of TPS Source: Laudon J.P., Laudon K.C., Management Information Systems 8/e. Prentice Hall 2004.

14 Types of TPS Source: Laudon J.P., Laudon K.C., Management Information Systems 8/e. Prentice Hall 2004.

15 Information systems - MIS A group of general-purpose, well-integrated systems that monitor and control the internal operations of an organization. These systems access, organize, summarize, and display information for supporting routine decision making in the functional areas. MIS provide decision-makers with reports summarizing transactions recorded in the company's database. On the basis of these reports, managers can observe the status and trends of mid-term operations. 15

16 Information systems - MIS Source: Laudon J.P., Laudon K.C., Management Information Systems 8/e. Prentice Hall

17 Information systems - DSS A set of interactive software programs that provide managers with data, tools, and models to make semistructured decisions. Models: ready-made or created by user. Components of a Decision Support System: Database management system (DBMS) Model management system Support tools Internal Data Decision-making Models What-if Analysis Goal Seeking Problem Solving Generate Alternatives Assess Risk External Data 17

18 Information systems - DSS Types of decisions Description Operational Tactical Strategic Structured decisions. Routine, easily understood decisions that do not require intuition or judgment, focus on day-to-day operations. Semistructured decisions that are part routine and part intuitive. Unstructured. Rely heavily on intuition, judgment, and experience. 18

19 Information systems - DSS Basic DSS methods Mathematical modeling Decision trees Simulation Queueing theory Statistical tools Queries What-If analysis Sensivity analysis 19

20 Information systems - DSS Source: Laudon J.P., Laudon K.C., Management Information Systems 8/e. Prentice Hall

21 Information systems ISS Intelligent Support Systems perform intelligent problem solving. One type od ISS is Expert Systems (ES). ESs provide the stored knowledge of experts to nonexperts, so the latter can solve difficult problems. With DSS, users make their decisions according to the information generated from the systems. With ES, the system makes recommended decisions for the users based on the built-in expertise and knowledge. The three main components in an expert system are the knowledge base, the inference engine, and the user interface. 21

22 Information systems ISS An expert system is a software program that captures the knowledge and problem-solving skills of a human expert. Expert systems are not targeted at any one level of management. Expert systems are ideally suited for problems that require knowledge, intuition or judgment. User Interface Knowledge Base (captures expert s knowledge) Inference Engine (software that helps the system apply knowledge to solve problems) 22

23 Information systems ESS ESS systems or Enterprise Information Systems (EIS) originally were implemented to support Senior management. These systems have been expanded to support other managers within the enterprise. At the senior management level they support strategic activities which deal with situations that significantly may change the manner in which business is done. Inputs: aggregate data Processing: interactive Outputs: projections Example: 5-year business plan 23

24 Information systems ESS Source: Laudon J.P., Laudon K.C., Management Information Systems 8/e. Prentice Hall

25 IS - interrelationships among systems Source: Laudon J.P., Laudon K.C., Management Information Systems 8/e. Prentice Hall

26 Integrated information systems Business processes Manner in which work is organized, coordinated, and focused to produce a valuable product or service. Concrete work flows of material, information, and knowledge sets of activities. Unique ways to coordinate work, information, and knowledge. 26

27 Integrated information systems Examples of Business Processes Manufacturing and production: assembling product, checking quality, producing bills of materials. Sales and marketing: identifying customers, creating customer awareness, selling. Finance and accounting: Paying creditors, creating financial statements, managing cash accounts. Human Resources: Hiring employees, evaluating performance, enrolling employees in benefits plans. 27

28 Integrated information systems Cross-Functional Business Processes: Transcend boundary between sales, marketing, manufacturing, and research and development. Group employees from different functional specialties to a complete piece of work. Example: Order fulfillment process. Source: Laudon J.P., Laudon K.C., Management Information Systems 8/e. Prentice Hall

29 Integrated information systems Enterprise applications Enterprise systems MRPII, ERP Supply chain management systems - SCM Customer relationship management systems - CRM Knowledge management systems - KMS 29

30 Integrated information systems Traditional view of the systems Inside the organization: there are functions and areas, each with their own information needs and own system Outside the organization: there are customers and vendors Everything works separately! Source: Laudon J.P., Laudon K.C., Management Information Systems 8/e. Prentice Hall

31 Integrated information systems Contemporary view of the systems Source: Laudon J.P., Laudon K.C., Management Information Systems 8/e. Prentice Hall

32 Integrated information systems Evolution of integrated systems The first systems appeared IC (Inventory Control) inventory management systems. They were developed in the early sixties and were historically the first systems supporting company management. MRP I - Material Requirements Planning - helps a manufacturer plan their purchasing and production activities, and when necessary, create the required purchase orders and production orders in time to meet customer orders. 32

33 Integrated information systems Evolution of integrated systems MRP II standard of APICS (American Production and Inventory Control Society) published in Manufacturing Resource Planning (MRP II) evolved from early Materials Requirement Planning (MRP) systems by including the integration of additional data, such as employee and financial needs. The system is designed to centralize, integrate and process information for effective decision making in scheduling, design engineering, inventory management and cost control in manufacturing. MRP II is a computer-based system that can create detail production schedules using realtime data to coordinate the arrival of component materials with machine and labor availability. 33

34 Integrated information systems - MRPII Elements od MRP II Business Planning Sales and Operation Planning SOP Demand Management DEM Master Production Scheduling MPS Material Requirements Planning MRP Bill of Material Subsystem - BOM Inventory Transaction Subsystem INV Schedule Receipts Subsystem SRS Shop Floor Control SFC Capacity Requirements Planning CRP Purchasing - PUR Distribution Resource Planning DRP Tooling Financial Planning Interface Simulation Performance Measurement 34

35 Integrated information systems - MRPII Material Requirements Planning (MRP) calculates the exact quantity, need date, and order release date for each of the subassemblies, components, and materials required to manufacture the products listed on the master production schedule. Capacity Planning is the process of determining how much (labour, resources, time, etc.) are required to accomplish the task of production. If capacity in the form of machines, equipment, facilities, labour, material, etc. is inadequate to support the plan, either the requirements must be reduced or the resources must be increased. Master Production Schedule (MPS) uses customer demand data and current stock inventory to create a production schedule for each end item produced. MPS is the key driver to an MRP. The MPS is a statement of what a company anticipates building including type, quantity, and date. All other material requirements are dependent upon this schedule. Bill-of-Materials (BOM): A structured list of all assemblies/parts/components that make up the final product. Purchase and Production Plans: this information is taken from the MRP and is used to determine the quantity and timing of orders to be placed or issued. This could be placing an order for production to begin (produce parts) or releasing an order to a supplier. 35

36 Integrated information systems - MRPII Closed Loop MRP II It uses the output of the material requirements plan (MRP), to develop a capacity requirements plan and compares the planned capacity utilization resulting from the MPS and MRP to the available capacity to determine if the plan is attainable. Once an attainable plan is developed, shop floor control and purchasing control closes the planning and control system, and actual orders are released. Production and supplier performances are then measured and compared to the plan. This feedback enables management to determine if corrective action is required. 36

37 Integrated information systems - ERP Evolution of integrated systems ERP - Enterprise Resources Planning is a generic term for corporate computing integrated systems. An ERP system automates and integrates business processes found in manufacturing environments, including business processes on the plant production floor. ERP implies the use of packaged software rather than proprietary software written by or for one customer. ERP modules may be able to interface with an organization's own software with varying degrees of effort, and, depending on the software, ERP modules may be alterable via the vendor's proprietary tools as well as proprietary or standard programming languages. An ERP system can include software for manufacturing, order entry, accounts receivable and payable, general ledger, purchasing, warehousing, transportation and human resources. 37

38 Integrated information systems - ERP 38

39 Integrated information systems - ERP Survey Results: The Top ERP Implementation Concerns, 39

40 Integrated information systems - ERP Benefits of ERP Firm structure and organization: One organization Management: Firm-wide knowledge-based management processes Technology: Unified platform Business: More efficient operations and customer-driven business processes 40

41 Integrated information systems - ERP Challenges of ERP Difficult to build: Require fundamental changes in the way the business operates Technology: Require complex pieces of software and large investments of time, money, and expertise 41

42 Integrated information systems - SCM Supply Chain Management (SCM) Close linkage and coordination of activities involved in buying, making, and moving a product. Integrates supplier, manufacturer, distributor, and customer logistics time. Reduces time, redundant effort, and inventory costs. Helps in procurement of materials, transformation of raw materials into intermediate and finished products. Includes reverse logistics - returned items flow in the reverse direction from the buyer back to the seller. 42

43 Integrated information systems - SCM Tasks of SCM Decide when, what to produce, store, move. Rapidly communicate orders. Communicate orders, track order status. Check inventory availability, monitor levels. Track shipments. Plan production based on actual demand. Rapidly communicate product design change. Provide product specifications. Share information about defect rates, returns. 43

44 Integrated information systems - SCM SCM as Web-based Inter-Organizational System (IOS) 44

45 Integrated information systems - CRM Customer Relationship Management Manages all ways used by firms to deal with existing and potential new customers. Uses information system to coordinate entire business processes of a firm. Provides end-to-end customer care. Provides a unified view of customer across the company. Consolidates customer data from multiple sources and provides analytical tools for answering questions. 45

46 Integrated information systems - CRM CRM include systems containing the majority (not necessary all) of the following modules: Sale: contact management (policies, structure, history, sales contacts) account management (generating quotes, orders, transactions), sales analysis, monitor the status of customer and potential business contacts; Timetable and correspondence management: calendar and users database (groups) support traditional and electronic mail (fax, ); Marketing: campaign management, catalogue of products product configurator, pricing and offers, analysis of the effectiveness of the campaign, distribution of information about customers interested in the offer; 46

47 Integrated information systems - CRM Telemarketing: preparing the telephone lists by target groups, automatic dialling, generating lists of potential customers, collection of orders; Customer service and support after the sale: assigning, tracking and reporting tasks, service problem management, control orders, warranty and post-warranty; Integration with ERP systems (finance, accounting, manufacturing, distribution, human resource management); Data synchronization - applies to the interaction between the devices (e.g. laptops) and the central database and application servers; E-commers handling e-commerce; Call center telephone customer support. 47

48 BACK OFFICE Management Information Systems FRONT OFFICE Integrated information systems - CRM Clients WWW fax... Information exchange systems phone CUSTOMER SERVICE Marketing Sale Service... INFORMATION SYSTEMS DATA WAREHOUSE KNOWLEDGE MANAGEMENT ANALYTICS 48

49 Integrated information systems - KMS Knowledge Management Systems Creating knowledge Discovering and codifying knowledge Sharing knowledge Distributing knowledge 49

50 Integrated information systems - KMS Source: Laudon J.P., Laudon K.C., Management Information Systems 8/e. Prentice Hall

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