Chapter 3: Business Functions and Supply Chains

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Chapter 3 Business Functions and Supply Chains
Management Information Systems, Fifth Edition
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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

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Objectives

• Enumerate the purposes of customer relationship
  management systems
• Explain the notion of enterprise resource
  planning systems

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Effectiveness and Efficiency

• Information technology makes work more effective,
  more efficient, or both
• Effectiveness the degree to which a goal is
  achieved
• Efficiency the relationship between resources
  expended and benefits gained in achieving a goal
• Productivity efficiency of human resources

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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

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Effectiveness and Efficiency
Figure 3.1 Business activities consist of
customer relationship management, supply chain
management, and supporting functions
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Effectiveness and Efficiency
Figure 3.2 Information systems in different
business functions are interdependent
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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

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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

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Accounting
Figure 3.3 Accounting information systems
include features that reflect up-to-date performan
ce of the organization in financial terms
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Finance

• Firms health is measured by its finances
• Information systems improve financial management
• Financial managers try to manage money as
  efficiently as possible

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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

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Finance
Figure 3.4 Financial information systems help
manage cash and investment portfolios
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Cash Management

• Financial information systems help managers track
  company finances
• Cash management systems deal specifically with
  cash
• Electronic funds transfer huge cash transactions
• From one bank to another

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Investment Analysis and Service

• Investors 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

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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
• Minimizing time to market is key to maintain
  competitive edge
• Information systems contribute significantly to
  minimizing time to market

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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

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

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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

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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

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Monitoring and Control

• Information systems help control manufacturing
  processes
• Controlling processes ensures quality

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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

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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

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Customer Relationship Management

• Customer Relationship Management supporting
  relationships with customers
• Supports three areas
• Marketing
• Sales
• Customer service

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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
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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

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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

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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

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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

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Salesforce Automation

• Equips traveling salespeople with information
  technology
• Makes sales presentations more efficient
• Let salespeople present different options for
  products and services on net

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Human Resource Management

• Employee record management
• Promotion and recruitment
• Training
• Evaluation
• Compensation and benefits management

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

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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

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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

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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

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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

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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

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Interorganizational Supply Chain Management
Systems
Figure 3.12 A shared supply chain management
system
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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

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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

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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

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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

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Summary

• Effectiveness is the degree to which a task is
  accomplished
• Efficiency is the ratio of output to input
• Productivity is the measure of peoples
  efficiency
• Information systems have been integrated into
  accounting services
• Financial information systems help managers track
  cash

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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

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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

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Summary
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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

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Eats2Go

• How Is IT Being Utilized?
• Accounting
• Management
• Manufacturing
• Marketing
• Payroll Administration
• Quickbooks

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Case Studies

• Wachovia Bank
• Sales Tracking
• Clients
• Modeling Forecasting
• Canada Post
• ERP Human Resources Module
• Employer Benefits
• Employee Benefits

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Video Krispy Kreme

• How do they use technology?
• Making product
• Employees
• Standardization

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Outside Investigation

• Supply Chain Management
• http//www.cio.com/enterprise/scm
• http//www.supply_chain.org

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