Management Information Systems · Management Information Systems ... integrates the elements of the management system ... management Inventory control Costs analysis

Faculty of Foundry Engineering

Virtotechnology

Management Information

Systems

Classification, elements, and evolution

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Information Systems (IS)

IS – introduction

Classification

Integrated IS

Agenda

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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.

Information systems - challenges

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... 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.]

Information systems

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Information system

Technology Data People

hardware

software

DBMS

telecommunication

What?

Where?

How?

When?

Who?

Why?

workers

clients

suppliers

Procedures

inside

outside

=

+ + +

Information systems

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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

Information systems

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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.

Information systems

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The growing role of information systems

IS

Inventory

systems

IS

Databases

IS

Computerization

of all key

functions

IS

E-business

1950 1960 1970 1980 1990 2000 2005

Information systems

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Information systems - classification

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

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Office Automation Systems (OAS)

Transaction Processing Systems (TPS)

Management Information Systems (MIS)

Executive Support Systems (ESS)

Decision Support Systems (DSS and ISS)

Knowledge Work Systems (KWS)

Information systems - classification

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TPS

ESS

MIS

DSS, ISS

OAS

KWS

Sales and

marketing Manufacturing Finance Accounting Human

Resources

Taking orders

Orders

tracking

Production scheduling

Material movement

control

Cash management

Securities

trading

Payrolls

Registration of

invoices

Employee record

keeping

Training tracking

Operational level systems

CAD, RP, CAM, CIM

Word processing, image processing, document management systems,

desktop publishing, TM, commumication, calculations

Knowledge level systems

Seles region

analysis

Sales

management

Production

planning

Inventory

control

Costs

analysis

Mid-term

budgeting

Price/profit

analysis

Capital investment

analysis

Contract costs

analysis

Performance

appraisal

Management level systems

5-year

sales

forecasting

5-year

investment

planning

5-year

budget

forecasting

Profit

planning

Personnel

planning

Strategic level systems

Information systems

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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.

Information systems - TPS

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An example of TPS


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Types of TPS


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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.

Information systems - MIS

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Information systems - MIS


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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

Information systems - DSS

Internal Data

External Data

Decision-making

Models

• What-if Analysis

• Goal Seeking

• Problem Solving

• Generate Alternatives

• Assess Risk

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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.

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Basic DSS methods


Mathematical modeling

Decision trees

Simulation

Queueing theory

Statistical tools

Queries

What-If analysis

Sensivity analysis

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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.

Information systems – ISS

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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.

Information systems – ISS

User Interface

Knowledge Base

(captures expert’s

knowledge)

Inference Engine (software

that helps the system apply

knowledge to solve problems)

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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

Information systems – ESS

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Information systems – ESS


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IS - interrelationships among systems


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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.

Integrated information systems

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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.


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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.



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Enterprise applications

Enterprise systems – MRPII, ERP

Supply chain management systems - SCM

Customer relationship management systems - CRM

Knowledge management systems - KMS


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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!


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Contemporary view of the systems



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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.


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MRP II – standard of APICS (American Production and Inventory Control Society) published in 1989.

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, inven-tory 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.


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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

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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.

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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.

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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.

Integrated information systems - ERP

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Survey Results: The Top ERP Implementation Concerns,

http://www.carillonfinancials.com/surveys/survey-results-the-top-erp-implementation-concerns

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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


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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


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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.

Integrated information systems - SCM

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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.


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SCM as Web-based Inter-Organizational System (IOS)


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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.

Integrated information systems - CRM

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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, e-mail);

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;


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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.


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WWW E-mail fax ... phone

Information exchange systems

CUSTOMER SERVICE

Service Marketing Sale

INFORMATION SYSTEMS

•DATA WAREHOUSE

•KNOWLEDGE MANAGEMENT

•ANALYTICS

FR

ON

T O

FFIC

E

BA

CK

OFFIC

E

Clients

...

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Knowledge Management Systems

Creating knowledge

Discovering and codifying knowledge

Sharing knowledge

Distributing knowledge

Integrated information systems - KMS

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Integrated information systems - KMS


Documents

Management Information Systems · Management Information Systems ... integrates the elements of the management system ... management Inventory control Costs analysis