Chapter 7 MIS

Core Activities of a Value Chain

- performed by the functional areas that process inputs and produce outputs, and support activities are those activities that enable core activities to take place. - include inbound logistics (receiving), operations and manufacturing, outbound logistics (shipping), marketing and sales, and customer service.

Make-to-Stock/Make-to-Order

- raw materials, subcomponents, and accessories are procured based on forecasts, but actual manufacturing does not start until an order is received - The processes associated with making products are composed of processing customers' orders, procuring the inputs to the manufacturing process, scheduling production, production, quality control, packaging, and stocking or shipping the product. - Processes: Process order, design, procure inputs, schedule production, production, quality control, and ship product

Limitations of ERP systems

ERP systems typically require organizations to modify various business processes; once an ERP system is implemented, the company is virtually locked in, and it is very difficult to make further changes, limiting organizations' flexibility and agility when facing new external challenges.

Vanilla Version

Features and modules that an enterprise system comes with out of the box

- Order to Cash

For most businesses, the order-to-cash process entails subprocesses such as creating a customer record; checking the customer's credit; creating an order; checking and allocating stock; picking, packing, and shipping; invoicing; and collecting the payment. Benefits of this process: customer satisfaction, serve to provide valuable inputs into business intelligence and customer relationship management applications.

Standalone applications

Systems that focus on the specific needs of individual departments are typically not designed to communicate with other systems in the organization

upstream information flow

consists of information that is received from another organization

Customer Service Activities

customer service focuses on post-sales (i.e., after the sale) activities. utilizing information systems to provide customer service is essential

Enterprise-wide information system

an integrated suite of business applications for virtually every business process, allowing companies to integrate data across functional areas on a company-wide basis.

Modules

are components that can be selected and implemented as needed.

Benefits realized from utilizing enterprise systems

improvements in information availability and increased interaction across the organization as a result of stream- lining business processes.

Marketing and Sales Activities

include the creation of marketing literature, communication with potential and existing customers, and pricing of goods and services prior to the sales.

Support activities

including administrative activities, infrastructure, human resources, technology development, and procurement, enable the primary activities to take place. Support activities include administrative activities, infrastructure, human resources, technology development, and procurement.

Core Business Process

make-to-stock, order to cash, procure to pay

Legacy Systems

many standalone applications are typically either fast approaching or beyond the end of their useful life within the organization

five distinct functional areas

marketing and sales, supply chain management, manufacturing and operations, accounting and finance, and human resources.

best practices

most enterprise systems are designed to operate according to industry-standard business processes. Best practices reflect the techniques and processes, identified through experience and research, that have consistently shown results superior to those achieved with other means.

Outbound Logistics Activities

outbound logistics focuses on the distribution of end products within the order-to-cash business process. Outbound Logistics picks the products from inventory and coordinates shipment to the customer

human resources

employee management, such as hiring, interview scheduling, payroll, and benefits management

Externally Focused Systems

help to streamline communications and coordinate business processes with customers, suppliers, business partners, and others who operate outside an organization's boundaries.

Internally Focused Systems

support functional areas, business processes, and deci- sion making within an organization. These activities can be viewed as a series of links in a chain along which information flows within the organization.

ERP core components

support the important internal activities of the organization for producing its products and services.

ERP extended components

support the primary external activities of the organization for dealing with suppliers and customers.

Enterprise Resource Planning (ERP)

systems evolved in part during the 1990s from material requirements planning and manufacturing resource planning packages. ERP systems replace standalone applications by providing various modules based on a common database and similar application interfaces that serve the entire enterprise rather than portions of it.

Infrastructure Activities

the buildings, machinery, and IS infrastructure components (computers, software, etc)

Administrative Activities

the day-to-day operations of an organization

Technology Development Activities

the design and development of applications that support the primary business activities so as to improve products and/or services.

Organizational Activities Along the Value Chain

the set of business activities that add value to the end product is referred to as a value chain. in which information flows through functional areas that facilitate an organization's business processes.

Custom software

which is designed and developed exclusively for specific organizations and can accommodate their particular business needs.

Packaged software, (off-the- shelf software)

written by third-party vendors for the needs of many different users and organizations, supporting standardized, repetitive tasks, such as word processing, payroll processing, or preparing taxes. Very cost-effective

Basic Steps in BPM

1. Develop a vision for the organization that specifies business objectives, such as reducing costs, shortening the time it takes to get products to market, improving quality of products and/or services, and so on. 2. Identify the critical processes that are to be redesigned. 3. Understand and measure the existing processes as a baseline for future improvements. 4. Identify ways that information systems can be used to improve processes. 5. Design and implement a prototype of the new processes.

Interorganizational System

A system that communicates across organizational boundaries. The key purpose is to streamline the flow of information from one company's operations to another's.

Business Process Management

A systematic, structured improvement approach by all or part of an organization whereby people critically examine, rethink, and redesign business processes in order to achieve dramatic improvements in one or more performance measures, such as quality, cycle time, or cost.

Operations Management

Components to simplify, standardize, and automate business processes related to inbound and outbound logistics, product development, manufacturing, and sales and service

Financial Management

Components to support accounting, financial reporting, performance management, and corporate governance.

Human Resource Management

Components to support employee recruitment, assignment tracking, performance reviews, payroll, and regulatory requirements

Inbound Logistics Activities

Inbound logistics involves the business activities associated with receiving and stocking raw materials, parts, and products. The receipt for products sold but also packaging materials.

Operations and Manufacturing Activities

Operations and manufacturing can involve such activities as order processing (e.g., at Amazon.com) and/or manufacturing or assembly processes (e.g., at Dell) that transform raw materials and/ or component parts into end products (i.e., the make-to-stock and make-to-order business processes).

Recommendations to provide an understanding of some of the challenges involved in implementing enterprise systems:

Recommendation 1. Secure executive sponsorship. Recommendation 2. Get help from outside experts. Recommendation 3. Thoroughly train users. Recommendation 4. Take a multidisciplinary approach to implementations. Recommendation 5. Evolve the implementation.

ERP Control

The locus of control over the computing systems and data contained in those systems, as well as decision making authority

Main objective of enterprise systems

To help achieve competitive advantage by streamlining business activities within and outside a company.

procure-to-pay process

procuring goods from external vendors Subprocesses: price and term negotiations, issuing of the purchase order, receiving goods, receiving and paying invoice. Benefits: obtain favorable conditions, reduce transaction costs and create customer goodwill.

Customization

provides either additional software that is integrated with the enterprise system or consists of direct changes to the vanilla application itself.

Procurement Activities

purchasing of goods and services that are required as inputs to the primary activities. Procurement receives, approves, and processes requests for goods and services from the primary activities and coordinates the purchase of those items.

Downstream information flow

relates to the information that is produced by a company and sent along to another organization.