03 Business Functions and Supply Chains

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COR JESU COLLEGE

COMPUTER STUDIES DIVISION
Management Information Systems
Business Functions and Supply Chains

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COR JESU COLLEGE

Objectives
Identify various business functions and
the role of ISs in these functions
Explain how ISs 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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Management Information Systems, Sixth Edition
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COR JESU COLLEGE

Objectives (continued)
Enumerate the purposes of customer
relationship management systems
Explain enterprise resource planning
systems
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COR JESU COLLEGE

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
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One system is more efficient
if its operating
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costs are lower for the same or better quality
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product
4
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COR JESU COLLEGE


(continued)
Productivity: efficiency of human
resources
Productivity improves when fewer workers
are required to achieve the same goal
Productivity tools: software applications

that improve productivity
ISs contribute to both effectiveness
and
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COR JESU COLLEGE


(continued)
Customer relationship management (CRM)
system: system that serves customers
better and faster
Service continues after delivery of goods as
customer service and more marketing
Often combined with supply chain
management (SCM) systems to create an
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enterprise resource planning
(ERP) system
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COR JESU COLLEGE


(continued)
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COR JESU COLLEGE

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Management Information
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COR JESU COLLEGE


(continued)
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COR JESU COLLEGE

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COR JESU COLLEGE

Accounting
Accountings purpose is to track every

financial transaction
Accounting systems are required by law
and for proper management
Needed to ensure company is making a
profit
Accounts payable and accounts
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receivable track who owes
who what
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Balance sheet: picture of financial
11
situation
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COR JESU COLLEGE

Accounting (continued)
Accounting information system: receives
information from transaction processing
systems (TPSs)
Automatically routes purchases to accounts
payable
Automatically routes sales to accounts
receivable
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Generates reports on demand
or on
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schedule
Work order: an authorization to perform
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COR JESU COLLEGE

Cost-accounting systems: accumulate
data about costs involved in producing
specific products
Accounting ISs are used for managerial
purposes for budgeting and cost control
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COR JESU COLLEGE

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COR JESU COLLEGE

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COR JESU COLLEGE

Finance
Firms health is measured by its finances
Information systems can improve
financial management
Financial managers goal is to manage
money as efficiently as possible by:
Collecting payables as soon as possible

Making payments at the latest
time allowed
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Ensuring funds are available
for daily
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operations
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Investing
not
used
for current activities
Management
Informationfunds
Systems,
Sixth
Edition
16
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COR JESU COLLEGE

Finance (continued)
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COR JESU COLLEGE

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COR JESU COLLEGE

Cash Management
Financial information systems help
managers track company finances
Cash management systems: systems that
deal specifically with cash
Electronic funds transfer: electronic
transfer of cash from one bank account to
another
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COR JESU COLLEGE

Investment Analysis and Service
Investors goal is to buy an asset and sell

it for a higher value
When investing in securities, you must
know current prices in real time
Nearly instantaneous information
systems can provide investors and clients
with financial news, stock010000110110111101110010001000000
prices,
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commodity prices, and currency
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exchange rates
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COR JESU COLLEGE

Investment Analysis and Service

(continued)
Some important factors to consider in
investing:
Variability of the securitys past yield
Expected return
Liquidity (how fast an investment can be
turned into cash)
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COR JESU COLLEGE

Engineering
Time to market: time between generating
an idea for a product and completing a
prototype
Brainstorming: process of a group of
colleagues meeting and collaborating to
generate creative solutions and new ideas
Minimizing time to market is key to
maintaining competitive edge
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contribute
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significantly to minimizing time to market
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COR JESU COLLEGE

Engineering (continued)
Computer-aided design (CAD): tools to
create, modify, and store designs and
drawings electronically
Rapid prototyping: creating one-of-a-kind
products to test design in three
dimensions
Allows a model to be produced in hours
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Computer-aided manufacturing (CAM):

systems
that
instruct
machines how
Management
Information
Systems,
Sixth Edition
23 to
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COR JESU COLLEGE

Engineering (continued)
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COR JESU COLLEGE

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COR JESU COLLEGE

Supply Chain Management
Supply chain: consists of procurement of

raw materials, processing materials into
goods, and delivering goods
Processing raw materials into goods is
also known as manufacturing
Supply chain management: monitoring,
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controlling, and facilitating
supply chains
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CAD systems often transfer
data
automatically to CAM systems
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COR JESU COLLEGE


(continued)
IT helps in manufacturing activities:
Scheduling plant activities to optimize the
use of resources
Planning material requirements based on
current and forecasted demand
Reallocating materials and resources from
one order to another
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Managing inventories
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Grouping similar work orders
for efficiency
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COR JESU COLLEGE


(continued)
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COR JESU COLLEGE

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COR JESU COLLEGE

Material Requirements Planning

and Purchasing
Material requirements planning (MRP):
inventory control
Determines when inventory needs to be
restocked
Can predict future need based on demand
forecasts
Takes customer demand as input, then works
back to calculate resources
needed to
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produce goods
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COR JESU COLLEGE

Material Requirements Planning

and Purchasing (continued)
Bill of materials (BOM): list of all raw
materials and subcomponent demands to
produce a product
Economic order quantity (EOQ): optimal
quantity of a raw material that minimizes
overstocking and saves cost, without
missing production deadlines
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Considers cost, discounts for large quantities,

cost of warehousing material, cost of
alternative uses of money, etc.
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Management
Information Systems, Sixth Edition
31
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COR JESU COLLEGE

Manufacturing Resource Planning

Manufacturing resource planning (MRP II):
combines MRP with other related
activities to plan the entire manufacturing
process
Uses master production schedule
Master production schedule: specifies

how production capacity is to be used to
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Just-in-time manufacturing:
suppliers
shipInformation
parts directly
to Edition
assembly lines
Management
Systems, Sixth
32 as
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COR JESU COLLEGE

Monitoring and Control

Information systems are designed to
control manufacturing processes as well
as monitor them
Controlling processes helps ensure
quality
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COR JESU COLLEGE

Shipping
Performed by manufacturer or shipping
company
Many variables affect cost and speed of
shipping, including:
Length of routes
Sequence of loading and unloading
Type of shipped materials (e.g., perishable,
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hazardous, fragile)
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Fuel prices
Road tolls
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COR JESU COLLEGE

Shipping (continued)
Sophisticated software that optimizes
shipping efficiency helps a company stay
competitive
Need to optimize:
Shipping time
Cost of labor
Use of equipment
Maintenance
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Vehicles equipped with computers, global

positioning
systems
and satellite
Management
Information Systems,
Sixth (GPS),
Edition
35
0100001101101111011100100010000001001010011001010111001101110101001000000100001101101111011011000
1101100011001010110011101100101010000110110111101110010001000000100101011010101010101010101101010
0100001101101111011100100010000001001010011001010111001101110101001000000100001101101
1110110110001101100011001010110011101100101010000110110111101110010001011010101010101
COR JESU COLLEGE

Shipping (continued)
010000110110111101110010001000000
100101001100101011100110111010100
100000010000110110111101101100011
01100011001010110011101100101
0100001101101111011100100010000001001010011001010111001101110101001000000100001101101111011011000
1101100011001010110011101100101010000110110111101110010001000000100101011010101010101010101101010
36
0100001101101111011100100010000001001010011001010111001101110101001000000100001101101
1110110110001101100011001010110011101100101010000110110111101110010001011010101010101
COR JESU COLLEGE

010000110110111101110010001000000
100101001100101011100110111010100
100000010000110110111101101100011
01100011001010110011101100101
0100001101101111011100100010000001001010011001010111001101110101001000000100001101101111011011000
1101100011001010110011101100101010000110110111101110010001000000100101011010101010101010101101010
37
0100001101101111011100100010000001001010011001010111001101110101001000000100001101101
1110110110001101100011001010110011101100101010000110110111101110010001011010101010101
COR JESU COLLEGE

RFID in SCM
Radio frequency identification (RFID): a
technology containing circuitry that allows
recording of information about a product
Electronic product code (EPC): a code on an
RIFD tag that provides more information
than the universal product code (UPC)
Information may include date of
010000110110111101110010001000000
manufacturing, plant location,
expiration date,
100101001100101011100110111010100
100000010000110110111101101100011
destination
01100011001010110011101100101
Ensures genuineness of products
0100001101101111011100100010000001001010011001010111001101110101001000000100001101101111011011000
1101100011001010110011101100101010000110110111101110010001000000100101011010101010101010101101010
38
0100001101101111011100100010000001001010011001010111001101110101001000000100001101101
1110110110001101100011001010110011101100101010000110110111101110010001011010101010101
COR JESU COLLEGE

RFID in SCM (continued)
010000110110111101110010001000000
100101001100101011100110111010100
100000010000110110111101101100011
01100011001010110011101100101
0100001101101111011100100010000001001010011001010111001101110101001000000100001101101111011011000
1101100011001010110011101100101010000110110111101110010001000000100101011010101010101010101101010
39
0100001101101111011100100010000001001010011001010111001101110101001000000100001101101
1110110110001101100011001010110011101100101010000110110111101110010001011010101010101
COR JESU COLLEGE

RFID in SCM (continued)
010000110110111101110010001000000
100101001100101011100110111010100
100000010000110110111101101100011
01100011001010110011101100101
0100001101101111011100100010000001001010011001010111001101110101001000000100001101101111011011000
1101100011001010110011101100101010000110110111101110010001000000100101011010101010101010101101010
40
0100001101101111011100100010000001001010011001010111001101110101001000000100001101101
1110110110001101100011001010110011101100101010000110110111101110010001011010101010101
COR JESU COLLEGE

010000110110111101110010001000000
100101001100101011100110111010100
100000010000110110111101101100011
01100011001010110011101100101
0100001101101111011100100010000001001010011001010111001101110101001000000100001101101111011011000
1101100011001010110011101100101010000110110111101110010001000000100101011010101010101010101101010
0100001101101111011100100010000001001010011001010111001101110101001000000100001101101
1110110110001101100011001010110011101100101010000110110111101110010001011010101010101
COR JESU COLLEGE

Customer Relationship Management

Customer relationship management (CRM)
systems: designed to support any and all
relationships with customers
Supports three areas
Marketing
Sales
Customer service
CRM systems capture the entire customer

experience with an organization
010000110110111101110010001000000
100101001100101011100110111010100
All company employees who deal
with the customer
100000010000110110111101101100011
have access to this information01100011001010110011101100101
0100001101101111011100100010000001001010011001010111001101110101001000000100001101101111011011000
1101100011001010110011101100101010000110110111101110010001000000100101011010101010101010101101010
42
0100001101101111011100100010000001001010011001010111001101110101001000000100001101101
1110110110001101100011001010110011101100101010000110110111101110010001011010101010101
COR JESU COLLEGE

Customer Relationship Management

(continued)
010000110110111101110010001000000
100101001100101011100110111010100
100000010000110110111101101100011
01100011001010110011101100101
0100001101101111011100100010000001001010011001010111001101110101001000000100001101101111011011000
1101100011001010110011101100101010000110110111101110010001000000100101011010101010101010101101010
43
0100001101101111011100100010000001001010011001010111001101110101001000000100001101101
1110110110001101100011001010110011101100101010000110110111101110010001011010101010101
COR JESU COLLEGE

010000110110111101110010001000000
100101001100101011100110111010100
100000010000110110111101101100011
01100011001010110011101100101
0100001101101111011100100010000001001010011001010111001101110101001000000100001101101111011011000
1101100011001010110011101100101010000110110111101110010001000000100101011010101010101010101101010
0100001101101111011100100010000001001010011001010111001101110101001000000100001101101
1110110110001101100011001010110011101100101010000110110111101110010001011010101010101
COR JESU COLLEGE

Market Research
To promote products successfully,
organizations must perform market research
Market research: helps discover populations
and regions that are most likely to purchase
product
Activities may include:
Conducting interviews with consumers and retailers
Building statistical models to predict
sales volumes
010000110110111101110010001000000
100101001100101011100110111010100
of different products
100000010000110110111101101100011
01100011001010110011101100101
0100001101101111011100100010000001001010011001010111001101110101001000000100001101101111011011000
1101100011001010110011101100101010000110110111101110010001000000100101011010101010101010101101010
45
0100001101101111011100100010000001001010011001010111001101110101001000000100001101101
1110110110001101100011001010110011101100101010000110110111101110010001011010101010101
COR JESU COLLEGE

Targeted Marketing
Targeted marketing: promotes to people most
likely to purchase products
Database technology allows all companies to
use targeted marketing, even small companies
Can direct promotional dollars to customers
most likely to buy
Spam: cheap method of advertising involving
sending mass e-mail communications
010000110110111101110010001000000
100101001100101011100110111010100
100000010000110110111101101100011
01100011001010110011101100101
0100001101101111011100100010000001001010011001010111001101110101001000000100001101101111011011000
1101100011001010110011101100101010000110110111101110010001000000100101011010101010101010101101010
46
0100001101101111011100100010000001001010011001010111001101110101001000000100001101101
1110110110001101100011001010110011101100101010000110110111101110010001011010101010101
COR JESU COLLEGE

Targeted Marketing (continued)
010000110110111101110010001000000
100101001100101011100110111010100
100000010000110110111101101100011
01100011001010110011101100101
0100001101101111011100100010000001001010011001010111001101110101001000000100001101101111011011000
1101100011001010110011101100101010000110110111101110010001000000100101011010101010101010101101010
47
0100001101101111011100100010000001001010011001010111001101110101001000000100001101101
1110110110001101100011001010110011101100101010000110110111101110010001011010101010101
COR JESU COLLEGE

010000110110111101110010001000000
100101001100101011100110111010100
100000010000110110111101101100011
01100011001010110011101100101
0100001101101111011100100010000001001010011001010111001101110101001000000100001101101111011011000
1101100011001010110011101100101010000110110111101110010001000000100101011010101010101010101101010
0100001101101111011100100010000001001010011001010111001101110101001000000100001101101
1110110110001101100011001010110011101100101010000110110111101110010001011010101010101
COR JESU COLLEGE


Database management systems sort
consumers based on demographic information
Telemarketing: marketing over the telephone
Caller has large database of consumer data
Computer telephony integration: allows

computer to use telephone line as input
Caller ID can be used to locate customer data
Data mining: uses large data 010000110110111101110010001000000

warehouses to find
trends and shopping habits of100101001100101011100110111010100
various
100000010000110110111101101100011
01100011001010110011101100101
demographic groups
0100001101101111011100100010000001001010011001010111001101110101001000000100001101101111011011000
1101100011001010110011101100101010000110110111101110010001000000100101011010101010101010101101010
49
0100001101101111011100100010000001001010011001010111001101110101001000000100001101101
1110110110001101100011001010110011101100101010000110110111101110010001011010101010101
COR JESU COLLEGE


Targeted marketing and Web
technologies enable retailers to
personalize online shopping
Software can track Web page click
streams to determine customer
preferences
010000110110111101110010001000000
100101001100101011100110111010100
100000010000110110111101101100011
01100011001010110011101100101
0100001101101111011100100010000001001010011001010111001101110101001000000100001101101111011011000
1101100011001010110011101100101010000110110111101110010001000000100101011010101010101010101101010
50
0100001101101111011100100010000001001010011001010111001101110101001000000100001101101
1110110110001101100011001010110011101100101010000110110111101110010001011010101010101
COR JESU COLLEGE

Customer Service
Web-based customer service provides
automated customer service 24/7
Saves labor costs
Saves paper costs
Includes FAQs, tracking systems,

maintenance of customer profiles
Artificial intelligence may010000110110111101110010001000000
be used to
100101001100101011100110111010100
emulate a real-life customer
service
100000010000110110111101101100011
01100011001010110011101100101
representative
0100001101101111011100100010000001001010011001010111001101110101001000000100001101101111011011000
1101100011001010110011101100101010000110110111101110010001000000100101011010101010101010101101010
51
0100001101101111011100100010000001001010011001010111001101110101001000000100001101101
1110110110001101100011001010110011101100101010000110110111101110010001011010101010101
COR JESU COLLEGE

Salesforce Automation
Equips traveling salespeople with
information technology to improve
productivity
Laptops and personal digital assistants
(PDAs)
Makes sales presentations more efficient

Allows salespeople to present
different
010000110110111101110010001000000
options for products and 100101001100101011100110111010100
services at the
100000010000110110111101101100011
01100011001010110011101100101
customer location
0100001101101111011100100010000001001010011001010111001101110101001000000100001101101111011011000
1101100011001010110011101100101010000110110111101110010001000000100101011010101010101010101101010
52
0100001101101111011100100010000001001010011001010111001101110101001000000100001101101
1110110110001101100011001010110011101100101010000110110111101110010001011010101010101
COR JESU COLLEGE

Human Resource Management

Human resource management (HRM) can
be classified into five main activities:
Employee record management
Promotion and recruitment
Training
Evaluation
Compensation and benefits management
010000110110111101110010001000000
100101001100101011100110111010100
100000010000110110111101101100011
01100011001010110011101100101
0100001101101111011100100010000001001010011001010111001101110101001000000100001101101111011011000
1101100011001010110011101100101010000110110111101110010001000000100101011010101010101010101101010
53
0100001101101111011100100010000001001010011001010111001101110101001000000100001101101
1110110110001101100011001010110011101100101010000110110111101110010001011010101010101
COR JESU COLLEGE

Human Resource Management

(continued)
010000110110111101110010001000000
100101001100101011100110111010100
100000010000110110111101101100011
01100011001010110011101100101
0100001101101111011100100010000001001010011001010111001101110101001000000100001101101111011011000
1101100011001010110011101100101010000110110111101110010001000000100101011010101010101010101101010
54
0100001101101111011100100010000001001010011001010111001101110101001000000100001101101
1110110110001101100011001010110011101100101010000110110111101110010001011010101010101
COR JESU COLLEGE

010000110110111101110010001000000
100101001100101011100110111010100
100000010000110110111101101100011
01100011001010110011101100101
0100001101101111011100100010000001001010011001010111001101110101001000000100001101101111011011000
1101100011001010110011101100101010000110110111101110010001000000100101011010101010101010101101010
0100001101101111011100100010000001001010011001010111001101110101001000000100001101101
1110110110001101100011001010110011101100101010000110110111101110010001011010101010101
COR JESU COLLEGE

Employee Record Management

HR departments must keep personnel
records
To satisfy laws
For payroll and tax calculation and deposit
For promotion consideration
For periodic reporting
Human resource ISs are now

digitized
010000110110111101110010001000000
100101001100101011100110111010100
Saves space to store records,
time to retrieve
100000010000110110111101101100011
them, and costs of both 01100011001010110011101100101
0100001101101111011100100010000001001010011001010111001101110101001000000100001101101111011011000
1101100011001010110011101100101010000110110111101110010001000000100101011010101010101010101101010
56
0100001101101111011100100010000001001010011001010111001101110101001000000100001101101
1110110110001101100011001010110011101100101010000110110111101110010001011010101010101
COR JESU COLLEGE

Employee Record Management

(continued)
010000110110111101110010001000000
100101001100101011100110111010100
100000010000110110111101101100011
01100011001010110011101100101
0100001101101111011100100010000001001010011001010111001101110101001000000100001101101111011011000
1101100011001010110011101100101010000110110111101110010001000000100101011010101010101010101101010
57
0100001101101111011100100010000001001010011001010111001101110101001000000100001101101
1110110110001101100011001010110011101100101010000110110111101110010001011010101010101
COR JESU COLLEGE

010000110110111101110010001000000
100101001100101011100110111010100
100000010000110110111101101100011
01100011001010110011101100101
0100001101101111011100100010000001001010011001010111001101110101001000000100001101101111011011000
1101100011001010110011101100101010000110110111101110010001000000100101011010101010101010101101010
0100001101101111011100100010000001001010011001010111001101110101001000000100001101101
1110110110001101100011001010110011101100101010000110110111101110010001011010101010101
COR JESU COLLEGE

Promotion and Recruitment

HR can select best-qualified person for position
by searching database of applicants and
existing employees for specific criteria
Automating the selection process significantly
minimizes time and money for recruitment
Intranet: inter-organizational network that
supports Web applications
Allows HR manager to post position
vacancy
010000110110111101110010001000000
100101001100101011100110111010100
announcements that get wide exposure
100000010000110110111101101100011
01100011001010110011101100101
0100001101101111011100100010000001001010011001010111001101110101001000000100001101101111011011000
1101100011001010110011101100101010000110110111101110010001000000100101011010101010101010101101010
59
0100001101101111011100100010000001001010011001010111001101110101001000000100001101101
1110110110001101100011001010110011101100101010000110110111101110010001011010101010101
COR JESU COLLEGE

Training
One important HR function is improving
employee skills
Multimedia software training is replacing
classrooms and teachers
May include 3D virtual reality simulated
environments in which the employee must
act
010000110110111101110010001000000
100101001100101011100110111010100
100000010000110110111101101100011
01100011001010110011101100101
Information technology reduces training

costs dramatically
0100001101101111011100100010000001001010011001010111001101110101001000000100001101101111011011000
1101100011001010110011101100101010000110110111101110010001000000100101011010101010101010101101010
60
0100001101101111011100100010000001001010011001010111001101110101001000000100001101101
1110110110001101100011001010110011101100101010000110110111101110010001011010101010101
COR JESU COLLEGE

Evaluation
Employee ability must be periodically evaluated
by supervisors
May include evaluation of technical ability,
communication skills, professional conduct, and
general behavior
Often a subjective process, which is a problem

Evaluation software tries to solve this problem
by standardizing evaluation process
010000110110111101110010001000000
Provides tools to aid in evaluating

every employee
100101001100101011100110111010100
100000010000110110111101101100011
fairly and objectively
01100011001010110011101100101
0100001101101111011100100010000001001010011001010111001101110101001000000100001101101111011011000
1101100011001010110011101100101010000110110111101110010001000000100101011010101010101010101101010
61
0100001101101111011100100010000001001010011001010111001101110101001000000100001101101
1110110110001101100011001010110011101100101010000110110111101110010001011010101010101
COR JESU COLLEGE

Compensation and Benefits

Management
Compensation includes salary, hourly pay,

commissions, and bonuses
Programs calculate pay and taxes
Automatically generate paychecks and
perform direct deposits
Software can help manage benefits

010000110110111101110010001000000
100101001100101011100110111010100
100000010000110110111101101100011
01100011001010110011101100101
Benefits database accessible through

intranet or Internet
0100001101101111011100100010000001001010011001010111001101110101001000000100001101101111011011000
1101100011001010110011101100101010000110110111101110010001000000100101011010101010101010101101010
62
0100001101101111011100100010000001001010011001010111001101110101001000000100001101101
1110110110001101100011001010110011101100101010000110110111101110010001011010101010101
COR JESU COLLEGE

Supply Chain Management Systems

Overall inventory in the U.S. is decreasing while
U.S. gross domestic product (GDP) is increasing
Money saved from reduced inventory can be
spent elsewhere
Reduction in inventory attributed to the use of
ISs, especially supply chain management
systems
Streamline operations throughout
chain
010000110110111101110010001000000
100101001100101011100110111010100
100000010000110110111101101100011
01100011001010110011101100101
ERP systems can also serve as SCM systems,

connecting multiple organizations
0100001101101111011100100010000001001010011001010111001101110101001000000100001101101111011011000
1101100011001010110011101100101010000110110111101110010001000000100101011010101010101010101101010
63
0100001101101111011100100010000001001010011001010111001101110101001000000100001101101
1110110110001101100011001010110011101100101010000110110111101110010001011010101010101
COR JESU COLLEGE

Supply Chain Management Systems

(continued)
010000110110111101110010001000000
100101001100101011100110111010100
100000010000110110111101101100011
01100011001010110011101100101
0100001101101111011100100010000001001010011001010111001101110101001000000100001101101111011011000
1101100011001010110011101100101010000110110111101110010001000000100101011010101010101010101101010
64
0100001101101111011100100010000001001010011001010111001101110101001000000100001101101
1110110110001101100011001010110011101100101010000110110111101110010001011010101010101
COR JESU COLLEGE

010000110110111101110010001000000
100101001100101011100110111010100
100000010000110110111101101100011
01100011001010110011101100101
0100001101101111011100100010000001001010011001010111001101110101001000000100001101101111011011000
1101100011001010110011101100101010000110110111101110010001000000100101011010101010101010101101010
0100001101101111011100100010000001001010011001010111001101110101001000000100001101101
1110110110001101100011001010110011101100101010000110110111101110010001011010101010101
COR JESU COLLEGE

The Importance of Trust

Supply chain systems work best when all
businesses in the chain are sharing information
Trust between allied companies facilitates
collaboration
Risk of disclosing important information to
competitors is present
Risk of taking advantage of demand figures by
charging higher prices is present
010000110110111101110010001000000
100101001100101011100110111010100
100000010000110110111101101100011
01100011001010110011101100101
0100001101101111011100100010000001001010011001010111001101110101001000000100001101101111011011000
1101100011001010110011101100101010000110110111101110010001000000100101011010101010101010101101010
66
0100001101101111011100100010000001001010011001010111001101110101001000000100001101101
1110110110001101100011001010110011101100101010000110110111101110010001011010101010101
COR JESU COLLEGE

The Musical Chairs of Inventory

Small enterprises do not use SCM systems
Affect more powerful organization to which small
enterprise is linked
Inventory turns: the number of times the

business sells its inventory per year
When SCMs of companies are not linked,
demand requirements are unknown, so supply
companies must overstock inventory
One company sits with lean010000110110111101110010001000000
inventory while
other stands with overstock,100101001100101011100110111010100
hence musical
100000010000110110111101101100011
01100011001010110011101100101
chairs
0100001101101111011100100010000001001010011001010111001101110101001000000100001101101111011011000
1101100011001010110011101100101010000110110111101110010001000000100101011010101010101010101101010
67
0100001101101111011100100010000001001010011001010111001101110101001000000100001101101
1110110110001101100011001010110011101100101010000110110111101110010001011010101010101
COR JESU COLLEGE

Collaborative Logistics
Web allows organizations from different
industries to collaborate
Businesses combine freight and share
trucks
Can optimize logistics by connecting SCM
systems
SCM systems can allow collaborative

010000110110111101110010001000000
100101001100101011100110111010100
warehousing to share warehouse
space
100000010000110110111101101100011
01100011001010110011101100101
0100001101101111011100100010000001001010011001010111001101110101001000000100001101101111011011000
1101100011001010110011101100101010000110110111101110010001000000100101011010101010101010101101010
68
0100001101101111011100100010000001001010011001010111001101110101001000000100001101101
1110110110001101100011001010110011101100101010000110110111101110010001011010101010101
COR JESU COLLEGE

Enterprise Resource Planning

Many companies replace old, disparate information
systems with enterprise applications
Enterprise resource planning (ERP) system: manages
daily operations and facilitates planning
Current ERP market includes four vendors:
SAP
Oracle
Microsoft
Sage Software
010000110110111101110010001000000
100101001100101011100110111010100
100000010000110110111101101100011
01100011001010110011101100101
0100001101101111011100100010000001001010011001010111001101110101001000000100001101101111011011000
1101100011001010110011101100101010000110110111101110010001000000100101011010101010101010101101010
69
0100001101101111011100100010000001001010011001010111001101110101001000000100001101101
1110110110001101100011001010110011101100101010000110110111101110010001011010101010101
COR JESU COLLEGE

Challenges and Disadvantages

of ERP Systems
ERP systems pose many challenges:
They are complex
They often require special tailoring for
specific organizations
They may not support a companys unique
sets of business processes
They are expensive
A process that becomes a 010000110110111101110010001000000
weak link in one
100101001100101011100110111010100
area may negatively affect100000010000110110111101101100011
other integrated
01100011001010110011101100101
processes
0100001101101111011100100010000001001010011001010111001101110101001000000100001101101111011011000
1101100011001010110011101100101010000110110111101110010001000000100101011010101010101010101101010
70
0100001101101111011100100010000001001010011001010111001101110101001000000100001101101
1110110110001101100011001010110011101100101010000110110111101110010001011010101010101
COR JESU COLLEGE

Providing the Missing Reengineering

Although most reengineering projects of
the 1990s failed, ERP systems helped
realize many of those ideas
ERP systems forced changes in processes
ERP systems allow better planning and

managing of processes at the
organizational level instead of at the
010000110110111101110010001000000
organizational unit level 100101001100101011100110111010100
100000010000110110111101101100011
01100011001010110011101100101
0100001101101111011100100010000001001010011001010111001101110101001000000100001101101111011011000
1101100011001010110011101100101010000110110111101110010001000000100101011010101010101010101101010
71
0100001101101111011100100010000001001010011001010111001101110101001000000100001101101
1110110110001101100011001010110011101100101010000110110111101110010001011010101010101
COR JESU COLLEGE

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
010000110110111101110010001000000
Financial information systems
help managers
100101001100101011100110111010100
100000010000110110111101101100011
track cash
01100011001010110011101100101
0100001101101111011100100010000001001010011001010111001101110101001000000100001101101111011011000
1101100011001010110011101100101010000110110111101110010001000000100101011010101010101010101101010
72
0100001101101111011100100010000001001010011001010111001101110101001000000100001101101
1110110110001101100011001010110011101100101010000110110111101110010001011010101010101
COR JESU COLLEGE

Summary (continued)
Computer-aided design (CAD) systems help
engineers design new projects
Computer-aided manufacturing (CAM) systems
direct machines that assemble parts
Supply chain management (SCM) systems
optimize workload, speed, and cost in supply
chains
Customer relationship management
(CRM)
010000110110111101110010001000000
100101001100101011100110111010100
includes the entire cycle of relationships
with
100000010000110110111101101100011
01100011001010110011101100101
customers
0100001101101111011100100010000001001010011001010111001101110101001000000100001101101111011011000
1101100011001010110011101100101010000110110111101110010001000000100101011010101010101010101101010
73
0100001101101111011100100010000001001010011001010111001101110101001000000100001101101
1110110110001101100011001010110011101100101010000110110111101110010001011010101010101
COR JESU COLLEGE

Summary (continued)
Human resource management systems
facilitate staff selection and record keeping
Multiple companies SCM systems can be linked,
facilitating cooperation, which requires trust
An enterprise resource planning (ERP) system
can encompass all business processes, but is
expensive and challenging
010000110110111101110010001000000
100101001100101011100110111010100
100000010000110110111101101100011
01100011001010110011101100101
0100001101101111011100100010000001001010011001010111001101110101001000000100001101101111011011000
1101100011001010110011101100101010000110110111101110010001000000100101011010101010101010101101010
74

03 Business Functions and Supply Chains

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0100001101101111011100100010000001001010011001010111001101110101001000000100001101101

COR JESU COLLEGE

Management Information Systems

Business Functions and Supply Chains

COR JESU COLLEGE

Management Information Systems, Sixth Edition

COR JESU COLLEGE

Management Information Systems, Sixth Edition

COR JESU COLLEGE

Effectiveness and Efficiency

Efficiency = Benefit / Costs010000110110111101110010001000000

COR JESU COLLEGE

Effectiveness and Efficiency

Productivity tools: software applications

Management Information Systems, Sixth Edition

COR JESU COLLEGE

Effectiveness and Efficiency

Management Information Systems, Sixth Edition

COR JESU COLLEGE

Effectiveness and Efficiency

Management Information Systems, Sixth Edition

COR JESU COLLEGE

COR JESU COLLEGE

Effectiveness and Efficiency

Management Information Systems, Sixth Edition

COR JESU COLLEGE

COR JESU COLLEGE

Accountings purpose is to track every

COR JESU COLLEGE

COR JESU COLLEGE

Management Information Systems, Sixth Edition

COR JESU COLLEGE

Management Information Systems, Sixth Edition

COR JESU COLLEGE

COR JESU COLLEGE

Collecting payables as soon as possible

COR JESU COLLEGE

Management Information Systems, Sixth Edition

COR JESU COLLEGE

COR JESU COLLEGE

Management Information Systems, Sixth Edition

COR JESU COLLEGE

Investment Analysis and Service

Investors goal is to buy an asset and sell

Management Information Systems, Sixth Edition

COR JESU COLLEGE

Investment Analysis and Service

Management Information Systems, Sixth Edition

COR JESU COLLEGE

Management Information Systems, Sixth Edition

COR JESU COLLEGE

Computer-aided manufacturing (CAM):

COR JESU COLLEGE

Management Information Systems, Sixth Edition

COR JESU COLLEGE

COR JESU COLLEGE

Supply Chain Management

Supply chain: consists of procurement of

Management Information Systems, Sixth Edition

COR JESU COLLEGE

Supply Chain Management

Management Information Systems, Sixth Edition

COR JESU COLLEGE

Supply Chain Management