Management Information Systems

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Faculty of Foundry Engineering

Virtotechnology

Management Information

Systems

Classification, elements, and evolution

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Management Information Systems 2

 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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Management Information Systems 11 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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Management Information Systems

An example of TPS

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Management Information Systems

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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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.

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Basic DSS methods

Information systems - DSS

 Mathematical modeling

 Decision trees

 Simulation

 Queueing theory

 Statistical tools

 Queries

 What-If analysis

 Sensivity analysis

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Information systems - DSS

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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.

Integrated information systems

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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.

Integrated information systems

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Enterprise applications

 Enterprise systems – MRPII, ERP

 Supply chain management systems - SCM

 Customer relationship management systems - CRM

 Knowledge management systems - KMS

Integrated information systems

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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

Integrated information systems

Everything works separately!

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Contemporary view of the systems

Integrated information 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.

Integrated information systems

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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, 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.

Integrated information systems

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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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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.

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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.

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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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Integrated information systems - ERP

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Integrated information systems - ERP

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

Integrated information systems - ERP

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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

Integrated information systems - ERP

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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.

Integrated information systems - SCM

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

Integrated information systems - SCM

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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;

Integrated information systems - CRM

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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.

Integrated information systems - CRM

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Integrated information systems - CRM

WWW E-mail fax ... ^phone

Information exchange systems

CUSTOMER SERVICE

Service

Marketing Sale

INFORMATION SYSTEMS

• DATA WAREHOUSE

• KNOWLEDGE MANAGEMENT

• ANALYTICS

FRONT OFFICEBACK OFFICE

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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