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Slide 1: Chapter 7, 8 Basic Information Systems Information Technology For Management 4th Edition Turban, McLean, Wetherbe John Wiley & Sons, Inc. Chapter 7 1
Slide 2: Functional Areas in a Business •Compensation •Vacation •Skills/Training Human Resources Accounting •A/R •A/P •Payroll •General Ledger •Receiving •Fulfillment •Process control •Purchasing •Cash Management •Asset Management •Budgeting Operations Business Funtion Financing •Order Taking •CRM •Self-service Sales Marketing •Retail Pricing •Sales Promotions •Sales Force Management. •Customer Loyalty •Interactive Marketing Chapter 7 2
Slide 3: Functional Areas – Value Chain Perspective The value chain model, views activities in organizations as either primary (reflecting the flow of goods and services) or secondary (supporting the primary activities). The organizational structure of firms is intended to support both of these types of activities. Chapter 7 3
Slide 4: Functional Areas – Supply Chain Perspective The supply chain is a business process that links all the procurement from suppliers, the transformation activities inside a firm (the value chain) and the distribution of goods or services to customers via wholesalers and retailers. Chapter 7 4
Slide 5: Functional Information Systems Functional information systems support the organization, processes and business model.  Composed of smaller systems: A functional information system consists of several smaller information systems that support specific activities performed in the functional area.  Integrated or independent: The specific IS applications in any functional area can be integrated to form a coherent departmental functional system, they can be integrated across departmental lines to match a business process or be completely independent.  Interfacing: Functional information systems may interface internally with each other to form the organization-wide information system or externally systems outside the organization.  Supportive of different levels: Information systems applications support the three levels of an organization’s activities: operational, managerial, and strategic Enterprise Wide Environment – All business units. Chapter 7 5
Slide 6: Functional Information Systems Strategic Datamining ops that support management Data Analysis and statistical forecasting. Dynamic and what-if features. Decision Support Integrated Clerical documents, schedules, mail, manuals, etc. Back office administrative tasks and ops. Office Operation Level of the company is normally highly structured and predefined. Business transactions, events and processes. Support of the business and customers. Transactional Chapter 7 6
Slide 7: Supply and Value Chains Supply chain refers to the flow of materials, information, payments, and services from raw material suppliers, through factories and warehouses (Value Chain), to the final consumer (Demand Chain). It includes tasks such as purchasing, payment flow, materials handling, production planning & control, logistics & warehousing, inventory control, and distribution. When it is managed electronically it is referred to as an e-supply chain.  Supply Chain Flows    Materials flows are all physical products, new materials, and supplies that flow along the chain. Information flows relates to all data associated with demand, shipments, orders, returns and schedules. Financial flows include all transfers of money, payments, credit card information, payment schedules, e-payments and credit-related data. Supply Chains contribute to increased profitability and competitiveness Chapter 7 7
Slide 8: Supply Chains Components  The supply chain involves three segments:    Upstream, where sourcing or procurement from external Upstream suppliers occur Internal, where packaging, assembly, or manufacturing take Internal place Downstream, where distribution or dispersal take place, Downstream frequently by external distributors.   It also includes the movement of information and money and the procedures that support the movement of a product or a service. Organizations and individuals are also part of the chain. Chapter 7 8
Slide 9: Supply Chains Classifications  There are several major types of supply chain     Integrated make-to-stock Continuous replenishment Build-to-order Channel assembly. “Supply” Chain Value Chain Demand Chain Chapter 7 9
Slide 10: Supply Chain Problems Adding value along the chain is essential for competitiveness, however problems exist especially in complex or long chains and in cases where many business partners are involved. These problems are due to uncertainties and the need to coordinate several activities, internal units, and business partners.  Demand forecasts are a major source of uncertainties      Competition Prices Weather conditions Technological development Customer confidence Machine failures Road conditions Shipments  Uncertainties exist in delivery times     Quality problems may also create production delays Chapter 7 10
Slide 11: Supply Chain Problems continued The bullwhip effect refers to erratic shifts in orders up and down the supply chain because of poor demand forecasting, price fluctuation, order batching, and rationing within the chain. Even slight demand uncertainties and variability become magnified if each distinct entity, on the chain, makes ordering and inventory decisions with respect to its own interest above those of the chain. Distorted information can lead to tremendous inefficiencies, excessive inventories, poor customer service, lost revenues, ineffective shipments, and missed production schedules. A common way to solve the bullwhip problem is by sharing information along the supply chain through EDI, extranets, and groupware technologies. For example employing a vendormanaged inventory (VMI) strategy, the vendor monitors inventory levels and when it falls below the threshold for each product this automatically triggers an immediate shipment. Chapter 7 11
Slide 12: Supply Chain Solutions Information sharing among supply chain partners (c-commerce) sometimes referred to as the collaboration supply chain is one method to overcome problems in the flow. Others are:      Optimal Inventory Levels Supply Chain Coordination and Collaboration Supply Chain Teams Performance Measurement and Metrics Various IT-Assisted Solutions     wireless technology optimal shipping plans strategic partnerships with suppliers just-in-time Chapter 7 12
Slide 13: Enterprise Resource Planning ERP and Supply Chains ERP or enterprise systems control all major business processes with a single software architecture in real time.  It is comprised of a set of applications that automate routine back-end operations:       such as financial management inventory management Scheduling order fulfillment cost control accounts payable and receivable, POS Field Sales Service  It includes front-end operations such as:     It also increases efficiency, improves quality, productivity, and profitability. Chapter 7 13
Slide 14: Chapter 7 14
Slide 15: Enterprise Resource Planning Chapter 7 15
Slide 16: Chapter 7 16
Slide 17: ERP Reality  Complete systems can cost tens of millions of dollars Implementation can take several years Companies may lose flexibility   Chapter 7 17
Slide 18: Chapter 7 18
Slide 19: Chapter 7 19
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Slide 21: What is SAP? Systems Applications and Products in Data Processing  SAP is the leading global provider of client/server business application solutions SAP is the number one vendor of standard business applications software SAP is the fifth largest independent software supplier in the world   Chapter 7 21
Slide 22: Electronic Commerce Interorganizational Systems:  Business-to-business  Electronic storefront
Slide 23: Market Exchange Interorganizational Structure  Vertical integration Multiple activities in the same firm  Risk: range of expertise required  Selective sourcing Some outsourced activities  Risk: control of outsourcer  Virtual corporation Coordination of separate activities  Risk: loss of core competency Chapter 7 23
Slide 24: Questions       Do we benefit from electronic commerce? Do we use information to add value to customers? Are we managing the product/service channel? Have we redesigned business with our partners to take advantage of technology and provide security Do we have partners with shared vision and common purpose? Do we have the right infrastructure? Chapter 7 24
Slide 25: External / Internal Hosting  Outside (Cheaper)     minimize bandwidth and hardware problems use external experts installed infrastructure little additional staffing required dependent on third party reliability possible single vendor software solutions possible single vendor payment scheme  Inside (More Control)    Chapter 7 25
Slide 26: External / Internal Hosting   External better at storefronts but requires close integration with core business Internal better at business to business but often creates a self-contained replicated system that can be outsourced Chapter 7 26
Slide 27: Payment  Credit Cards Checks Cash SET (Secure Electronic Transaction) with http  Electronic Public/private key transactions with banks  Electronic  EDI/EFT Chapter Value added network7 using 3rd party. 27 3rd party software to create virtual cash
Slide 28: Infrastructure Drivers Chapter 7 28