Chapter 1


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Chapter 1

  1. 1. Chapter 1 (Narrative Report) By: Aala, Maryjane A.Bainto, Mark Angelo F.Francisco, Mark Jupiter Reyes, Ivan M. Yerro, Jennelyn L. BSCS IV-A Mr. Jomel Penalba
  2. 2. Professor August 03, 2010Business Functions and Supply Chains In an economy that produces and consumes so much information, professionals must know how to use informationsystems in virtually every business activity. Managers must have an overall understanding of all elements of a system, so that theyknow what are available to control, quality, costs, and resources. Modern information systems encompass whole business cycles,often called supply chains. When you finish this chapter, you will able to: • Identify various business functions and the role of ISs in these functions. • Explain how to ISs in the basic business functions relate to each other. • Articulate what supply chains are and how information technology supports management of supply chains. • Enumerate the purpose of customer relationship management systems. • Explain the notion of enterprise resource planning systems. Effectiveness and EfficiencyEffectiveness - defines the degree to which a goal is achieved. A system is more or less effective depending on: 1. How much of its goal is achieves, and 2. The degree to which it achieves better outcomes than the other systems do.Efficiency - determined by the relationship between resources expended and the benefits gained in achieving a goal.Accounting
  3. 3. The purpose of accounting is to track every financial transactions within a company, from a few cents to multimillion dollarpurchases, from salaries and benefits to the sale of every item. Without tracking the costs of labor, materials, and purchasedservices using a cost-accounting system, a company might discover too late that it sells products below what it costs to make them.Finance ISs can significantly improve financial management using Financial Information Systems that helps managing cash andinvestment portfolios of one’s business.Cash Management Financial Information Systems help managers track a company’s finances. These systems record every payment and cashreceipt to reflect cash movement, employ budgeting software to track plans for company finances, and include capital investmentsystems to manage investments through another system called cash management systems (CMSs).Cash Management Systems – systems that deal specifically with cash. Ex.: Electronic Funds Transfer (EFT) – is the electronic transfer of cash from an account tin one bank to an account in another bank.Investment Analysis and Service ISs provide subscriber brokers and their clients with financial news, stock prices, commodity prices, and currency ratesfrom multiple locations across the world. Some of the most important factors these managers must consider are: 1.) Risk – measured as the variability (degree of change) of the paper’s past yield. 2.) Expected Return 3.) Liquidity – a measure of how fast an investment can be turned into cash.Engineering Time to market – is the time between generating an idea for a product and completing a prototype that can be mass-manufactured. Brainstorming – (the process of a group of colleagues meeting and working collaboratively to generate creative solutionsand new ideas), developing a concept, creating mock-ups, building prototypes, testing and other activities that require investmentsof time, labor, and money. Rapid Prototyping – allows a model of a product to be produced within hours, rather than days or weeks. Computer-aided Design (CAD) – is the use of computers in modifying designs quickly and store drawings electronically. Computer-aided Manufacturing (CAM) – is the process of data to instruct machines, including robots, how to manufacturethe parts and assemble the product.Supply Chain Management Consist of monitoring, controlling, and facilitating supply chains. Supply chain management systems are informationtechnologies that support SCM. SCM system have been instrumental in reducing manufacturing costs, including the costs ofmanaging resources and controlling inventory, the manufacturing phase does not exist, so the term “supply chain” refers only topurchasing of finished goods and the delivery to customer of those goods.Supply Chain Consist of three phases: procurement of raw materials, processing the materials into intermediate and finished goods, anddelivery of the goods to customer.Material Requirements Planning and Purchasing One area of manufacturing that has experienced the greatest improvement from IS is inventory control, or materialrequirements planning (MRP). Traditional inventory control techniques operated according to the basic principle that futureinventory needs are based on past use, once used up, inventory was replaced. By contrast, replenishment in MRP is based on future
  4. 4. need. MRP programs take customer demand as their initial input. The main input to MRP programs is the number of product unitsneeded and the time at which they are needed; the programs then work back to calculate the amounts of resources required toproduce subparts and assemblies.Economic Order Quantity The Economic Order Quantity of a specific raw material is the optimal quantity that allows a business to minimizeoverstocking and save cost, without risking under stocking and missing production deadlines.Manufacturing Resource Planning II Manufacturing Resource Planning (MRP II) combines material requirements planning (MRP) with other manufacturingrelated activities to plan the entire manufacturing process, not just inventory. MRP II system can quickly modify schedules toaccommodate orders, track production in real time modify schedules to accommodate orders, track production in real time, and fixquality slippage.Monitoring and Control Information system has been designed to control process, not just monitor them. Controlling process is important to ensurequality. For example, Ford Motor Company implemented software that it calls Project Execution, which combines bar coding andwireless technology to ensure quality. Since each vehicle is assembled on a chassis, each is tagged with a unique bar code. A bar-code sensor is installed in each stop of the assembly line. The sensor transmits wireless signals to computers and electronicallycontrolled gates. The purpose of the system is to ensure that no assembly steps are skipped, and that each vehicle passes a series ofperformance and quality test along the way. If a step is missed, the gate does not let the vehicle leave the plant.RFID in SCM The most important development in hardware to support SCM has been a technology called radio frequency identification(RFID). RFID tags contain circuitry that allows contain circuitry, that allows recording of information about a product. When attachedto it. It contains circuitry that allows recording of information about a product. It also contains an lectronic product code (epc) whichreplaces the Universal Product Code with much more information. The tag can include the date, destination, and many other detailsthat help track its movement and sale. The information can be read and also revised by special RFID transceivers. Item withrewritable tags can contain maintenance history of products which helps optimize maintenance of the items. The same technology can also used for other purposes: detection of items that should be recalled because of hazardouscomponents, detection of counterfeit products, and accurate condemnation of expired items, such as drugs and auto parts. Customer Relationship Management Customer Relationship Management (CRM) systems are designed to support any and all relationships with customers.Mostly, they support three areas: marketing, sales and customer service. Modern CRM systems can help capture the entirecustomer experience with an organization from response to an online advertisement to automatic replenishment of products, to
  5. 5. proactive service. They constantly strive to improve customer service and periodically contact anyone who has ever purchasedsomething from them to ensure repeat sales and encourage loyalty. Any information technology that supports thesae efforts isconsidered a CRM system. CRM systems also provide an organization with an important element: all employees of the company who directly orindirectly serve a customer are “on the same page”. Through their individual computers, all can have immediate access to the statusof an order for an item or a resolution of a buyer’s complaint, or to any other information that has to do with the customer. All whoserve the customer are well- informed and receive the information from the same source.Market Research Market research systems can help to find the populations and regions that are most likely to purchase a new product orservice. They also help analyze how a new product fares in its first several months on the market.Targeted Marketing To save resources, businesses use IT to promote to people most likely to purchase their products. This activity is oftenreferred to as targeted marketing. The principle of target marketing is to define the prospective customers as accurately as possibleand then to direct promotional dollars to those people most likely to purchase products. To define target markets, businesses collectdata everywhere they can: from sales transactions and warranty cards, or by purchasing databases with information aboutorganizations and individuals. Using database management systems(DBMSs), special programs to build and manipulate data pools, acompany can sort and categorize consumers by age, gender, income, previous purchase of related product, or any combination ofthese facts and other demographic information. Telemarketing (marketing over the telephone) makes intensive use of IT. It is a method of direct marketing in whicha salesperson solicits to prospective customers to buy products or services, either over the phone or through a subsequent face toface or Web conferencing appointment scheduled during the call. Computer telephony integration (CTI) is a technique enabling a computer to use the digital signal coming through atelephone line as an input in a computer system. Data mining technique takes advantage of large date warehouses to find trends and shopping habits of variousdemographic groups.Customer Service Web based CS provides automated customer support 24hrs per day, 365 per year. It saves company’s cost of labor ifhumans provide the same service.Salesforce Automation It equips traveling salespeople with information technology to facilitate their productivity. It can increase productivitysignificantly, making sales presentations more efficient and letting field representatives close deals on the spot, using preformattedcontracts and forms.Ethical and Societal IssuesConsumer Privacy • What Is Privacy? It is your right to control information about yourself. • Business Arguments. Business leaders argue that they must collect and use personal data. • Consumer Arguments. Consumer usually accepts that they must divulge some private information to receive services, but many do not accept the mass violation of privacy.
  6. 6. • Losing Control. Once you provide information, you have a little control over it. • The Eight Commandments of Personal Data Collection and Maintenance. Purpose. Companies should inform people who provide information of the specific, exclusive purpose for which the company maintains its data, and only use data for another purpose with the subject’s consent. Relevance. Companies should record and use only data necessary to fulfill their own purposes. Accuracy. Companies should ensure that the personal records they maintain are accurate. Currency. Companies should make sure that all data about an individual is current. Security. Companies should limit access to data to only those who need to know. Time Limitation. Companies should retain data only for the time period necessary. Scrutiny. Companies should establish procedures to let individuals review their records and correct inaccuracies. Sole Recording. When using a recording technology, a company should ensure that no other party can take advantage of the technology to record the same information.Human Resource Management (HRM) - It means employing people, developing their capacities, utilizing, maintaining and compensating their services in tune with the job and organizational requirement. - There are five classification of Human Resource Management:  Employee Record Management - The human resource department must keep personnel records to satisfy both external regulations and internal regulations, as well as for payroll and tax calculation and deposit, promotion consideration and periodic reporting. Information Systems facilitate employee record management. Ex. HR use IS to reduce the space in storing employees’ records.
  7. 7.  Promotion and Recruitment - Recruitment activities need to be responsive to the ever-increasingly competitive market to secure suitably qualified and capable recruits at all levels. Automating the selection process significantly minimizes time and money spent on promotion and on recruitment. Ex. Intranets helps HR managers post position vacancy announcements from their own PCs. Training -It is an organized learning over a given period of time, to provide the possibility of performance change. Multimedia Software Training is replacing training programs, such applications include interactive, three-dimensional simulated environment. Ex. Multimedia Software Training safely prepares the worker for the dangerous work instead of putting him at risk for injury in actual work. Evaluation -An organization needs to take stock of its workforce and to assess its performance in existing jobs to improve organizational performance. Ex. Software helps managers standardize their employee evaluations by providing step by step guides to writing performance reviews. Compensation and Benefits Management - Compensation includes topics regarding the wage and/or salary programs and structures. And an Employee benefit typically refers to retirement plans, health life insurance, life insurance, disability insurance. Special Software helps the HR department manage benefits and compensation efficiently and effectively.