Management Information Systems Chapter Nine Achieving Operational Excellence and Customer Intimacy: Enterprise Applications Md. Golam Kibria Lecturer, Southeast University

1-2 Enterprise Business Systems E-business means using the Internet, other networks, and IT to support  Electronic commerce  Enterprise communications and collaboration  Web-enabled business processes E-commerce is the buying, selling, and marketing of products, services, and information over the Internet and other networks

1-3 Transaction Processing Systems Cross-functional information systems that process data resulting from the occurrence of business transactions  Transactions include sales, purchases, deposits, withdrawals, refunds, and payments  Online transaction processing (OLTP) is a real-time system that captures transactions immediately

1-4 The Transaction Processing Cycle

Enterprise Systems/ ERP Enterprise Resource Planning ( ERP) Enterprise systems, also known as ERP, which are based on a suite of integral software modules and a common database. The database collects data from many different divisions and departments in a firm, and from a large number of key business processes in Manufacturing and Productions, Sales and Marketing, Finance and Accounting, and Human Resources, Making the data available for applications that support nearly all of an organization’s internal activities.

Why ERP is Required? Typical Business Process: Finance & Accounting Customer Sales HR Shop Floor Execution Production Planning Inventory Vendors

Key Observations: A typical enterprise has many departments These departments continuously communicate and exchange data with each other The success of any organization lies in effective communication and data exchange within the departments as well as associated third party such as Vendors, Outsourcers, and customers.

Types of Enterprise Systems  Decentralized Systems  Centralized Systems or ERP

Decentralized Systems Data is Maintained locally at the individual departments Departments do not have access to data of other departments

Problems with Decentralized Systems Finance & Accounting Customer Sales HR Shop Floor Execution Production Planning Inventory Vendors Loss of Revenue and Customer Dissatisfaction Data Maintenance cost goes up Material and Inventory cost increases Labor cost increase Loss of reputation and may face legal action

Centralized Systems  Data is maintained at a central location and is shared with various departments  All departments have access in data of all departments

Benefits of Centralized Systems/ ERP Finance & Accounting Customer Sales HR Shop Floor Execution Production Planning Inventory Vendors Increase revenue and customer delight No data duplicationLabor cost decreases Payments on-time, no legal action

Key Benefits of ERP  Eliminates the duplication, discontinuity, and redundancy in data  Provides information across departments in real time  Provides control over various processes  Increases productivity, better inventory management, promotes quality, reduced material cost, effective human resources management, reduced overheads what boosts profit.  Better customer interaction, increased throughput, improved customer service.

Supply Chain Management Systems What is Supply Chain A firm’s supply chain is a network of organizations and business processes for procuring raw materials, transforming these materials into intermediate and finished products, and distributing the finished products to customer. It links suppliers, manufacturing plants, distribution centers, retail outlets, and customers.

Management Information Systems Supply Chain Management Systems NIKE’S SUPPLY CHAIN This figure illustrates the major entities in Nike’s supply chain and the flow of information upstream and downstream to coordinate the activities involved in buying, making, and moving a product. Shown here is a simplified supply chain, with the upstream portion focusing only on the suppliers for sneakers and sneaker soles. © Prentice Hall

Upstream supply chain:  Firm’s suppliers, suppliers’ suppliers, processes for managing relationships with them Downstream supply chain:  Organizations and processes responsible for delivering products to customers

Information Systems and Supply Chain Management  Inefficiencies cut into a company’s operating costs Can waste up to 25% of operating expenses  Just-in-time strategy: Components arrive as they are needed Finished goods shipped after leaving assembly line  Safety stock Buffer for lack of flexibility in supply chain  Bullwhip effect Information about product demand gets distorted as it passes from one entity to next across supply chain

How IS Facilitates SCM?  Decide when and what to produce, store, and move  Rapidly communicate orders  Track the status of orders  Check inventory, transportation, and warehousing costs  Track shipments  Plan production based actual customer demand  Rapidly communicate changes in product design

Customer relationship Management