Using infornation system (is) in manufacturing industries: outsourcing and data protection - Coursework Example

?USING INFORNATION SYSTEM (IS) IN MANUFACTURING INDUSTRIES: OUTSOURCING AND DATA PROTECTION Introduction Globally, the business environment is changing rapidly, thereby posing multiple challenges to manufacturing industries. Business approach has changed as more choices and varieties in products and services are demanded by present day customers. This has prompted manufacturing industry to opt for newer business approaches and practices like outsourcing, mass customization, minimizing time constraints, etc. Accordingly they have also changed their pricing strategies. Advanced information and communication technologies have helped manufacturing industry to sustain in a changing global market (Leondes 2005, p 27). Irrespective of industry type, market demands quickly response. Information technology is particularly useful for not only meeting such market needs but also for solving issues with a modernized approach. Information system (IS) has a wide variety of roles in manufacturing industry. It is adopted for “preparation, collection, transport, retrieval, storage, access, presentation, and transformation of information” in the form of “voice, graphics, text, video and image” (Leondes, 2005, p 27). Presently, manufacturing industries have adopted outsourcing on a large scale. With increase in outsourcing tendencies, the aspect of data protection has become an allied matter. This paper inspects importance of IS and outsourcing with respect to manufacturing industry and also examines data protection system and norms related to it. Benefits of IS: manufacturing industry Though the practice of using IS dates back to past decade, it is only in past few years that IS was used extensively. In an age of globalization, IS was widely adopted to support e-commerce, and e-communication. At the same time, IS has been the stand for virtual participation, enterprise and integration. IS supports applications like MRP, MRPII, CAD, CAM, CNC, SPC, AGV, CIM, EDI, management of Data and PLC aided extensive automation. Such extensive use is supported by advanced technologies and applications. From a general point of view, IS in manufacturing industry could be divided into four segments- strategic level systems, knowledge level system, tactical systems and operational systems (Leondes, 2005, pp. 28- 29). E-commerce and IS According to Leondes (2005, pp. 33- 34), e-commerce as a part of IS was used for inter- enterprise integration. It is useful for providing solution problems arising from unequal distribution of information, exerting influence or control over customers, maintenance of partner relationships, cooperation and most importantly market competition. Thus, strategies of e-commerce influence overall business strategy and scope. Cross- enterprise involvement in the form of suppliers, customers etc could be regarded as scopes for manufacturing industry. Moreover, IS through e-commerce generates revenue and also contributes in customer retention by producing contended customers. To adopt with constant changes in business patter, manufacturing industry requires maintaining close interactions with both its suppliers and customers. E-commerce helps in time compressing by minimizing response time. This in turn generates EDI for business and also lowers transaction costs. In present time of massive industrial expansion, e-commerce has helped manufacturing industries to maintain a sound supply chain. Infrastructure and IS To support and sound and yielding IS, industries need to have supportive infrastructure. Firstly, IS requires different types of resources. There range from internal manufacturing facility to technologies, internet networks and human resource. In case of manufacturing industry, everything that is owned by manufacturing organizations is considered as resources. Expertise in specific areas or skilled professionals is indispensible for building up IS of an organization. Responsible bodies are all the more essential in manufacturing industry to ensure synchronization and smooth flow of information between different segments within an organization. Previously, IS meant coordination of local organizations only. Nowadays, IS connects organizations all across the world, through different modes of communication. Thus, to support a IS, organizations require to have sound communication system. In manufacturing industry, constant communication helps in instant sharing of details and ideas, problem detection and solution, tracking, and status reporting. Support of software tools is also required. All these are equally applicable for outsourcing also. For outsourcing, organizations must possess valid operational documents (Booton n.d., pp. 28- 30). Virtual organizations and IS In order to meet the demands of information integration, IS are used by single organizations as well as by scattered manufacturing plants, for coordination, tracking and distribution of manufactured goods. Visual enterprise is the result of a common market need and correlated business objectives. Thus, establishment of business relationships forms the basis of virtual organization, thereby characterizing the global supply chain. Once this concept by manufacturing organizations, IS helps in managing technical constraints like “synchronized engineering, inter-network applications, hardware heterogeneity, communication- software” and time (Leondes 2005, pp. 34-35). Outsourcing in manufacturing industry The chief organizational objective behind outsourcing is reduction of production costs. At present every industry, including the manufacturing industry is eager to take every possible step to lower their production costs. Reduction of production costs operate at three levels- cost of products, direct labor cost and lastly, fixed overhead costs (Booton n.d, p. 17). Outsourcing involves direct labor. US have experienced increase in labor costs in past few years. This has resulted in transfer of business from developed countries like US to comparatively low- cost countries. Owing to their ‘low- labor rates’, presently, India and China have largest market of outsourced business, becoming the most favorite destinations for outsourcing. Though it must be noticed that in ‘low cost’ countries calculation of actual wage is not done methodically primarily because the manufacturing organization do not calculate their markups and profits for outsourcing. Moreover, outsourcing has reduced issues related to employee empowerment and human resource management. This is not only led to lessening of hazards of business activities but has also ensured effectual and precise allocation of resources. All these features have not only induced competition in global market but has also changed pattern of business globally (Booton n.d, pp. 18- 20). Objective behind outsourcing is not limited to lowering of labor costs only. Outsourcing is also helpful for increasing overall organizational capacity. For this reason also, outsourcing is used extensively by manufacturing industry. When the practice of outsourcing was first introduced, it was used mostly to manage the extra burden of work in order to meet the excess demand. The ‘third party’ to when the work was given were generally low skilled and non- technical. Later on the concept of ‘catching on’ was introduced. This process assured involvement of trained and skilled ‘third party’. Gradually as the standards of third party grew they became equals to their outsourcing partners. This led to introduction of contractual outsourcing. Outsourcing is also adopted for rapid organizational development, automation and cross-synergies (Booton n.d, p. 19- 21). As a matter of fact, industries which outsource, suffer from lesser risks of capacity fluctuations. This is one of the important advantages reaped by manufacturing industries. By means of outsourcing, they could also get access to advances and updated technologies. This leaves outsource- adopting organization with more time and resource to concentrate on their core values and functions. The most manufacturing organization prefers outsourcing of goods, which involves direct labor and controlling aspects of product design, sales and promotion by themselves. It provides two benefits to manufacturing industry. Firstly, even if they outsource, the end “product” is sold with their brand name. The customers believe that the whole product is manufactured by that particular brand and hence possess little doubts about product quality and image. Secondly such measures help in controlling leverage of huge investments. However, this is not the case always. Often, some manufacturing organizations enter into contract with outsourcing companies who produce, test and even ship the ‘end product to customers’. These practices result in stretching of business activities into newer geographical domains, thus turning them to global entities (Booton n.d, p. 21). However, manufacturing industries of developed countries could not outsource every other thing as because besides labor costs, they also need to consider about some other costs also. Some of these include- costs of factory production, operational process, quality control, etc. As it is pointed out by (Booton n.d, p. 35- 36) manufacturing organizations are often made to compromise with customer services, product design, and effective as well as efficient business process as a result of outsourcing. Outsourced products might also have deficits regarding design, testing and manufacturing. At the same time, outsourcing could be very expensive if outsourcing strategy is not planned properly, outsourcing is adopted for wrong reasons or wrong outsourcing partners are selected. Outsourcing and data protection is a legalized process which requires protection of divulged data and information. This necessity has given rise to contracting of business activities. Thus, data and information must be used in a balanced way to serve the purpose of organization as well as to safeguard privacy. On any occasion when the contract is breached or ethical considerations are violated, data protection laws are applicable. Data controllers in manufacturing industry need to handle data with the sole of objective of benefitting the organization through fair means. While processing personal data, manufacturing organizations must process data lawfully and systematically. There are certain ethics that requires to be maintained. Firstly, collection of data should be supported by adequate and valid purpose. Secondly, only relevant data should be collected. Thirdly, information that is collected and processed must be accurate and correct. Fourthly, organizations must have provisions to destroy data after it has served the desired objective. This is an important step adopted by manufacturing industries to stop illegal use of data and information. And lastly, manufacturing industries must maintain data collection and protection acts of respective countries. Information System ethics maintain that organizations must take necessary measures in case of unauthorized or unlawful data processing. Especially in case or outsourcing, manufacturing organizations generally include provisions about right of accessing data, right to object to data- processing procedure, automated decision taking and direct marketing (Data Protection, 2008). US data- protection laws While outsourcing data and information, it often happens that the receiving organization gets access of former’s confidential data. As every organization has to maintain certain contractual and ethical obligations with their clients, suppliers and creditors, outsourcing increases the risk of breaching of privacy. This might generate legal and economic complications for that particular organization. Thus, privacy laws are introduced to safeguard organizations’ interest. These set of laws are helpful for manufacturing industry for ensuring privacy compliance requirements. Most nations have their own privacy regulations, set in response to global developments. The US government has adopted a set of privacy laws and amended few others as far as outsourcing transactions and information is concerned (Hirschheim, 2006, p.146). Some laws implemented by US are- The Gramm- Leach Bliley Act deals with information regarding individual- finance. The Health Insurance Portability and Accountability Act govern health and medical information. Children’s Online Privacy Protection Act functions by monitoring information collected from internet about children below 13 years. Conclusion IS are adopted by all types of manufacturing firms, be it small, medium or large. Firms make use of IS to exchange information among business units. This helps all the units to function as a whole. In manufacturing industry, codification, processing of information and diffusion plays extremely important roles. Thus, IS function with comparatively wider base than information technology (IT) (Leondes 2005, p 27). At present times, the value of IS and the importance to outsource them has been recognized. Outsourcing expands overall business process. Due to change in business approaches in present times, most manufacturing organizations have adopted outsourcing, treating it as an integral part of business strategy. It is true that outsourcing has helped in lessening excessive workloads of manufacturing industry, have lowered production coast and has also helped in overall organizational development, especially management. Outsourcing has led to segmentation of business activities which has resulted in better service production and better business communication (Schniederjans and Schniederjans, 2007, p. 4- 5). Some common types of outsourcing include HR, logistics, all-round appraisal system etc. Data protection is invariably related to outsourcing. As a safety measure, manufacturing organizations and other organizations as well make enter into contracts with the organization to which they have outsourced. This prevents unauthorized or illegal access and processing of data and information. References 1. Booton, B n.d., Outsourcing-in-a-Box, BidnessBooks Publishing, US 2. Data Protection 2008, Out- Law: Legal news and guidance from Pinsent Masons. Viewed 14 June 2013, Read More