The Systems Approach Businesses - Research Paper Example

? Introduction Systems approach represents a line of thought within the management field that stresses the interactive nature and interdependence of both the internal and external factors within an organization. An organization can be considered to represent a unified and purposeful system comprising of a number of interconnected, interacting, and interdependent parts. A food outlet has three core areas that ought to function well to attain its potential for success, namely: production and procurement systems that encompass all those functions that are pertinent to prepare and serve products to the clients. The financial function deals with safeguarding cash, cash control, cash management, as well as operational and financial reporting. The “systems approach” recognizes the different factors impacting on how business operate. The systems approach is essentially a multidisciplinary approach that can be employed to solve problems and highlight opportunities for development. This paper explores the systems approach businesses (production systems, procurement systems, and finance systems), avails examples of the relevance, and utilization of the approach as the Director of a major fast food outlet. Systems approach aids to foster the development of action plans that avail a very strong “bottom-up” element to business improvement. The operating environment in the contemporary business world is highly competitive and dynamic as typified by sophisticated technology and enhanced access to information. As a result, businesses need to be flexible and responsive to rapidly changing circumstances so as to survive. A business system can aid one become aware of the forces at play, enhance the bottom line, control costs, and enhance the business products and services (Hansen, Mowen and Guan 2009, p.376). Production System as an effective method to control costs and manage a business Inventory plays a critical role within the operation of a production system. The production and delivery of products are critical to the firm given that functions possess value only if they improve the capability to undertake this profitability. Production scheduling represents part of a complex flow of information and decision making that shapes the operations planning and control systems. Increasing competition and rapidly changing customer requirement are rendering efficient production scheduling (Bowhill 2008, p.57). A solid production schedule should aid in outlining whether delivery dates can be satisfied and can highlight predictable downtime to meeting the schedules. An effective production schedule can highlight resource conflicts, control the release of jobs to the production floor, and guarantee timely sourcing of all the required raw materials. Moreover, better coordination will enhance the overall productivity and minimize operating cost. Traditional scheduling research has not made a significant effort in enhancing production-planning practices, whereby most of the traditional scheduling models grounded in operation-research technique that presume ideal situations found to be inadequate. The employment of computerized scheduling software systems, especially the use of spreadsheets to model and simulate can aid in designing of an advanced planning and scheduling system. Spreadsheets are powerful and easier to use since the overall projection of capabilities and limitations can be pre-loaded within the operating plan (Bower 2003, p.302). A production system makes it easier in making a number of decisions such as releasing jobs for production, prioritizing jobs that necessitate resources, reassigning resources from one job to another, establishing when jobs should be launched, and interrupting jobs that should be stopped. Procurement Systems as an effective method to control costs and manage a business Most enterprises encounter challenges that can impact on profitability, efficiency, and compliance, inclusive of process automation, profit recovery, and process optimization. Selecting a procurement system for the business is intrinsically subjective and the decision is frequently intuitively based on the previous knowledge and experience of the client or decision-makers (Sople 2012, p.86). In today’s, fast-paced, technologically driven business world, procurement systems frequently involve the employment of specialized software that enables the owner to track inventory while at the same time highlighting the fastest and the cost-effective mode of delivering goods on time (Olsson and Sjo?stedt 2004, p.3). E-procurement (electronic procurement) represents the business-to-business or business to consumer purchase and sale of supplies via the internet, as well as other information and networking system such as Enterprise Resource Planning. Procurement systems are pertinent to availing the best value for money (Olsson and Sjo?stedt 2004, p.4). Product forecasting can be regarded as the most pertinent element of the procurement and supply management process. A well managed distribution system will deliver a constant supply of product while at the same time sustaining conditions that guarantee product quality. E-procurement represents web sites that enable qualified and registered users to pursue buyers or sellers of goods and services. The buyers and sellers may stipulate costs or invite bids online. E-procurement allows automated buying and selling by employing e-procurement software. Examples of e-procurement include e-MRO (maintenance, repair, and overhaul), web-based ERP (enterprise resource planning), e-tendering, e-sourcing, e-informing, e-market sites, and e-reverse auctioning. For instance, McDonald’s e-procurement system is so efficient that it avails the backbone to all of the logistics and the supply chain management of McDonald’s. An effective e-procurement hub can allow all the franchises of fast food-joints to purchase supplies uniformly (Tschoegl 2007, p.2). An e-procurement site will enable the fast food joint to purchase supplies and materials at a discounted price in a fast and convenient way, which ultimately reduces costs for the food joint. Finance Systems as an effective method to control costs and manage a business A financial management information system represents a tool that the business can seize to assist the manager in interpreting the financial outcomes of operational decision-making. An effective financial management system collects information regarding the business and presents the information in a manner that is easy to comprehend. Key financial measures entail sales revenue, cash flow, profitability, return on investment, and cost reduction. It is advisable to abandon outmoded financial systems that are dependent on manual processes since they render it difficult for finance to respond to those challenges. The IT systems should respond and adapt to the changes made in business strategy, scale and/or tactics by providing information in ways that allow insights and decisions to be made effectively (Dettmer 2003, p.3). With the increasing demand for insight and information, it is essential to upgrade the technology to ensure that the financial system can support the evolving information needs for both finance and business. A strategic financial system implementation should consider how to utilize new technologies and address the finances and the wider business information needs, and can help to generate value in a number of ways. For instance, technological advances allow for extensive automation and standardization for essential processes such as procurement-to-pay, record-to-report cycles, and order-to-cash. Effective implementations can also simply more complex processes such as supply chain processes (Parthasarthy 2007, p.4). The implementation of a new financial system can avail the impetus and platforms for a broad range of actions such restructuring. It can also serve as a catalyst for stimulating business partners in the adoption of new tools. For instance, enhancement of control structures can herald cost savings that can be used to offset the cost of migrating to a new ERP. In the case of pricing decisions, financial systems can be structured to capture historical data regarding the diverse components of price, products, and cost. This presents analytical tools that decision makers can employ to run various pricing scenarios to help spotlight the most profitable ones (Andreescu 2006, p.128). Advantages and Disadvantages of Systems Approach Systems approach is central to creating consistency and predictability in running a business. A systems approach can aid in the attainment of uniformity of production practices across multiple operations and employees, and generate a uniform consistent end product. The implemented standards necessitate regular update process, as well as sustain with improvement in technology and production practices (Carretta and Mattarocci 2013, p.302). Systems approach can be employed to introduce tools that render the collaboration of diverse systems in the business, as well as broadening data access and availing information and analytic tools to business units necessary for decision support (Neave1998, p.376). The systems approach is pertinent to managers comprehending the relationship between the organization and the external environment. A systems approach is essential in heralding efficiency in the running of a business. One of the disadvantages of employing a system approach is that the approach is rigid, whereby, in the event that there any alteration in the environment, it will react quite slowly to the change. Moreover, the approach is highly applicable to the manufacturing industry relative to the service industry, which necessitates the adoption of the external environment. Conclusion A systems approach seeks to explore a firm in totality to ensure that resources within a business are organized to realize the firm’s overall objectives as efficiently as possible. Comprehending the context within which the business operates comprises of two core elements: overall operating environment and the industry in which the firm operates. This requires one to pay close attention to aspects such as procurement processes, distribution processes, and supply requirements, which also necessitates consistency by standardization of systems and processes. Financial management system allows accomplishment of daily financial objectives for the business. An effective financial system allows business managers to manage proactively rather than reactively; render the business operations to be more profitable and efficient; and, access a formidable source of decision-making tool for key financial considerations. Having the “most appropriate” financial system can be regarded as not only an IT issue or a cost of conducting business issue, but rather one that goes to the heart of broadening strategic role for the business and delivering value to the business. References List Andreescu, D. (2006). Measuring business performance: A systems approach, Michigan, General Project Management systems and Solutions. Pp.128. Bower, D. (2003). Management of procurement. London, Thomas Telford. Pp.201. Bowhill, B. (2008). Business planning and control: integrating accounting, strategy, and people, Chichester, England, Wiley. Pp.57. Carretta, A. & Mattarocci, G. (2013). Financial systems in troubled waters: Information, strategies, and governance to enhance performances in risky times, New York, Routledge. Pp.302-303. Dettmer, H. W. (2003). Strategic navigation: a systems approach to business strategy, Milwaukee, Wis, ASQ Quality Press. Pp.3. Hansen, D. R., Mowen, M. M., & Guan, L. (2009). Cost management: accounting and control, Mason, Ohio, South-Western. Pp.376. Neave, E. (1998). Financial systems: Principles and organization, New York, Routledge. Pp.376. Olsson, M. O., & Sjo?stedt, G. (2004). Systems approaches and their application: examples from Sweden, Boston, Mass, Kluwer Academic. Pp.3-4. Parthasarthy, S. (2007). Enterprise resource planning (ERP) a managerial and technical perspective. New Delhi, New Age International (P) Ltd., Publishers. Pp.4-5. Sople, V. (2012). Supply chain management: Text and cases, New Delhi, Dorling Kindersley (India) Pvt. Ltd. Pp.86. Tschoegl, A. E. (2007). McDonald’s-Much maligned, but an engine of economic development, Global Economy Journal, 7 (4), pp.1-16. Read More