Information Systems within Palmer and Harvey - Case Study Example

Name: Topic: TYPES OF INFORMATION SYSTEMS Institution: Date of submission: Instructor Contents Topic: TYPES OF INFORMATION SYSTEMS 1 Contents 2 MAIN FINDINGS 5 Types of information systems 5 APPLICATION OF THEORIES AND PRINCIPLES OF INFORMATION SYSTEMS 7 ADVANTAGES AND DISADVANTAGES OF INFORMATION SYSTEMS 9 EXECUTIVE SUMMARY The report had a sole purpose of identifying the various information systems that are used by an organization in its operations. The report identified the transaction processing system, the executive information system, payroll management system, the chain supply management system and the inventory control system as some of the information system used by Palmer and Harvey plc. Palmer and Harvey is the biggest privately owned business in the U.K., hence the need information systems. How these systems affect the decision, making process in an organization context has also been dealt with in this report. Both the advantages and disadvantages of all the systems used have all been listed in the report and the ways in which the business can use them to their advantage. Various conclusions were arrived at during the preparation of the report. The findings were then used to come up with a suggestion of recommendations that the writer thought could benefit the organization. INTRODUCTION Information systems are an incorporated set of constituents that consist of people and computers that work together to bring together, store and process data for delivering information. Most companies rely on information systems to run their day-to-day operations. According to Stair and Reynolds (2013, p. 16) People are the most significant part of an information system. This is because they determine the difference between the success and failure of an entity that uses of an information system. There are mainly four types of information systems; administrative information system, decision support systems, management information systems and transaction processing systems. Most organizations combine all these information systems to aid in decision-making. The top management uses the administrative information system, the senior manager’s use the decision support system, the management information system is used mostly by the middle managers while the rest of the staff use the transaction processing system as suggested by Rainer and Cegielski (2010, p. 44). Information systems are used by various businesses across the industry. These systems are properly designed to fit the organizational goals of the business. They enable decision-making organs make rational decision thereby enhancing the effectiveness of business. Well-designed information system can also help in improving the profitability of a firm by reduction of operational and administrative cost that is, this is according to Johannes and Heijdn (2009). The purpose of this report is to identify the types of information systems that are used by the Palmer and Harvey. The report will critically analyze the information system of the company and their potential impact on decision-making. Palmer and Harvey's plc is U.K’s biggest wholesaler and sixth largest private company. The company is headquartered in Hove and provides wholesaling services to many firms in the U.K. Its deals with over 14000 products hence make it essential to have information systems in place to assist in its operations. MAIN FINDINGS Types of information systems The first type of information system used by Palmer and Harvey plc is the transaction processing system. Stair and Reynolds (2013, p. 21) Defines transaction information systems as a structured collection of persons, actions, software and devices that work in an organized manner to record business transactions. An case in point of this kind of system is the payroll transaction processing system. The inputs that are required in this type of information system are the hours worked and the pay rate per hour to determine an employee’s paycheck. Transaction processing system is crucial when it comes to decision making in an organization. This is because of the reasons that; it provides instantaneous updates on the occurrences in the company hence enable managers to take appropriate action when necessary. The other reason is that the system has the potential to perform multiple tasks hence improving the efficiency of the firm. When it comes to decision making, this ensures that decisions are made promptly as compared to systems that can perform one task at time as Nowduri (2011, p. 4) Indicates. The other type of information system used by Palmer and Harvey is the supply chain management system. This type of system is defined by Oz (2008, p. 18) As a series of activities concerned in selling of a product or service. Palmer and Harvey deal with wholesaling services hence the reason they have this information system in place. It helps them to manage the supply of the over 14000 products of their clients. It is usually essential for the middle-level managers’ decision-making because of the following reasons. Nowduri (2011, p. 5) Suggests some reasons to be: the system gives managers’ fast access to information hence ensuring that they make decisions that fit the company’s strategy. In addition, this type of system also aids in record keeping, this comes in handy for the top management when they want to decisions since they have to look at past records. Moreover, the system allows numerous users to access the similar content at the same time. This enhances accountability of the company that is a significant key to decision making. The other type of information system used by Palmer and Harvey is the executive information system. Millet and Mawhinney (1992, p. 85) define an administrative information system as a system that integrates information from both external and internal sources which help top executives in a company in their decision-making. Several transnational firms often rely on administrative information systems to make critical decisions since they provide timely and valuable information as Watson et al. (1997, p. 422) suggests. This type of information system helps the top management when making decisions on pricing, this decision will be based on the internal and external information provided by the system. External information provided by the system indicates how competitors achieve great effectiveness hence help the top management when making decisions to do with productivity of the company; improving the productivity of the company as Shim (2000 p. 228) emphasizes. Palmer and Harvey plc also use decision support and expert systems. These are information systems that are specially designed to assist in decision-making; most professionals do not have time to study and understand long and comprehensive reports. The system produces brief reports that the professional can use to make a decision. These type of systems are commonly used to answer the question of ‘what if’ according to Oz (2008, p. 20). The systems are programmed in such a way that they process data, formulate comparisons and produce information that will help professionals to look at the greatest alternatives that fit into the strategy of the company. Moreover, the system is usually important in decision making for senior managers as they are the ones that make decisions to do with marketing, policy, and credit authorization. This is possible given the fact that expert systems rely on artificial intellect to sustain knowledge rigorous decision making. Inventory control system is the other system that is used by Palmer and Harvey; this is a system that helps in the control of stock both incoming and outgoing stock. This system helps the managers to make decisions based on the internal information stream about stock in the organization. It is usually used by lower level and middle level managers to make decisions. This is because these managers are the ones that make decisions on the movement of stock. The system can also be used to forecast future demand, however it’s difficult to forecast this demand when a similar product is introduced into the market since past data of the current product cannot be used to forecast future demand as Axsater (2007, p. 8) suggests. APPLICATION OF THEORIES AND PRINCIPLES OF INFORMATION SYSTEMS One of the philosophies that can be used in the application of information systems in an organization is the Grounded Theory (GT). This is a method of coming up with ideas that are from grounded data that is systematically gathered and analyzed. The purpose of the theory is to build up theoretically broad explanations about a particular observable fact. Some case studies have been performed with the goal of examining the utility level felt by managerial actors with the computer-based systems used to support their work processes. These studies addressed the use of the computer-based systems and the way their use was understood in the organizational context. The other concern in studying these systems is the structural, communal, political, and representative context in which the use of the system was happening. The purpose of the report is to comprehend how organizational factors interacted with a given system, how they perceive that interface, and how they incorporated the system into the work realism. The report found out that most of the users of the information system were able to interact with the systems effectively. The top management who primarily use the executive information system reported that the system is easy to use. However, not all senior managers are well versed with the use of computers or trust the information system. Moreover, the system only supports top management decisions hence critics of the system say the executives cannot use it to make decisions to do with the other levels of management. The senior managers use the decision support and expert system to make decisions in the organizational context. Most of these decisions are often structured to affect the employee that fall under their command. At time managers need to make quick decisions at the same time remain rational, this usually causes unnecessary tension in the organization as Burstein and Holsapple (p. 5) suggest. This is where the expert systems come in handy as they provide data at a very quick pace. The transaction processing system that is mainly used a vast number of employees. However, each employee has login details that are used to show which employee made a certain entry. For example, if a Palmer and Harvey plc employee is using the system to dispatch goods and makes an error, the supervisor can quickly identify the employees and tell them to rectify the mistake. The other example of the system is the accounts receivables system which primarily deals with the debtors of an organization as stated by Shelly and Rosenblatt (2011, p. 15). Examples of the chain supply management system are the web- based system that provides an incorporated means to purchase, follow the progress and order products electronically. Lan et al. (2006) also give SAP as the other example of a supply chain management system. This is a system that offers a variety of solutions when it comes to transporting, processing and procurement of goods. The point of sale synchronization is also the other example of the supply chain management system, this type of system enhances efficiency of a company by lowering costs at the time providing relevant information. An inventory control system is primarily used by the staffs that work in the store of the company. The system helps them to make their day-to-day operations about the business stock secure. However, supervision should be maintained at all time to ensure that the employee do not mess with the system. Access to the system can also be limited to only a few numbers of employees. An example of where this system is used in the organizational context of Palmer and Harvey plc is when moving the over 14000 products of their clients. The system helps them to maintain a record of the remaining and incoming stock of these clients. ADVANTAGES AND DISADVANTAGES OF INFORMATION SYSTEMS Some of the advantages of the transaction processing system are, it maintains data constancy in that in the occasion of network breakdown committed transactions are finished to completion while non-committed ones are reversed back involuntarily. In addition, the system also allows the division of processor resources among several users hence improving on the effectiveness of the company. The other benefit of the system is that it enables access to untapped markets hence the potential growth can be achieved if the system is operated correctly. Moreover, the system helps an organization to increase on its labor efficiency hence improving on its productivity. However, the transaction processing system also has its disadvantages that include; the system is expensive to maintain, it also requires more hardware and software so as to be in place. The other disadvantage is that the system cannot subjectively terminate transactions if there is an overload Ren et al. (2014). Some of the benefits of the supply chain management system include lower costs; the system helps the company to develop a good relationship with the customers hence cutting costs through quantity discounts. Besides this, the system also creates an improved partnership with both suppliers and consumers; this is possible since the system includes a progress of reports on how the chain of supply is working. Furthermore, this type of system helps in response to problems; any business usually has its rough times. This is the basis as to why the system is necessary; it enables the managers quickly figure out a answer to the problem. Some of the disadvantages of the system include: it requires huge capital outlays to purchase and put into practice, these costs include professional services in addition to teaching of staff on how to use the system. The other disadvantage is that the system is designed around a definite business form hence any firm that wants that wants to take up the system should adjust its business model to fit Wisner et al. (2011, p. 197). The executive information system also has its advantages and disadvantages. The advantages include; it is easy to work with, provides well-timed release of firms review information and improves on the tracking of information when required. Additionally, the system also ensures the effectiveness of the decision makers by providing them with filtered information. The disadvantages of the system include: it cannot carry out difficult calculations since its functions are restricted. The users of the system may also encounter information burden, become sluggish and even hard to run. Besides this, the system requires high skillful employees to operate, and it may lead to less dependable and timid data to be obtained as Shajahan (2007 p. 162) Among the benefits of a decision support and expert system are that it improves individual competence, increases a firm’s organizational control and encouragement of learning and training. Furthermore, the system helps in speeding up of the problem-solving process of business, ensures interpersonal communication of the employees and assists in automating the management course of action of a company. In addition to these functions, the system helps a corporate to have a competitive advantage over their competitors, aid in coming up with brilliant ideas to fasten the pace of delivery of the business and produce evidence in support of a decision to be made. The disadvantages of the system include: the system building process is costly hence only organizations with massive amounts of capital can afford to acquire it. It is also very complex to use because only experts can understand the output of the system hence it is not accessible to everyone in the organization. The system does not also generalize results hence making it difficult for other managers to make decisions Sol et al. (1987 p. 33). The advantages of the inventory control system to the organization are that: there is reduced stock cost in terms of both administrative and operational cost. The system also translates into improved efficiency in storekeeping and inventory control. All these benefits transform to savings that are key in any organization as Saxena (2003, p. 104) emphasizes. The primary disadvantages are precision Issues and the risk of fraud. Information produced by this system is only as accurate as to how it was input. Hence, a firm that plans to use the system need to have a way of validating data before it is entered into the system. More often than not various companies face the risk of fraud. Any automated structure carries the danger of interference. A fraudulent merchant could hack the system to claim compensation for goods never delivered. To prevent this organization can come up with security checks to verify the users of the system. CONCLUSIONS The report, therefore, makes the following conclusion: i. Information systems make a contribution to the professional running of the business. This is because the several parts of the organization pull collectively to achieve the purpose of the business. ii. In addition, the report came into a conclusion that the information systems area source of information infrastructure by the information that is produced by them. iii. The other conclusion is that Palmer and Harvey should consider strengthening their information system so as to be more efficient and gain a competitive advantage. iv. Moreover, the supply chain management system help in tracking of hazardous cargo hence the firm can provide services only to trustworthy customers. v. On the payroll transaction processing system, it helps the business to properly remunerate their employees and determine which of them require a pay rise. vi. Although executive information systems are not used by all the executives of the company, they are very essential in decision-making. vii. On the decision support and expert information system used by Palmer and Harvey plc, the report concludes that the information system helps the organizational to get expert advice before making any critical decisions. RECOMMENDATIONS The report suggests the following recommendations in regards to the information systems: i. The management should support the effectuation of a jointly interdependent relationship between the users of the system. ii. Besides this, the report also recommends improved monitoring of the information systems so as not to be victims of unsupervised systems. iii. The business should also find ways of tailoring the information systems in that they are in shape with the several decision-making organs in the organizations. iv. Moreover, the report suggests that the business outsources professional persons who can help it in running the information system. v. The report also recommends the business to perform time-to-time evaluation of the system to establish problems in the system and ways of prevention and to solve of the problem. vi. The report also suggests that the business should adopt new technologies that come up each day so as the information systems are up to date. vii. This report also recommends use of exclusive user names and intensification of passwords controls. 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