Management Information Systems - Coursework Example

Management Information Systems Part Information systems are required to solve problems in organisations. Information systems are a standard requirement for business to be become and remain successful in the current global business environment. In fact, Laudon and Laudon (2007) indicate that it is not only required for the creation of successful organisations but in the addition of value as well as in the provision of products and services to one of the most important stakeholders – customers. Laudon and Laudon (2007) also placed emphasis on the importance of information technology in ensuring business survival. The speed with which businesses have to respond to customers requests makes this a very important point. Information is the lifeblood of an organisation and without information important decisions that determine the continuation of the business cannot be made. The major types of information systems that exist at a company that I am familiar with are inventory management, sales and accounting. These information systems are required in order for management to obtain information on a timely basis so that the right decisions can be made. The major types of problems that these information systems have helped to resolve in an organisation that I am familiar with include: i. The provision of inventory information in real time; ii. The provision of sales information; iii. The provision of timely accounting information. Inventory information is important in the prevention of under-stocking and over-stocking of items. Stock-outs result in loss sales which eventually go to competitors. Additionally, holding too much of a particular item means that warehouse space is used to hold items that are not moving as fast as expected. The cost of holding stock can be very high especially for inventory items that are moving slowly. Furthermore, items that are moving slow takes up space that other fast moving and profitable stock items could do well with. An inventory management information system helps businesses to manage inventory effectively. Information relating to sales is important for management in service, production and retail businesses to determine if sales targets are being met. In the case of an organisation that provides services it helps management to determine which service area is generating the most revenue and which area is generating the least revenue. In the case of production and retail organisations it provides information on which products are doing well and which ones are doing poorly. Additionally, they will also be able to determine which geographic region they are performing best and worst in. It allows management to make decisions that are well informed and allow them to channel more resources if necessary towards the areas that are performing well and make corrective actions in other areas. Management require accounting information in order to determine which expenses have almost reached or have surpassed the budget. Information on receivables from customers and the amounts payable to suppliers can also be obtained. They also need to know the amount of profit that the business is making on a monthly, quarterly or yearly basis. It therefore means that an accounting system that is linked to other areas of the business becomes critical. When a sale is made and when a purchase takes place the information goes straight to the accounting system and updates the records of customers and suppliers. This allows information to be readily available on critical areas of the business. Therefore, management is able to take the necessary information to achieve the level of profit required. If targets are not attained in a particular month management can then focus on putting the necessary controls in place. Part 2 In order for businesses to compete effectively they need information from within the organisation as well as from outside. This information has to be available quickly in order to enable management to make the right decisions. Therefore, the need exists for information systems that will provide the necessary information to facilitate successful business operations. Information systems are useful in supporting various competitive strategies including: low cost leadership; and also to strengthen customer and supplier intimacies. Michael Porter (cited in Walton 1999) indicates that low cost leadership is one of the generic business level strategies that will allow a company to achieve higher performance. Information systems can allow businesses to achieve low cost leadership since they facilitate a reduction in costs while increasing revenue. Strengthening customer and supplier intimacies can be achieved through the use of customer relationship management (CRM) and supply chain management (SCM) systems. This will allow businesses to gain a competitive advantage over their rivals. CRM involves using information that allows a business to nurture its relationship with its customers. In order to do this a company needs to build a good and strong relationship with its customers. The business will therefore need to have a list of all their customers along with the following information: i. contact information such as a telephone number and an address if possible; ii. the products that their customers are interested in; iii. the amount of money they normally spend with the business; This information can be analysed by the company to determine what income bracket their customers fall in and the kinds of products that they normally purchase. The business will also know how loyal their customers are. With this information customers will be informed of certain events including sale/special discount days and customer appreciation dates. This will also facilitate the performance of customer service surveys. Laudon and Laudon (2006) indicate that CRM examines customers from various angles and therefore focuses on all areas of a businesses relationship with its customers. The supply chain of a business is a network of organisations and business processes through which raw materials are procured, transformed and distributed to customers. A supply chain consists of a business, its suppliers of raw materials and customers. SCM systems provide information that helps members of a supply chain manage their inventory. The result is that operating costs is reduced. Laudon and Laudon (2006) indicate that inefficient supply chains can result in waste of up to 25% of a businesses operating cost. Some supply chains use radio frequency information devices (RFID) that provide real time information to suppliers about the items that they supply to a particular business. This has facilitated not only a reduction the amount of goods produced but also the amount of goods ordered by retailers. The use of RFID devices has also facilitated a reduction in the operating costs of both manufacturers and retailers in the supply chain by providing information that is accurate. The internet has facilitated the integration of the supply chain in a cost effective manner. References Laudon, K.C and Laudon, J.P. (2006). Managing Information Systems: Managing the Digital Firm. 10th ed. New Jersey: Pearson Prentice Hall Walton, J. (1999). Strategic Human Resource Development. UK: Pearson Prentice Hall Read More