2 Information Systems in the Enterprise - Main Web

More documents

Recommendations

Info

and the systems operated in isolation from each other. The firm had no way of communicating or consolidating company-wide information. To increase productivity and competitiveness, Alpina decided to install enterprise resource planning software, embarking in 1995 on an ambitious project to create integrated systems for industrial processes, logistics management, administrative and financial functions, and commercial functions. Alpina started its enterprise project with pieces of software from a number of different vendors but eventually used Oracle Consumer Packaged Goods (CPG) software to integrate these functions. By December 1998 Alpina had installed the Oracle CPG software in its production plants and sales agencies. Monitor market changes Monitor service and costs Oracle Consumer Packaged Goods software Sales agencies Plants Distributors Integrate production logistics, sales, and financial data Improve inventory planning Consolidate delivery loads Calculate consumer demand Short shelf life of products Rapid growth New global and local competitors The new system has enabled Alpina to reduce its inventory through better planning and stocking of raw materials and finished products. Alpina has reduced turnaround in raw materials from 35 days to 25 days and has reduced turnaround in finished products from 8 days to 5 days. Through better supply chain management, Alpina is saving $2.7 million each year. Alpina has also reduced costs by using the information from its system to consolidate delivery loads and create more efficient delivery routes. The system’s transportation planning capabilities have helped the company reduce the number of trucks at each of its major distribution centers by 15 percent, saving $200,000 annually in transport costs. With information about past order history, Alpina’s system helps customers plan and stock their shelf space, providing them with information about which products, flavors, and sizes are most in demand in their stores. Alpina is using this information as well to help calculate customer demand as it introduces new products in the sub-Andes region, Central America, and the United States. Sources: Michael Miley, “Fast Mooving,” Profit Magazine, February 2000 and www.alpina.com.co. Increase service Reduce costs Alpina Mooves Faster with Enterprise Systems Management Challenges 2.1 Key System Applications in the Organization Different Kinds of Systems Six Major Types of Systems Relationship of Systems to One Another 2.2 Systems from a Functional Perspective Sales and Marketing Systems Window on Management: How Southstream Seafoods Lands the Big Customers Manufacturing and Production Systems Finance and Accounting Systems Human Resources Systems 2.3 Integrating Functions and Business Processes: Enterprise Systems and Industrial Networks Business Processes and Information Systems Customer Relationship Management and Supply Chain Management Window on Organizations: Supply Chain Management Keeps Inventory Fresh at HP Enterprise Systems Management Decision Problem Analyzing Enterprise Process Integration Benefits and Challenges of Enterprise Systems Extended Enterprises and Industrial Networks Application Software Exercise: Database Exercise Management Wrap-Up • Summary • Key Terms • Review Questions • Group Project • Tools for Interactive Learning • Case Study 3
4 Part I ❙ ORGANIZATIONS, MANAGEMENT, AND THE NETWORKED ENTERPRISE Management Challenges operational-level systems Information systems that monitor the elementary activities and transactions of the organization. Businesses need different types of information systems to support decision making and work activities for various organizational levels and functions.To respond to new competitive pressures, many are implementing enterprise-wide systems that integrate information and business processes from different functional areas. Alpina, for instance, needed information systems that would allow it to move its products more efficiently through its supply chain. It found a solution in building systems that could link important business processes for sales, production, and logistics.The opening vignette presents the potential rewards to firms with well-conceived systems linking the entire enterprise. Such systems typically require a significant amount of organizational and management change and raise the following management challenges: 1. Integration. Although it is necessary to design different systems serving different levels, functions, and business processes in the firm, more and more firms are finding advantages in integrating systems. However, integrating systems for different organizational levels, functions, and business processes to freely exchange information can be technologically difficult and costly. Managers need to determine what level of system integration is required and how much it is worth in dollars. 2. Enlarging the scope of management thinking. Most managers are trained to manage a product line, a division, or an office.They are rarely trained to optimize the performance of the organization as a whole, and often are not given the means to do so. But enterprise systems and industrial networks require managers to take a much larger view of their own behavior to include other products, divisions, departments, and even outside business firms. Investments in enterprise systems are huge, they must be developed over long periods of time, and they must be guided by a shared vision of the objectives. In this chapter we examine the role of the various types of information systems in organizations. First we look at ways of classifying information systems based on the organizational level they support. Next we look at systems in terms of the organizational function they serve. We then show how systems can support business processes, including processes spanning more than one function, such as customer relationship management and supply chain management. Finally, we examine enterprise systems and industrial networks, which enable organizations to integrate information and business processes across entire firms and even entire industries. 2.1 Key System Applications in the Organization Because there are different interests, specialties, and levels in an organization, there are different kinds of systems. No single system can provide all the information an organization needs. Figure 2-1 illustrates one way to depict the kinds of systems found in an organization. In the illustration, the organization is divided into strategic, management, knowledge, and operational levels and then is further divided into functional areas such as sales and marketing, manufacturing, finance, accounting, and human resources. Systems are built to serve these different organizational interests (Anthony, 1965). Different Kinds of Systems Four main types of information systems serve different organizational levels: operationallevel systems, knowledge-level systems, management-level systems, and strategic-level systems. Operational-level systems support operational managers by keeping track of the elementary activities and transactions of the organization, such as sales, receipts, cash deposits, payroll, credit decisions, and the flow of materials in a factory. The principal purpose of systems at this level is to answer routine questions and to track the flow of transactions through the organization. How many parts are in inventory? What happened to Mr. Williams’s pay
Page 1: 2 2 Information Systems in the Ente
Page 5 and 6: 6 Part I ❙ ORGANIZATIONS, MANAGEM
Page 7 and 8: 8 Part I ❙ ORGANIZATIONS, MANAGEM
Page 9 and 10: 10 Part I ❙ ORGANIZATIONS, MANAGE
Page 27 and 28: 28 Part II ❙ INFORMATION TECHNOLO
Page 29 and 30: 30 Part II ❙ INFORMATION TECHNOLO

2 Information Systems in the Enterprise - Main Web

Create successful ePaper yourself

Delete template?

Save as template?