ITSS Midterm Review Intro to MIS lecture ∙ MIS =Management Information Systems = IT (information technology) o Acquisition, design, implementation, and use of information systems in a business context ∙ Business + Technology o Information Technology is helping businesses run better o An information systemDon't forget about the age old question of Describe the vertical temperature structure of the Earth's atmosphere and why it is the way it is.
Don't forget about the age old question of What are the consequences of innovation?
Don't forget about the age old question of What happens in the various phases of planning?
We also discuss several other topics like What is the importance of stock dividend?
Don't forget about the age old question of Determine the vandelay industries' price-earnings ratio.
We also discuss several other topics like How to solve for dividend yield?
(IS) collects, processes, stores, analyzes and disseminates information for a specific purpose ∙ Great Paying Jobs for IT Professionals o Highest average starting salary in school of management ∙ Information systems help manage and execute business processes ∙ Information systems are used to create innovative products, processes and/or services Information System Components Benefits ∙ Automate system processes ∙ Innovate Definition of a Process ∙ Any part of an organization that takes inputs and transmits them into outputs ∙ Converts inputs to outputs ∙ Sequence of tasks or activities that take a set of inputs and convert them into desired inputs e.g. Procurement, Fulfillment, Production Organizational Functions Functions vs. Processes ∙ In order to execute a process, we need to seamlessly integrate the process across multiple departments which can be difficult ∙ Historically, companies would buy an information technology system ex: accounting software ∙ If each department did this one by one, it would not integrate properly causing the Silo effect- where systems are unable to communicate with each other Functional vs. Enterprise systems ∙ Functional- allows you to pick the best system for your department, but all information is stored separately. ∙ Functional systems have clear cut separation of functions and tasks between departments makes it easier to mange ∙ Enterprise system- Uses a common system but may lose some specialization. ∙ But enterprise systems allow seamless sharing between departments ∙ Functional systems also cause delays and limit visibility across the whole process. Ex: “where is my order?” ∙ Enterprise systems: 1. Execute the process (automation) 2. Capture and store process data (automatic and manual data capture) 3. Monitor performance Using MIS Ch. 3 ∙ Q1 – How does organizational strategy determine information systems structure?∙ An organizations goals and objectives are determined by its competitive strategy. Thus, competitive strategy determines the structure, features, and functions of every information system. ∙ Q2: What five forces determine industry structure? Porter’s Five Forces ∙ Provides a framework to predict intensity of rivalry between firms 1. Bargaining power of customers 2. Threat of Substitutions 3. Bargaining power of suppliers 4. Threat of new entrants 5. Rivalry ∙ When it is easy to join a new industry, there is much more rivalry ∙ When substitutes are readily available rivalry is higher. Ex: car-> bikes, uber, motorcycles ∙ Threat of new substitutes- vendors lock people in with subscriptions or other ways to increase switching costs and eliminate threat of substitutes. ∙ Bargaining power of suppliers- Wal mart negotiates very aggressively with all of their suppliers. They buy such large amounts that they can dictate bargaining power. The intensity of each force determines the characteristics of the industry, how profitable it is, and how sustainable that profitability will be. An organization develops its competitive strategy based on how it intends to respond to these forces. ∙ Q3- How does analysis of industry structure determine competitive strategy? Porter’s four competitive strategies ∙ Organization can focus on being: o Cost leader o Differentiation ∙ Next the organization can employ the cost or differentiation strategy either:o Across an industry o Or focus its strategy on a particular industry segment. ∙ Q4-How does competitive strategy determine value chain structure? ∙ Organizations analyze the structure of their industry (5 forces), and using that analysis they formulate a competitive strategy. They then need to organize the structure to implement that strategy. ∙ Ex: cost leader business activities need to be developed to provide essential functions at the lowest possible cost. ∙ Porter defined value as the amount of money that a customer is willing to pay for a resource product or service ∙ The difference between the value that an activity generates and the cost of the activity is called the margin. ∙ Value chain- a network of value-creating activities. Consists of primary activities and support activities. ∙ Support activities- contribute indirectly to the production, sale, and service of the product. They include procurement ∙ Primary activities- production, etc. ∙ Linkages- interactions across value activities. o Ex: manufacturing systems use linkages to reduce inventory costs. Such a system uses sales forecasts to plan production; it then uses the production plan to determine raw material needs and then uses the material needs to schedule purchases. End result is just-in-time inventory, which reduces costs. ∙ Q5 how do businesses generate revenue? ∙ Business process- a network of activities that generate value by transforming inputs into outputs. ∙ Cost- in the business process is the cost of inputs plus the cost of the activities.∙ Activity- a business function that receives inputs and produces outputs. Can be performed by a human, by a computer system, or both ∙ Repository- is a collection of something; a database is a repository of data and a raw material repository is the inventory of raw materials. ∙ Q6 how does competitive strategy determine business processes and the structure of information systems? ∙ Organizations analyze their industry and choose a competitive strategy. Given that strategy, they design business processes that span value-generating activities. Those processes determine the scope and requirements of each organization’s information systems. ∙ Ex: low cost bicycle rental company for students may use a shoebox as their repository, while a high-end bicycle company will have extensive use of information systems ∙ Q7 how do information systems provide competitive advantages? ∙ Product implementations 1. creating new products or services 2. enhancing existing products or services 3. differentiating their products and services from those of their competitors. ∙ Process implementations 4. Lock in customers and buyers (switching costs) 5. Lock in suppliers 6. Raise barriers to market entry 7. Establish alliances 8. Reduce costs EBPIS Chapter 2 – Enterprise Systems ∙ Enterprise system- Uses a common system but may lose some specialization. ∙ But enterprise systems allow seamless sharing between departments ∙ Functional systems also cause delays and limit visibility across the whole process. Ex: “where is my order?” ∙ Enterprise systems: 4. Execute the process (automation) 5. Capture and store process data (automatic and manual data capture) 6. Monitor performance Stand-Alone Mainframe Systems ∙ Components of an ES o Hardware o Software- includes specialized operating system software needed to execute operations from the applications on the hardware and custom applications that provide capabilities needed to complete specific tasks o Database- used to store data associated with the ES o One of the major drawback of the mainframe architecture was its limited scalability- a concept related to the number of users or the volume of operations that a given hardware/software combination can manage.Stage 2: Client-server architecture ∙ Consist of three components: 1. Presentation layer- How you interact with the application (using menus, typing selecting) Ex: browser when working on the internet 2. Application layer- What the application allows you to do (create formulae or charts, compose an essay) 3. Data layer- Where the application stores your work (on your hard drive or flash drive) Ex: web sites combine application and data layers. Stage 3: Service-Oriented Architecture ∙ Service-oriented architecture (SOA)- during the early years of the internet, companies began to web-enable their three-tier applications so users could access the systems through a web browser. Also benefitted from new technologies that could help integrate many different client-server systems together in new and very valuable ways. ∙ By using web services companies could now integrate several client-server applications and create an enterprise mashup, or composite applications. Composite applications and mashups rely on Web services to send and receive data between and among ES. In addition, they execute newer and more specific processes than are found in the standard ES. Types of Enterprise Systems ∙ Enterprise Resource planning (ERP) systems- world’s largest and most complex ES. ∙ Focus primarily on the internal operations of an organization, and they integrate functional and cross-functional business processes. ∙ SAP was the first company to create a fully integrated and global ERP ∙ ERP systems support processes within a company, or intracompany processes.- processes that take place between and among companies. ∙ Examples o Supply chain management (SCM) and supplier relationship management(SRM), which connect a company’s ERP system to those of its suppliers. o Customer relationship management (CRM) -connect a company’s ERP system to those of its customers. o Produce life cycle management(PLM) systems- help companies administer the process of research, design, and product management. Take new product ideas from the virtual drawing board all the way to manufacturing. o Application suite- collection of these systems. Ex: SAP and Oracle are suite vendors, providing an enormous amount of functionality and cover most of the standard business processes in a company ES Application Suite- ERP, SCM, SRM, CRM, PLM ∙ In addition to application suites, today’s global companies typically have an ES landscape that includes custom and packaged applications from several vendors. o Best of breed applications- typically isolated to one process or part of a process and have evolved from departmental applicationso Niche applications- in addition to large and medium-sized ES vendors, there are thousands of smaller independent software vendors (ISVs) who offer highly specialized niche applications for various industries and functions. ∙ ERP systems can also be categorized based on the size of the organization that uses them and the way the systems capabilities are delivered. o Size of the enterprise- for large enterprises (more than 1000 employees), SAP and Oracle tend to be the most popular vendors based on their scalability and industry specific functionality. Midsized (1000-100) SAP and Oracle are joined by Microsoft and Sage. Small (few than 100) SAP and Intuit are popular o Method of delivery Types of Data in an ES ∙ Organizational data- define the organizational structure of the business ∙ Master data- define the key entities with whom an organization interacts such as customers, vendors, products, and employees. ∙ Transaction data- day-to-day activities of the organization. Who did what, when, and where, as well as specialized data that relate to the specific task. EX: when a company sends a purchase order to a vendor, the following transaction data are generated : dates, quantities, name of the person requesting the material, name of the person approving the material, prices, where the shipment is to be delivered, and the shipment method. Chapter 3: The Procurement Process ∙ Procurement processs- a series of steps that a company takes to obtain or acquire necessary materials. Also referred to as the requisition to pay process. Documents used in the procurement process 1. purchase requisition 2. purchase order 3. packing list 4. goods receipt document 5. vendor invoice 6. vendor payment1. Begins with warehouse manager creating a purchase requisition when a quantity is low 2. Purchasing department selects a vendor and sends a purchase order to the vendor. 3. The warehouse will receive shipment that will include a packing list and goods receipt document 4. Vendor then sends a bill, or invoice received by the accounting department 5. Accounting department will send payment to the vendor. ∙ Purchase requisition o Identifies who prepared requisition and requested delivery date o Products needed and quantity o Unique requisition number ∙ Purchase order o Shipping information o Purchase order number, date, delivery date, shipping method, F.O.B point, payment terms o Details about the vendor, and delivery and payment terms o Signature to authorize the purchase order ∙ Free-on-board (FOB) point is the point at which ownership of the material in the shipment legally transfers from one company to the other. Typical FOB points are the shipping point and the destination. o FOB point has major implications in the case of loss or damage when the shipment is in transit between the seller and the buyer. If the fob point is the shipping point, the loss is borne by the buyer, because ownership changes to the buyer as soon as shipment is sent. o If the FOB point is the destination, then the loss incurred during shipping is borne by the sender, because ownership does not change until the material has been delivered o Included on purchase order ∙ Payment terms- define how the company is to pay the vendor. In most cases payment is due either the date the company receives the invoice or the date it receives the shipment. Typical payment terms include:o net nn, where nn specifies the number of days within which payment for the invoice is due. Net 30= payment is due within 30 days o X% mm/Net nn where x is a discount expressed as a percent of the total invoice amount. Ex: 1%10/Net30 = payment is due in 30 days, but the company can take a discount of 1% if it send the payment within 10 days ∙ Packing list- accompanies a shipment. Identifies the contents of the shipment and allows one to verify that the material in the shipment matches the quantity and materials that were originally ordered. ∙ Includes data about the purchase order for the shipment, dates when the order was filled (packed) and shipped, process involved in preparing the order, details of the items contained in the shipment, including quantities and weights. Example below: o Identifies vendor o Destination of the shipment o Details about shipment (dates and the people at the vendor who were involved with preparing the shipment) o Indicated that the order was shipped via ups ground, as requested o Customer’s purchase order # as a reference o Order number- unique identifying number assigned by the vendor that enables the vendor to track the status of the order in the vendor’s organization ∙ Goods receipt document- verifies that the specified goods have been received. o Good receipt number o Date of receipt and the name of the supplier o Purchase order number associated with the receipt o Specifies which products were ordered along with quantities ordered, received, and backordered o Signature ∙ Backordered quantity- quantity that is to be shipped at a later date. Happens when there is not enough materials in inventory. ∙ Vendor invoice- a bill the vendor sends to accounting for payment. o Sender, invoice number, invoice date, and recipient o Customer purchase order number and vendor order number and the terms of the order o Details of what the invoice is for, along with a total balance due o Information about who should be paid (“make checks payable to”) ∙ Three-way match- Accounting will retrieve the corresponding purchase order and goods receipt document and compare them to the invoice. If the data in all three documents match, payment is sent to the vendor. Information Flow This information is difficult to obtain in a manual environment ∙ Instance level information o Much of it is related to the status of one particular instance in the process, that is, a specific purchase requisition. o Concerned with the state of the order as the process is executed.o Has a purchase order been issued for a requisition? Have the goods been received? When were they received? Has an invoice been received and paid? ∙ Process-Level information o Concerned with the purchasing process on an overall level, across multiple instances (or requisitions). o Uses this information to understand how well it is executing each step in the process as well as how the entire process is operating over time 1. Which suppliers are prompt? 2. Which materials does SSB purchase most frequently, and from which suppliers? 3. What is the average time between sending a purchase order and receiving the materials? What is the average for each vendor? For each material? Role of Information Systems in the Information Process ∙ Execute the process ∙ Create purchase requisition ∙ Create purchase order ∙ Receive shipment ∙ Receive invoice and send payment ∙ Capture and store process data ∙ Monitor the process ∙ Instance level information flow- ability to drill down into details is a very powerful capability of enterprise systems ∙ Key performance indications (KPI)- current state is measure against at standard definition of what is expected, or KPI ∙ Process level information flow ∙ ^ ES can help the procurement process as a whole, going from manual and paper to much of the process being automated and accessible from multiple places Ch. 4: Fulfillment Process Key Concepts ∙ Sell from stock o High volume, low cost products o Little choice for buyer o Ex: ipod, SSB uses sell from stock ∙ Configure to order o Low volume, high cost products o Base mode + options o Ex: mini cooper Physical Flow 1. Sales-Receive customer inquiry, create and send quotation 2. Sales- receive customer purchase order, create sales order 3. Warehouse- prepare shipment (pick and pack), Send shipment (ship)4. Accounting- create and send invoice, receive payment Document and data flow 1. Customer inquiry 2. Quotation 3. Customer purchase order 4. Sales order 5. Picking document 6. Packing list 7. Customer invoice 8. Customer payment ∙ Customer inquiry- a request for information about the availability and prices of the products specified o Customer o Products the customer is interested in and quantities desired o The individual who actually sent the inquiry ∙ Quotation- after sales receives an inquiry, it prepares a quotation spelling out the availability and prices of the materials specified in the inquiry. o Addressed to person who send inquiry o Validity period o Terms of payment and delivery (FOB) o Pricing per each unit o Total for entire order o Name of person preparing document o Quotation number ∙ Customer purchase order- an agreement to purchase the stated material, for the stated price, under the stated terms o PO number o quantities and prices that match quotation o terms of payment and delivery as well as the preferred mode of shipment o authorization signature from purchasing ∙ Sales order- standardizes data across all customer POs. Contains all the necessary data in a format that is best suited to the organization receiving the order. Creates an internal record of the customer order that can be used to track progress. o Identifies customero Customers PO number o Order and delivery dates and terms o Materials posted o Prices o Received by, packed by, shipped by, invoiced by, payment received by ∙ Picking document- prepared when the warehouse receives a sales order in order to prepare the shipment by picking and packing. 1. Sender’s name and address 2. Bill to 3. Ship to (two addresses, may be the same) 4. Order number 5. Customer po number 6. Po date 7. Requested delivery date 8. Shipped via 9. Fob point 10. Terms 11. Material number 12. Material description 13. Unit type 14. Quantity ordered 15. Quantity picked 16. Storage location 17. Picked by ∙ Packing list- accompanies the shipment and specifies the items and quantities shipped. Customer uses packing list to verify the contents of the shipment match their original purchase order. 1. Customer name and address (bill to) 2. Data about the order 3. Packing and shipping information 4. Customer billing and shipping addresses (ship to) may be the same as 1. 5. Details about the material included in the shipment ∙ Customer invoice- in the procurement process the vendor sends and invoice to SSB, in the fulfillment process, SSB sends an invoice to the customer 1. Customer addresses 2. Basic order information 3. Details of the material prices and totals Information Flow ∙ Process-level information ∙ Process-level information Financial Impact Role of Enterprise Systems in the Fulfillment Process ∙ Execute the process ∙ Create a quotation∙ Create a sales order ∙ Prepare shipment ∙ Send shipment ∙ Create and send invoice ∙ Receive and process payment Capture and store process data Monitor the process ∙ Instance-level information ∙ Process level information Chapter 5: The Production Process Production Processes and Strategies ∙ Assembling or manufacturing- assembling is taking components and putting them together to finish a desired finished product while manufacturing involves taking raw materials and creating something from them. ∙ Another way to classify production is in terms of discrete manufacturing vs. process manufacturing. ∙ Discreet manufacturing- ex: furniture, computers, plates, cups ∙ Process manufacturing ex: oil and gas ∙ Make-to-order- produce goods in response to direct customer orders ∙ Make-to-stock- create an inventory of products that they can store and then use later to meet customer demands Production process ∙ All the steps needed to assemble or manufacture a finished product ∙ Plan to produce ∙ Design to produce (customizable products) ∙ Engineer to produce (highly specialized) Master Data in the Production Process ∙ Bill of Materials- all the materials or parts needed to make one unit of a finished product. Result of the product design process that leads to engineering drawing of the product ∙ Engineering drawing- a visual representation of the product and its components. BOM derived from the engineering drawing ∙ Work centers- the actual task of creating the product is done here. One or more tasks or operations can be completed in a work center ∙ Product routing- the steps or operations necessary to create the product. For each operation, the routing lists the work center where the operation is to be conducted, the time allocated for each operation, and the material to be used in each operation ∙ Ex: 1. Material staging 2. Skateboard assembly 3. Initial inspection 4. Packing5. Final inspection 6. Move to storage ∙ Production capacity- the number of skateboards the shop floor can produce in a specified amount of time, such as per hour or per day. This is determined by how much time it takes to make each skateboard. Physical Flow Document and Data Flow ∙ Planned order- production process begins wit a request for production in the form of a planned order. Used to request that the company produce a specified quantity of goods. 1. Planned order # 2. Production order # 3. Request date 4. Requested delivery date 5. Requester name 6. Requester phone 7. Delivery location 8. Material number 9. Material description 10. Quantity 11. Requested by 12. Approved by ∙ Production order- planned orders eventually translated into production orders by the production controller. Provides written authorization to the shop floor to produce the stated quantity of products 1. Production order number 2. Material number 3. Material description 4. Quantity 5. Date 6. Quantity complete 7. Scrap quantity 8. Completed by9. Planned order number 10. Authorized by 11. Date authorized ∙ Material withdrawal slip- When production is authorized (trigger), a material withdrawal slip is created. Inludes a list of all the materials needed to produce the quantiy of finished goods in the production order. 1. Production order # 2. Production quantity 3. Date 4. Issued by 5. Received by 6. Location 7. Material number 8. Material description 9. Quantity per skateboard 10. Total quantity needed 11. Quantity issued ∙ Goods receipt document- when the completed skateboards are delivered(trigger), the warehouse will complete a goods receipt document. Serves as a record for the warehouse indicating that Mark delivered the Skateboards to Tim on the date and the production order #. When the warehouse completes goods receipt document, the factory completes the production order document for the shop floor. 1. Company name 2. Goods receipt number 3. Receipt date 4. Po number 5. Vendor number 6. Material # 7. Description 8. Unit type 9. Quantity ordered 10. Quantity received 11. Backorder quantity 12. Received by Which of the following items would not appear on a pick list?