01 Overview

IE 368 Manufacturing Information System

OverviewTheodorus B. Hanandoko

LEARNING OUTCOMES1.1Compare management information systems (MIS) and information technology (IT)

1.2Describe the relationships among people, information technology, and information

1.3Describe why people at different levels of an organization have different information needs

What is information?Information has two dimensions: physical or digital representation and human cognition.

As a commodity, information refers to facts, statistics, or other data that are valuable or useful to a person for accomplishing a task.

What is IT ?Information technology (IT)any computer-based tool that people use to work with information and support the information and information-processing needs of an organization

Information technology is an important enabler of business success and innovation

Achieving Business Success Through Information TechnologyPeople use information technology to work with information

What is MIS?Management information systems (MIS)the function that plans for, develops, implements, and maintains IT hardware, software, and the portfolio of applications that people use to support the goals of an organization

MIS is a business functionsimilar to Accounting, Finance, Operations, and Human Resources

A Federation of Information Systems

Components of Information SystemsPurpose / Business FunctionPeopleInformation TechnologyProceduresData

Benefits of Information SystemsHigh-quality informationAccess to informationUtilization of informationPerform organizational work efficientlyBetter communication and decision makingBetter products and services for customers

Information System ApplicationsA transaction processing system (TPS) is an information system that captures and processes data about business transactions.

A management information system (MIS) is an information system that provides for management-oriented reporting based on transaction processing and operations of the organization.

A decision support system (DSS) is an information system that either helps to identify decision making opportunities or provides information to help make decisions.

Information System Applications (contd)An Executive Information System (EIS) is an information system designed for top-level managers that integrates data from all over the organization into at-a-glance graphical indicators and controls.

An expert system is an information system that captures the expertise of workers and then simulates that expertise to the benefit of non-experts.

A communications and collaboration system is an information system that enables more effective communications between workers, partners, customers, and suppliers to enhance their ability to collaborate.

An office automation system is an information system that supports the wide range of business office activities that provide for improved work flow between workers.

Information System Applications (contd)

Organizations must manage information properlyDetermine what information it requiresAcquire that informationOrganize the information in a meaningful fashionAssure the information's qualityProvide tools (hardware and software) so employees throughout the organization can access and use the information they require

At the heart of all management information systems is a database and DBMSDatabasemaintains information about various types of objects (inventory), events (transactions), people (employees), and places (warehouses)

Database management system (DBMS) software through which users and application programs interact with a database

Two primary ways that users obtain information from a databaseDirect user interaction Indirect user interaction

The role of IT in strategic decision makingData martsdata marts contain a snapshot of operational data that helps business people to strategize based on analyses of past trends and experiences Data-mining toolsData mining involves sorting through large amounts of data and picking out relevant information Digital dashboardsalso known as an enterprise dashboard or executive dashboard, is a business management tool used to visually ascertain the status (or "health") of a business enterprise via key business indicators. Digital dashboards use visual, at-a-glance displays of data pulled from disparate business systems to provide warnings, action notices, next steps, and summaries of business conditions Supply chain management (SCM)Customer relationship management (CRM)Enterprise resource planning (ERP)

Enhancing Business DecisionsBusiness intelligence, gained through OLTP and OLAP, enables organization to make strategic business decisionsBusiness intelligenceinformation that people use to support their decision-making effortsOnline transaction processing (OLTP) the capturing of transaction and event informationOnline analytical processing (OLAP) the manipulation of information to create business intelligence in support of strategic decision making

Enhancing Business DecisionsOrganizational employees have unique information processing and analyzing needs

Enhancing Business DecisionsMany organizations use data warehouses and data-mining tools to support strategic decision making

Data warehouse a logical collection of information gathered from many different operational databases that supports business analysis activities and decision-making tasks

Data-mining tools use a variety of techniques to find patterns and relationships in large volumes of information and infer rules from them that predict future behavior and guide decision making

Creating Collaborative Partnerships In BusinessOrganizations create and use teams, partnerships, and alliances to:Undertake new initiativesAddress both minor and major problemsCapitalize on significant opportunities

Organizations create teams, partnerships, and alliances both internally with employees and externally with other organizations

Creating Collaborative Partnerships In BusinessCollaboration system supports the work of teams by facilitating the sharing and flow of information

Creating Collaborative Partnerships In BusinessOrganizational collaboration systems include:

Groupware supports team interaction and dynamics including calendaring, scheduling, and videoconferencing

Document management systems (DMS) supports the electronic capturing, storage, distribution, archival, and accessing of documents

Knowledge management systems (KMS) supports the capturing and use of organizational know how

Project management software supports long-term and day-to-day management and execution of a project

Creating Collaborative Partnerships In BusinessOrganizations form alliances and partnerships with other organizations based on their core competency

Core competency is an organizations key strength, a business function that it does better than any of its competitors

Core competency strategy an organization chooses to focus specifically on its core competency and forms partnerships with other organizations to handle nonstrategic business processes

Creating Collaborative Partnerships In BusinessInformation technology can make a business partnership easier to establish and manageInformation partnership occurs when two or more organizations cooperate by integrating their IT systems, thereby providing customers with the best of what each can offer

The Internet has dramatically increased the ease and availability for IT-enabled organizational alliances and partnerships

Transforming OrganizationsSome business environment observers have an ominous vision of the future - digital Darwinism organizations which cannot adapt to new demands are doomed to extinction

CLASSROOM OPENERGREAT BUSINESS DECISIONS Apples Decision to Develop the First Saleable Personal Computer (PC)Like all great computer companies, Apple began its life in a garage. In 1977, Steve Jobs and Steve Wozniak built the Apple 1, regarded by many as the first real personal computer. This founded the Apple Company and the invention of the Apple 2 and the Apple Macintosh. Apples key goal was to make computers accessible to ordinary people. Jobs and Wozniak captured an opportunity and changed the world through a combination of good fortune and technical and marketing brilliance.Instead of writing commands in computer code, Apple owners invented a mouse to click on easily recognizable icons for example, a trash can and file folders. Other companies were quick to copy Apples competitive advantage, including Microsoft.The two founders eventually parted, with Wozniak leaving the company to become a teacher and Jobs continuing with the launch of the Apple Macintosh. Unfortunately, Macintosh captured only 20 percent of the desktop market, while Microsoft captured 80 percent of the desktop market with its MS-DOS operating system. One newspaper described Jobs as a corporate Huckleberry Finn and said his early business exploits had already made him part of American folk history. John Sculley, former Pepsi chairman, removed Jobs from Apple in 1985. Sculley was removed from Apple in 1993. Eventually, after a 13-year exile, Jobs returned to Apple in 1998. The man who founded the company had come full circle and was now its only hope for survival. Jobs return brought the creation of the iMac and Apple rediscovered its inventive originality. The iMac sold 278,000 units in the first six weeks and was described by Fortune as one of the hottest computer launches ever. The iMac and Jobs return contributed to doubling Apples share prices in less than a year.1.1 Compare management information systems (MIS) and information technology (IT)MIS is not IT. MIS is a business function. IT is a computer-based tool. Most organizations have an IT Department that is responsible for performing the MIS function. This is similar to an organization having an Accounting Department that is responsible for performing the accounts payable and accounts receivable functions

1.2 Describe the relationships among people, information technology, and informationIT in and of itself is not useful unless the right people know how to use and manage it efficiently and effectivelyPeople, information, and information technology (in that order of priority) are inextricably linkedIf one fails, they all fail

1.3 Describe why people at different levels of an organization have different information needsThe structure of a typical organization is similar to a pyramidThe array of organizational activities occurs at different levels of the pyramidPeople in the organization have unique information needs and thus require various sets of IT toolsAnalysts perform daily tasks such as processing transactions (OLTP)Managers deal less with the details (finer information) and more with meaningful aggregations of information (coarser information) that help them make broader decisions on behalf of the organization (OLAP)

IT does not equal or represent business success and innovation, it is simply an enabler of business success and innovationAsk your students if spending large amounts of money on IT will guarantee automatic successAns: Spending large amounts of money on IT will not guarantee an organization automatic successOrganizations need to allocate resources on the right types of IT that correctly support their business operations to be successfulIT in and of itself is not useful unless the right people know how to use and manage it efficiently and effectivelyPeople, information, and information technology (in that order of priority) are inextricably linkedIf one fails, they all failAsk your students what is one of the most important assets in an organizationAns: Information is one of the most important assets in an organization, and the primary way that people get information is through information technologyWithout databases and spreadsheets how would managers gather, correlate, and analyze information? Ans: ManuallyPerforming these tasks manually, or by hand, is extremely time consumingMIS is not technologyMIS is a business functionMost organizations have an IT Department that is responsible for performing the MIS functionThis is similar to an organization having an Accounting Department that is responsible for performing the accounts payable and accounts receivable functionsLike any resource, an organization must manage information properlyAlmost all MIS systems contain a database and a database management system (DBMS)Ask your students what are all business decisions based onAns: InformationAsk your students where will they find organizational informationAns: In a databaseWithout knowing and understanding databases, your students, regardless of their major, will have a hard time finding organizational informationWithout information they will have a difficult time making business decisions

Class Activity: Ask your students their majors and list them on the boardFind examples of the different types of database information each major will use to make decisions and perform their jobsThis will help your students understanding why databases will be important in their future careersFor example, accounting majors will be auditing databases. If an accountant is sent to audit AOL, they will not find any physical inventory. AOLs primary revenue is generated from customer subscriptions and usage (intangible objects). They would have to audit the systems to determine if AOLs revenue is accurate. The systems contain databases, hence accounting majors will be involved with databases in the future.

Ask your students to think of databases and DBMS this way: A DBMS is to a database as: Word is to a document Excel is to a spreadsheetIn general, Application to Unit of work - DBMS is the application, and the database is the unit of workDirect interaction The user interacts directly with the DBMSThe DBMS obtains the information from the database

Indirect interaction User interacts with an application (i.e., payroll application, manufacturing application, sales application)The application interacts with the DBMSThe DBMS obtains the information from the database

Strategic decision making is critical to an organizations successOrganizations use IT to gain valuable business insight to make strategic decisions regarding SCM, CRM, and ERPAsk your students if they can give an example of business intelligence in respect to the raw data captured by a grocery store check-out register? Or What types of business intelligence would a grocery store find when analyzing its sales information?Ans: Answers will vary. Grocery stores collect and maintain large amounts of sales information. Potential answers include: Which products typically sell together? Which products sell more on the weekend as opposed to a weekday? Which products are most frequently sold in the express lane sales? Which products are always sold in quantities greater than three? Basically any question that adds insight into how the business works is considered business intelligenceOne recent finding discovered that many customers in the express lane who purchased diapers also purchased beer. This insight into consumer behavior, or business intelligence, allowed the grocery store to strategically place diapers across from the beer coolers. The sales for diapers and beer both increased by over 30 percent. It was later determined that husbands who were sent to the grocery store to buy only diapers, typically also purchased beer. This is a great example of using business intelligence to increase sales.The typical structure of an organization is similar to a pyramidDifferent activities occur at different levels by different peopleAll of these people require different types, levels, and formats of information to perform their jobsAt the lower levels of the pyramid, people perform daily tasks such as processing transactions - OLTPMoving up through the organizational pyramid, people (typically managers) deal less with the details and more with meaningful aggregations of information - OLAPA data warehouse is exactly what it sounds like, an extremely large repository of dataAsk your students to explain the difference between a database and a data warehouseAns: Explain to your students that the primary difference between a database and a data warehouse is that a database is application specific, for example, a payroll database or a customer database. A data warehouse houses all data from many databases, for example payroll, sales, marketing, purchasing, customer, shipping, and even order data is all stored in a data warehouse.Data-mining tools are used to access the information stored in a data warehouseIt is getting harder and harder for any one individual to perform organizational activities in isolationAsk your students to list types of organizational activities that are performed by individualsAns: For the most part, almost all organizational activities are performed in teams. For example, a customer service representative usually needs to talk with many coworkers to discover customer issues and problem resolutionA marketing executive will need to work with sales representatives to determine what is hot in the market, what is selling, and what issues/complaints customers have before launching a new productThe majority of work today is performed in groups and teamsThese teams can be departmental, interdepartmental, cross-functional, internal, and externalCollaboration systems, such as groupware, enable, support, and facilitate internal and external team collaborationThis is a good time to mention the importance of people skills, or soft skills, in additional to business knowledge. Your students should anticipate working with many coworkers from different areas of the business when solving issues or finding opportunities. Building soft skills is just as important as building analytical skills. Successful people rarely work in isolation.

Ask your students if they find it difficult to work on group projects Ask them how many students are typically involved in their group projectsExplain that organizational projects can include anywhere from 3 employees to 300 employees to 2,000 employeesTo add complexity to the project, these employees might be located in different offices around the worldAsk your students what barriers they might encounter if they are working on a global teamAns: Language barriers, currency differences, metric differences, etc.Talk about time zone differences how do team members collaborate when one team is coming to work (for example a team member in the U.S.) while the other team is heading home (a team member in the U.K.). If a coworker in Chicago asks for a 3:00 p.m. meeting, does the coworker in Denver schedule the meeting for 3:00 p.m. CST or MST?If a coworker from France asks for 1 kilo of product, will the U.S. coworker understand?Explain the issues with simple dates and the date barrier. If a coworker in Europe sets a meeting for 1/3/06, does the U.S. coworker understand that this meeting is on March, 1, 2006, not January 3, 2006 because in some parts of Europe the date is displayed as Day/Month/Year, not Month/Day/Year as it is in the United States.

The collaboration tools above all help to alleviate these types of collaboration issuesIt is just as important for an organization to form teams, partnerships, and alliances with other organizationsAn organization that uses a core competency strategy will focus on its core competency and form partnerships with other organizations to handle nonstrategic business processesThe most common example of this is outsourcing payroll or accounting functionsMany organizations want to focus on the marketing and selling of a unique product or service. These organizations do not want to incur the expense of maintaining accounting or tax experts on staff, hence they will outsource these functions to a business partnerThis is a great time to refer back to the opening caseDiscuss how Levis core competency is brand-name differentiation and recognition, while Wal-Marts core competency is retail cost leadershipThe partnership between these two organizations enables cost-leadership selling of a widely recognized brand name

Ask your students to provide a few examples of how the Internet has enabled information partnershipsAns: A good example is Amazon.comThe company developed a profitable business segment by providing e-business outsourcing services to other retailers who use Amazons Web site softwareRetailers partnering with Amazon.com include Marshall Fields, Office Depot, and TargetTechnology changes and globalization have raised the intensity of the competitive environment in just about every industryFigure 1.6 displays traditional businesses changed by Internet-enabled competitionClass Activity: Break your students into eight groups and assign each group one of the traditional businesses from Figure 1.6Ask your students to detail how the business has been impacted by its Internet competitionHave each group present their findings to the class