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In today¡¦s advancing technology state, one must be aware of information management systems and how they are shaping lives. Many industries are involved in information technology, and it is that technology which enables them to survive. Five major industries are health, services, manufacturing, finance, and retail. It is hard to say which one is affected more by technology because they all are in their own individual ways. The topics of IT they all share, but the way that information technology is used and introduced in each industry makes them different. In such a highly competitive environment, businesses need to take advantage of all the technology they can in order to survive and gain the upper hand. This semester, I focused on the manufacturing industry because it is how many of products become products and how they are brought to us, the consumer.
Data and Knowledge Management
A company is made up of managers and employees. The hierarchy of the management team and the different levels of data information at each level needs need to be recognized, as does the fact that from top, strategic management to clerical and shop floor workers, all the members have varying needs regarding information systems. The general pyramid-shaped hierarchy is the most common organizational structure found in businesses. At the bottom are the clerical and shop floor workers, then the operational managers, next are the middle managers, and at the top are the senior managers. The largest group is the clerical and shop floor workers.
Some common characteristics of information at each level are the data range, time span, level of detail, the source, the degree of structure, and the purpose. Data range is the amount of data from which information is extracted. Top management needs a wide data range while the lower levels need a narrow range to focus on their specific divisions. Time span refers to how long a period of time the data covers. Top management need data that reaches far into the past, while lower level managers need only a time span of hours or days. The level of detail is the degree to which the information generated is specific. For top management they need summarized information that is not greatly detailed, while operational managers need highly detailed information. The way that information is presented varies depending on the user or manager. Some different presentation methods are graphically, with text, tabular, or audibly.
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There are different information systems for the different levels of management. The different systems are transaction-processing systems (TPS¡¦s), Decision Support Systems (DSS), Expert Systems (ES), Executive Information Systems (EIS), and Management Information Systems (MIS). Shop floor managers typically use transaction-processing systems because they provide them with up-to-date information and help them to serve customers, place purchase orders, and provide information to other employees. Operational managers use TPS¡¦s, report-generating applications, and electronic monitoring of employees to do their job. Middle managers use Decision Support Systems and expert systems to assist them in solving problems that are typically more complex and nonroutine than problems faced by operational management. Senior managers also use DSS¡¦s and ES¡¦s, but they also like to not use computers in their decision making because they felt that computers and such should be used by lower level managers.
IT Concepts and IT Fundamentals
An important issue for manufacturing companies is the hardware they use and the software that runs it. Managers should consider software first before hardware, but most companies already have their hardware and now they need the software to run it. Hardware starts with the computer, which has four operations: accept data, store data and instructions, process data, and output data. Software is the collective term for programs, which are sets of instructions to computer hardware. Managers must understand different types of software and be able to evaluate programs, because much of their work is highly dependent on software. Software deals with the data like managing inventory levels, setting prices, tracking sales, etc. The hardware¡¦s productivity is based on its durability and adaptability.
In one of our class discussion, Kevin King talks about GM and how using computer aided design technology has improved their business greatly. GM has teamed up with EDS and Sun MicroSystems to create a program called PACE, the Partners for the Advancement of CAD/CAM/CAE Education. These companies have been providing hardware and software for computer-aided design, manufacturing and engineering of automobiles to universities all over. For GM, using CAD has reduced its development of cars from 3 years to 18 months, which is quite amazing7. Computer-Aided Design software is used heavily in manufacturing, and this is just one example of how it is changing companies today.
Telecommunications have become such an integral part of businesses today that it is hard to imagine the world without it. Telecommunications has brought four basic improvements to business: better business communication, higher efficiency, better distribution of data, and instant transactions. Networks are a vital part of telecommunications. LAN¡¦s (local area networks) and WAN¡¦s (wide area networks) are the two types of networks. These networks are what connect terminals together to the server, which connects the rest of the company¡¦s computers.
An example of how telecommunications is changing the world is by high-speed internet connections. This article talks about Broadband turning every electrical outlet into a high-speed internet connection. The way it will work will be by carrying data by fiber-optic or telephone lines to bypass high-voltage lines, and then inject it into the power grid downstream, onto medium voltage wires4. Some are excited about this and some are a little weary because there are some drawbacks to the process and the idea is still being tested. Telecommunications has come a long way and it is still advancing, but this just shows how some people are trying to utilize its existence to better their companies for their customers.
Integrating Islands of Technology
An increasing number of organizations that share information for their mutual benefit have replaced their paper-based transactions. Instead, they use interorganized information systems that utilize telecommunications to exchange electronic data. This concept is called electronic data interchange. Numerous benefits result from EDI like cost savings, speed, accuracy, security, system integration, and just-it-time support. Manufacturing companies receive some tremendous benefits from EDI. By linking its vendors, customers, and subcontractors, a manufacturing firm can use EDI to quickly query raw or interim goods suppliers, who in turn can provide on-time delivery of the exact amount of resources needed . Manufacturers monitor retailers¡¦ inventory, replenish retailers¡¦ product inventory and update inventory records, and invoice retailers and use electronic funds transfer to pay suppliers. A few bad things about EDI are no control over the speed of communication, security challenges, and the difficulty in ensuring non-repudiation. Here is an example of how EDI may happen in a company.
This figure1 illustrates how EDI benefits retailers, manufacturers, and suppliers. However, some companies are turning toward XML instead of EDI. XML is a tool that tells computers how to interpret a text file. Using the two together though results in a lot of saved money. In an article, the issue of whether EDI can survive XML is discussed. Researchers say that XML lets companies make connections much quicker than EDI. However, in the last couple of years EDI has improved itself by making itself more applicable to smaller companies, less expensive, and easier to use. THEREFORE, XML is getting more attention, but EDI will still be with us8.
As example of how EDI has helped in the manufacturing world is at Nissan. EDI implementation has brought benefits to Nissan and their suppliers. EDI has helped Nissan reduce mail to suppliers by 90%. Nissan started to use EDI in 1989 and immediately received cost savings because of reduced labor requirements and mailings. There was also a reduction in the level of human/manual errors and a shortening of the lead-time for delivery information to their supplier base .
Companies need somewhere to accompany all of the variable information systems that collect and display data, which is where databases come in to store and organize that data. Every type of business today uses and needs to understand the power of databases. The structure of a company is important and that is where the IT architecture comes in. One of the most important things about IT and computers today are hackers and violations of privacy. Hackers and security breaches are becoming more and more today, so what are companies doing to stop this. Well by designing IT systems that are safe with firewalls and such will help. However, an article in our discussion brings up the point that this year will be worse than last year for viruses, worms, Trojan horse writers, and hackers. A suggestion by a technical director of malicious code research at TruSecure says that corporations need to look internally to secure their networks and computers rather than worry5. Preventing security breaches and viruses start with the company and their design, so IT architecture is extremely important and should not be taken lightly.
Building Information Systems
To understand information systems, we first need to recognize that information and data do not mean the same thing. Data are the raw materials in the production of information; it is a given fact, like a number. The number of items sold in a day would be data. Information is data that have meaning within a context. Information can be raw data or data manipulation through tabulation, addition, subtraction, division, or any other operation that leads to greater understanding of a situation. What the IS can do with the data is the most important and useful idea to consider.
¡§Information systems are used throughout a manufacturing operation, from inventory control to paying suppliers. IS¡¦s help allocate resources, such as personnel, raw material, and time, to optimize productivity. Inventory control systems help plan optimal reorder quantities of raw materials so that the company does not pay too much for materials it will not use for a long time, while ensuring that materials are available when required.1¡¨ ¡§Resource planning information systems play a vital role in determining which resource to use where and when. Some special IS systems automatically report every item¡¦s economic order quantity (EOQ), which is the quantity sufficient to prevent an out-of-stock situation, while minimizing the value of warehoused products and the cost of warehousing. Many manufacturing have adopted systems called enterprise applications systems that include inventory planning, purchasing, payment, billing, and so on.1¡¨
One example of how IS is helping manufacturing is the company BEA. They have found an initiative to lower the cost of connecting enterprise applications, systems, and users. BEA is a huge application software company who are more like problem solvers. This new software will allow customers to connect their users, applications and systems with standards-based, best of breed software in order to reduce the cost and complexity of creating the integrated enterprise3. BEA is helping manufacturing companies to cut costs because in this competitive global environment, keeping costs low either makes or breaks a company.
Information Systems in Business
Manufacturing is the processing of raw materials into physical products. Manufacturing encompasses customers and personnel, purchasing and warehousing raw materials and running production and assembly lines. The most important IT achievement in manufacturing is improved agility, which is a company¡¦s ability to adjust its manufacturing process in real time to meet both market and manufacturing demands1.
IT has helped manufacturing in many ways including:
„« Scheduling plant activities, optimizing and combined use of all resource: machines personnel, tooling, and raw and interim materials.
„« Planning material requirements based on current and forecasted demand.
„« Reallocating material rapidly from one order to another, to satisfy due dates.
„« Letting users manage inventories in real time, taking into consideration demand and the responsiveness of all work centers.
„« Grouping work orders by ¡§characteristics¡¨ of items ordered, such as color and width of products.
„« Considering the qualifications of each resource (such as qualified labor, set-up crews, and specialized tools) to accomplish its task1.
Most businesses use computers for various functions, but as technology is becoming more and more important for business, it is still going away because of our economy. Douglas Whiting found an article talking about how PC makers are losing sales during the first quarter of this year because the public sector is declining their spending (specifically the government and educational institutions)6. While companies are trying to come out with innovative and new technologies, sales may not increase like they hope, but our economy will bounce back from this and then we will need these new technologies to just keep up.
This figure1 shows how manufacturing and inventory control information systems help reduce cycle times and the cost of maintaining inventory. Inventory control, other wise know as materials requirement planning (MRP) has received the greatest improvement. MRP is based on future need, calculated by MRP software from demand forecasts. A second type of inventory control is manufacturing resource planning (MRP II). MRP combines MRP and other manufacturing-related activities to plan the entire manufacturing process, not just inventory. The most important input of MRP II systems is the master production schedule (MPS), which specifies how production capacity will be used to meet customer demands and maintain inventories1.
Some companies have gained strategic advantage by linking their systems to their suppliers¡¦ systems. One example is Cisco systems, which has linked their ISs through the Internet to the ISs of its suppliers and can track orders. ¡§Over 80 percent of what Cisco orders never passes through the company¡¦s facilities; the manufacturers ship the products directly to Cisco¡¦s clients1¡¨. Manufacturing execution systems (MES¡¦s) are a third system that manufacturing companies use. Their purpose is to track, schedule, and control manufacturing processes. These systems collect data such as the number of hours the machine operates every day of the month, the number of hours the machine lies idle, and the reasons.
IS Development and Planning
An opportunity, problem, or directive can trigger the development of a new IS. An opportunity means a potential increase in revenue, reduction of costs, or gain in competitive advantage that can be achieved using an IS. A problem is any undesired situation. A directive is an order to take a certain action. There are certain phases to be followed and completed for the new IS to be successful. After planning, analysis, design, implementation, and support follow. First, analysis of the company¡¦s needs; second, the technical, operational, and economic feasibility of the project needs to be assessed; and third, the system requirements definition needs to be written up. After this, designs are made up so the making of the system can begin. After this, it is tested and then implemented.
Development and planning usually come with a new idea, which usually helps a company become more successful, but does it always need to be a new idea? An article discussed in the online discussion talks about a company that has decided that their new idea is to stick with what they have been already doing. Eastman Chemical is sticking with Commerce One because they trust Commerce One, they have always kept their risks to a minimum, and Eastman knows that Commerce One is continually coming up with better systems10. So maybe sticking with old may provide to be the best new idea for a company.
Decision Support Systems
The success of an organization largely depends on the quality of the decision that its managers make. Three steps are followed while making decisions: intelligence, design, and choice. The intelligence phase consists of collecting facts, beliefs, and ideas. For the design phase, the method by which the data is considered is designed. The choice phase consists of making a choice after the alternatives have been reduced. During the decision-making process, problems occur. These problems are classified in three ways: structured, semi structured, and unstructured. Structured problems involve optimal solutions that can be reached through a single set of steps. Unstructured problems are ones for which there is no algorithm (sequence of steps) to follow to reach an optimal solution. A semi-structured problem is one that is neither fully structured nor totally unstructured. Managers in manufacturing have to solve semi-structured problems such as ¡§which supplier should we use to receive the best price for purchased raw materials while guaranteeing on-time delivery1¡¨?
Decision support systems and group decision support systems are becoming increasing popular due to diseases, virus, and other unknown health risks in our world today. Again, Kevin King found a great article that discusses a company that has developed an on-line decision support tool that is like a GDSS so companies and their employees can meet over the internet to perform design reviews2. This new way saves employees from having to travel to offshore manufacturing facilities so their health is not put to risk. One reason this idea came about was because SARS, and while SARS is a horrible virus, it has prompted this company to take some actions and develop a different system of planning and such without having to risk their employees¡¦ lives.
Strategic Uses of IT
Strategic information systems help manufacturers identify opportunities that will give them competitive advantages. A for-profit company achieves competitive advantage when its profits increase significantly, most commonly through increased market share. Eight initiatives that can be used to gain competitive advantage are reduce costs, raise barriers to market entrants, establish high switching cost, create new products or services, differentiate products or services, enhance products or services, establish alliances, and lock in suppliers or buyers. Dell was the first PC manufacturer to use the Web to take customer orders1. Therefore, it gained a competitive advantage for being the first to do that, which is the key to gaining the upper hand.
An article found by Kevin King talks about Saturn and how they have embedded chips into their cars that contain technical records about the car and the owner. While this idea is a great concept and has given Saturn some strategic advantage, there is one common concern with it: privacy. This chip also monitors details about the cars operation and can be accesses in the event of a car crash1. So, is this the right way to go about gaining an advantage, or is just going to break the company? This chip does seem to invade one¡¦s privacy, but it can also prove very useful in car accidents or in ways to improve a car. This privacy issue will always be around no matter what the idea or concept, but it is how the issue is handled that determines the company¡¦s success.
Most other industries and companies could not survive without manufacturing. Manufacturers produce products and services that other companies use to keep their business thriving. For instance, IBM produces computers that are used in most other companies to maintain their records, write memos, create and maintain web sites, etc. Some industries have ties to other industries that make each thing they due essential to the success of their company and their contribution to our economy. In order for companies to survive today, they need to be current with technological advances because they are going to keep happening and it is what will make this world different and better in the years to come.
1) ¡§Are you riding on a black box?¡¨ 2003. http://www.seniormag.Com/headlines/ blackboxcars.htm
2) Barry, Katherine. ¡§Framework Technologies Offers Rapidly Deployable and Cost-Effective Product Package in Response to Customers¡¦ Business Travel Restrictions¡¨. April 2003. http://www.prnewsire.com
3) ¡§BEA Lowers the Cost of Enterprise Integration with New Adapters and Portlets¡¨. August 2002. http://java.sun.com/industry/news/story/47418.do
4) http://biz.yahoo.com/ap/030209/elctric_internet_1.html. Could not get any other information.
5) Keizer, Gregg. ¡§Warning: Tough Year Ahead for IT Security¡¨. December 2002. http://www,internetweek.com/story/showARticle.jhtml?articleID=6400856
6) La Monica, Paul. ¡§More bad news for PC makers¡¨. March 2003. http://money.cnn.com/2003/03/13/technology/idc/index.htm
7) Lillich, Mike. ¡§GM designs digital future for its cars¡Xand future employees¡¨. September 2002. http://news.uns.purdue.edu/UNS/html13month/020926. Connolly.digital.html
8) Orzech, Dan. ¡§Can EDI Survive XML Challenge?¡¨ July 2002. http://www.aspnews.com/news/print/0,,4191_1381531,00.html
9) Oz, Effy. Management Information Systems, 3rd Ed., Thompson Learning Course Technology. 2003.
10) ¡§Why Eastman Chemical is Sticking with Commerce One¡¨. 2002. http://www.internetweek.com/shared/printableArticle.jhtml?articleID+8100076
¡§Are you riding on a black box?¡¨ 2003. http://www.seniormag.Com/headlines/ blackboxcars.htm
Barry, Katherine. ¡§Framework Technologies Offers Rapidly Deployable and Cost-Effective Product Package in Response to Customers¡¦ Business Travel Restrictions¡¨. April 2003. http://www.prnewsire.com
¡§BEA Lowers the Cost of Enterprise Integration with New Adapters and Portlets¡¨. August 2002. http://java.sun.com/industry/news/story/47418.do
http://biz.yahoo.com/ap/030209/elctric_internet_1.html. Could not get any other information.
Keizer, Gregg. ¡§Warning: Tough Year Ahead for IT Security¡¨. December 2002. http://www,internetweek.com/story/showARticle.jhtml?articleID=6400856
La Monica, Paul. ¡§More bad news for PC makers¡¨. March 2003. http://money.cnn.com/2003/03/13/technology/idc/index.htm
Lillich, Mike. ¡§GM designs digital future for its cars¡Xand future employees¡¨. September 2002. http://news.uns.purdue.edu/UNS/html13month/020926. Connolly.digital.html
Orzech, Dan. ¡§Can EDI Survive XML Challenge?¡¨ July 2002. http://www.aspnews.com/news/print/0,,4191_1381531,00.html
Oz, Effy. Management Information Systems, 3rd Ed., Thompson Learning Course Technology. 2003.
University of Colorado at Denver Online. ISMG 3000. Online discussions. Spring 2003.
¡§Why Eastman Chemical is Sticking with Commerce One¡¨. 2002. http://www.internetweek.com/shared/printableArticle.jhtml?articleID+8100076
Wreglesworth, Paul. ¡§Automotive Suppliers benefit from EDI at Nissan¡¨. 2002. http://www.edi.wales.org/cstudie4.htm