Unit-III: Manufacturing and Service Systems

 Unit-III: Manufacturing and Service Systems 

Information systems for Accounting, Finance, Production and Manufacturing, Marketing and HRM functions - IS in hospital, hotel, bank. Enterprise System Enterprise Resources Planning (ERP): Features, selection criteria, merits, issues and challenges in Implementation - 

Supply Chain Management (SCM): Features, Modules in SCM - Customer Relationship Management (CRM): Phases. 

Management Information Systems and Accounting Information System 

We all know the invaluable worth of computers in our daily lives and our work. But did you know computers are also essential to an organization’s decision making? There are computer software and systems that help businesses analyze data in a scientific way to ease the decision-making process. Let us look at two such functions Management Information Systems (MIS) and Accounting Information System. 

Accounting Information System (AIS) 

Like MIS, Accounting Information System (AIS) is also a computer-based system, which an organization uses to take important financial decisions. An AIS will collect, process, analyze and store financial data of a company. And when called upon it will retrieve and report such data to its users, namely accountants, consultants, financial officers CFO, auditors, government tax authorities etc.

There are three basic objectives of an AIS, which are 

● It helps an organization fulfill its statutory obligations of preparing and publishing certain accounting statements and information 

● It analyses financial data and provides reliable and accurate financial information to the users of the AIS 

● Protects a firms accounting data from breach or theft (which can be a significant problem) 

Components of Accounting Information System 

An AIS, like most computer systems, consists of six basic components. Let us take a look. 

● People: These are the users of the AIS. Internal users include accountants and other financial officers o the company. Then there are also users outside the organization, that can be given access to the AIS. Some such external users are auditors, consultants, tax authorities etc. 

● Procedures: These are the procedures the system follows to collect and process data. The database for such a process can be internal (like employee names, sales figures) or external databases (like customer orders, tax slabs etc). The feeding of the data can be both manual as well as automated.

● Data: An AIS mainly deals with all kinds of financial and commercial data. Any data that is pertinent to the accounting of the firm will be input data for an AIS. Care must be taken that the data entered is accurate and complete. Examples of such data include invoices, orders, payroll, bills etc. 

● Software: AIS software performs all the functions of storing, processing, analyzing, retrieving financial data of a 

company. The software can be generalized software that is available in the market (Tally, Oracle etc) or can be 

specialized software created specifically for a particular company and it’s accounting needs. Some of this software has an inbuilt internal control and audit options. They even help in tax management. 

● Hardware: Like any other information system, AIS will also require some hardware components. these can include computers, laptops, servers, printers, scanners, secondary storage hardware etc. 

Financial Management Information Systems (FMIS) 

Financial Management Information Systems (FMIS) support the automation and integration of public financial management processes including budget formulation, execution (e.g. commitment control, cash/debt management, treasury operations), accounting, and reporting. FMIS solutions can significantly improve the efficiency and equity of government operations, and offer a great potential for increasing participation, transparency and accountability. Whenever FMIS and other PFM information systems (for example, e-procurement, payroll, debt management) are linked with a central data warehouse (DW) to record and report all daily financial transactions, offering reliable

consolidated platforms can be referred to as integrated FMIS (or IFMIS). The World Bank is a leading provider of financing and technical assistance for FMIS development. 

PIMS (Production 

Information Management System) 

Also known as a “process information management system,” a PIMS is a client/server application for the acquisition, display, archiving and reporting of information from a wide variety of control, plant and business systems. A critical component in a manufacturing enterprise’s application architecture for creating a common repository of plant information that can be effectively leveraged in enterprise and supply chain management applications.

The Operative Functions of Human Resource Management are as follows: 

1. Recruitment and Selection - Recruitment of candidates is the function preceding the selection, which brings the pool of prospective candidates for the organization so that the management can select the right candidate from this pool. 

2. Job Analysis and Design - Job analysis is the process of describing the nature of a job and specifying the human requirements like qualification, skills, and work

experience to perform that job. Job design aims at outlining and organizing tasks, duties, and responsibilities into a single unit of work for the achievement of certain objectives. 

3. Performance Appraisal - Human resource professionals are required to perform this function to ensure that the performance of employees is at an acceptable level. 

4. Training and Development - This function of human resource management helps employees acquire skills and knowledge to perform their jobs effectively. Training and development programs are organized for both new and existing employees. Employees are prepared for higher-level responsibilities through training and development. 

5. Wage and Salary Administration - Human resource management determines what is to be paid for different types of jobs. Human resource management decides employee's compensation which includes - wage administration, salary administration, incentives, bonuses, fringe benefits, etc,. 

6. Employee Welfare - This function refers to various services, benefits, and facilities that are provided to employees for their well-being. 

7. Maintenance - Human resource is considered an asset for the organization. Employee turnover is not considered good for the organization. Human resource management always tries to keep their best performing employees with the organization. 

8. Labour Relations - This function refers to human resource management interaction with employees represented by a trade union. Employees come together and form a union to obtain more voice in decisions affecting wage, benefits, working conditions, etc,. 

9. Personnel Research - Personnel research is done by human resource management to gather employees' opinions on wages and salaries, promotions, working conditions, welfare activities, leadership, etc,. Such researches help in understanding employee satisfaction, employee turnover, employee termination, etc,. 

10. Personnel Record - This function involves recording, maintaining, and retrieving employee-related information like - application forms, employment history, working hours, earnings, employee absents and presents, employee turnover, and other data related to employees.

ERP is an integrated, real-time, cross-functional enterprise application, an enterprise-wide transaction framework that supports all the internal business processes of a company. 

It supports all core business processes such as sales order processing, inventory management and control, production and distribution planning, and finance. 

Why of ERP? 

ERP is very helpful in the follwoing areas − 

● Business integration and automated data update 

● Linkage between all core business processes and easy flow of integration 

● Flexibility in business operations and more agility to the company ● Better analysis and planning capabilities

● Critical decision-making 

● Competitive advantage 

● Use of latest technologies 

Features of ERP 

The following diagram illustrates the features of ERP − 

Scope of ERP 

● Finance − Financial accounting, Managerial accounting, treasury management, asset management, budget control, costing, and enterprise control. 

● Logistics − Production planning, material management, plant maintenance, project management, events management, etc. 

● Human resource − Personnel management, training and development, etc.

● Supply Chain − Inventory control, purchase and order control, supplier scheduling, planning, etc. 

● Work flow − Integrate the entire organization with the flexible assignment of tasks and responsibility to locations, position, jobs, etc. 

Advantages of ERP 

● Reduction of lead time 

● Reduction of cycle time 

● Better customer satisfaction 

● Increased flexibility, quality, and efficiency 

● Improved information accuracy and decision making capability ● Onetime shipment 

● Improved resource utilization 

● Improve supplier performance 

● Reduced quality costs 

● Quick decision-making 

● Forecasting and optimization 

● Better transparency 

Disadvantage of ERP 

● Expense and time in implementation 

● Difficulty in integration with other system 

● Risk of implementation failure 

● Difficulty in implementation change 

● Risk in using one vendor 

Supply chain management is the systemic, strategic coordination of the traditional business functions and tactics across these business functions - both within a particular

MIS - Supply Chain Management 

company and across businesses within the supply chain- all coordinated to improve the long-term performance of the individual companies and the supply chain as a whole. 

In a traditional manufacturing environment, supply chain management meant managing movement and storage of raw materials, work-in-progress inventory, and finished goods from point of origin to point of consumption. 

It involves managing the network of interconnected smaller business units, networks of channels that take part in producing a merchandise of a service package required by the end users or customers. 

With businesses crossing the barriers of local markets and reaching out to a global scenario, SCM is now defined as − 

Design, planning, execution, control, and monitoring of supply chain activities with the objective of creating net value, building a competitive infrastructure, leveraging worldwide logistics, synchronizing supply with demand and measuring performance globally. 

SCM consists of − 

● operations management 

● logistics 

● procurement 

● information technology 

● integrated business operations 

Objectives of SCM

● To decrease inventory cost by more accurately predicting demand and scheduling production to match it. 

● To reduce overall production cost by streamlining production and by improving information flow. 

● To improve customer satisfaction. 

Features of SCM 

Scope of SCM

SCM Processes 

● Customer Relationship Management 

● Customer Service Management 

● Demand Management 

● Customer Order Fulfillment 

● Manufacturing Flow Management 

● Procurement Management 

● Product Development and Commercialization 

● Returns Management 

Advantages of SCM 

SCM have multi-dimensional advantages −

● To the suppliers − 

○ Help in giving clear-cut instruction 

○ Online data transfer reduce paper work 

● Inventory Economy − 

○ Low cost of handling inventory 

○ Low cost of stock outage by deciding optimum size of replenishment orders 

○ Achieve excellent logistical performance such as just in time 

● Distribution Point − 

○ Satisfied distributor and whole seller ensure that the right products reach the right place at right time 

○ Clear business processes subject to fewer errors 

○ Easy accounting of stock and cost of stock 

● Channel Management − 

○ Reduce total number of transactions required to provide product assortment 

○ Organization is logically capable of performing 

customization requirements 

● Financial management − 

○ Low cost 

○ Realistic analysis 

● Operational performance − 

○ It involves delivery speed and consistency. 

● External customer − 

○ Conformance of product and services to their 

requirements 

○ Competitive prices

○ Quality and reliability 

○ Delivery 

○ After sales services 

● To employees and internal customers − 

○ Teamwork and cooperation 

○ Efficient structure and system 

○ Quality work 

○ Delivery 

MIS - Customer Relationship Management 

CRM is an enterprise application module that manages a company's interactions with current and future customers by organizing and coordinating, sales and marketing, and providing better customer services along with technical support. 

Atul Parvatiyar and Jagdish N. Sheth provide an excellent definition for customer relationship management in their work titled - 'Customer Relationship Management: Emerging Practice, Process, and Discipline' − 

Customer Relationship Management is a comprehensive strategy and process of acquiring, retaining, and partnering with selective customers to create superior value for the company and the customer. It involves the integration of marketing, sales, customer service, and the supply-chain functions of the organization to achieve greater efficiencies and effectiveness in delivering customer value. 

Why CRM? 

● To keep track of all present and future customers. 

● To identify and target the best customers.

● To let the customers know about the existing as well as the new products and services. 

● To provide real-time and personalized services based on the needs and habits of the existing customers. 

● To provide superior service and consistent customer experience. ● To implement a feedback system. 

Scope of CRM 

Advantages of CRM 

● Provides better customer service and increases customer revenues. ● Discovers new customers.

● Cross-sells and up-sells products more effectively. 

● Helps sales staff to close deals faster. 

● Makes call centers more efficient. 

● Simplifies marketing and sales processes. 

Disadvantages of CRM 

● Some times record loss is a major problem. 

● Overhead costs. 

● Giving training to employees is an issue in small organizations.