management information systema & dss-unit-v

8/2/2019 Management Information Systema & Dss-unit-V

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MANAGEMENT INFORMATION

SYSTEMA & DSS

UNIT-V


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Strategic Information Systems for

Competitive Advantage

Key features of the Strategic ISs are the following:

Decision support systems that enable to develop astrategic approach to align IS or IS with an organization'sbusiness strategies

Primarily Enterprise resource planning solutions that

integrate/ link the business processes to meet theenterprise objectives for the optimization of the enterpriseresources

Database systems with the "data mining" capabilities tomake the best use of available corporate information formarketing, production, promotion and innovation. The SISalso facilitate identification of the data collection strategies tohelp optimize database marketing opportunities.

The real-time ISs that intend to maintain a rapid-response

and the quality indicators.


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Elements of Strategic Management

1. Long Range Planning

2. Response Management

3. Proactive Innovation


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The Role of IS in Business Innovation

IS creates applications that provide strategic advantagesto companies

IS is a competitive weapon

IS supports strategic change, e.g, re-engineering

IS networks with business partners

IS provides cost reduction

IS provides competitive business intelligence


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Competitive Intelligence

The Internetis central tosupportingcompetitiveintelligence

Such activities drivebusiness

performance by:Increasing marketknowledge

Improving internal

relationships

Raising the quality ofstrategic planning

Many

companiesmonitor theactivities ofcompetitors


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Strategic Information systems at Rosenbluthdefending

against business pressures and competition,

(resource: Turban et al, 2006, p. 93)


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An SIS is characterized by its ability to significantlychange the manner in which business is conducted,

in order to give the firm strategic advantage. An SIScannot be classified by organizational structure,

functional area, or support system as described inthe previous chapter. Any information systemEIS,OIS, TPS, KMSthat changes the goals, processes,products, or environmental relationships to help an

organization gain a competitive advantage or reducea competitive disadvantage is a strategic informationsystem.


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It changes industry structure and alters the rules ofcompetition...

by increasing the power of buyers,

raising barriers to entry and

influencing the threat of substitution

It creates competitive advantage by giving

companies new ways to out-perform their rivals... lowering costs,

enhancing differentiation and

changing competitive scope

HOW IT/IS AFFECTS

THE NATURE OF COMPETITION


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It spawns whole new businesses, often from within acompany's own operations... by making

new businesses technologically feasible

creating derived demand for new products and

creating new businesses within old ones.

HOW IT/IS AFFECTS

THE NATURE OF COMPETITION


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PORTERS Value Chain Model

Value chain analysis describes the activities within andaround an organization, and relates them to an

analysis of the competitive strength of the organization.Therefore, it evaluates which value each particularactivity adds to the organizations products or services.


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Porters Value Chain Model

Porter distinguishes between primary activities and supportactivities. Primary activities are directly concerned with thecreation or delivery of a product or service. They can begrouped into five main areas: inbound logistics,

operations, outbound logistics, marketing and sales,and service. Each of these primary activities is linked tosupport activities which help to improve their effectivenessor efficiency.

There are four main areas of support activities:

procurement, technology development (including R&D),human resource management, and infrastructure

(systems for planning, finance, quality, information

management etc.).


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The term Margin implies that organizations realize a

profit margin that depends on their ability to manage

the linkages between all activities in the value chain.In other words, the organization is able to deliver aproduct / service for which the customer is willing topay more than the sum of the costs of all activities in

the value chain.


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Porters Value Chain Model

In most industries, it is rather unusual that a singlecompany performs all activities from product design,production of components, and final assembly to

delivery to the final user by itself.

Most often, organizations are elements of a valuesystem or supply chain. Hence, value chain analysis

should cover the whole value system in which theorganization operates.


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A typical value chain analysis can be performed in thefollowing steps:

Analysis of own value chain which costs are relatedto every single activity

Analysis of customers value chains how does ourproduct fit into their value chain

Identification of potential cost advantages in

comparison with competitors

Identification of potential value added for thecustomer how can our product add value to thecustomers value chain (e.g. lower costs or higherperformance) where does the customer see suchpotential


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How Enterprise Systems Work

Enterprise systems feature a set of integrated software modules and a central databasethat enables data to be shared by many different business processes and functionalareas throughout the enterprise.

ACHIEVING Operational Excellence and CustomerIntimacy: Enterprise Applications


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Management Information Systems

Supply chain Management is a set of approachesutilized to efficiently integrate suppliers,manufacturers, warehouses, and so that merchandise

is produced and distributed at the right quantities, tothe right locations, and at the right rimes, in order tominimize system wide costs while satisfying servicelevel requirements.

SUPPLY CHAIN MANAGEMENT SYSTEMS

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Supply chain: Network of organizations and processes for:

Procuring raw materials

Transforming them into products

Distributing the products

Upstream supply chain: Firms suppliers, suppliers suppliers, processes for managing

relationships with them

Downstream supply chain: Organizations and processes responsible for delivering

products to customers


Prentice Hall 201119


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Nikes Supply Chain

This figure illustrates the major entities in Nikes supply chain and the flow of information upstream and

downstream to coordinate the activities involved in buying, making, and moving a product. Shown here isa simplified supply chain, with the upstream portion focusing only on the suppliers for sneakers andsneaker soles.



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Management Information SystemsSUPPLY CHAIN MANAGEMENT SYSTEMS

THE BULLWHIP EFFECT

Inaccurate information can cause minor fluctuations in demand for a product to be amplified asone moves further back in the supply chain. Minor fluctuations in retail sales for a product cancreate excess inventory for distributors, manufacturers, and suppliers.

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Push- Versus Pull-Based Supply Chain Models

The difference between push- and pull-based models is summarized by the sloganMake what we sell, not sell what we make.


Traditional supply chain strategies are often categorized as push or pullstrategies. Probably. this stems from the manufacturing revolution or ihe I 9&)s.in which manufacuring systems were divided into these categories.

Push. Based supply chain : In a push-based supply chain, production anddistribution decisions are based on long term forecasts. Typically. themanufacturer bases demand forecasts on orders received from the retailer's

warehouses. It therefore takes much longer for a push-bused supply chain toreact to the changing marketplace. which can lead to. The inability to meet changing demand patterns.. The obsolescence or supply chain inventory as demand ror certain productsdisappears.In addition, we saw in Chapter 4 that the variability of orders recciscd from the

retailers and the warehouses is much larger than the variabiliy in customerdemand. due to the bullwhip effect. This increase in variability leads to. Excessive inventories due to the need for large safely stocks (see chapter 3).. Larger and more ariabte production batches.. Unacceptable service levcls. Prxduct obsolcscence.


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Push- Versus Pull-Based Supply Chain Models

The difference between push- and pull-based models is summarized by the sloganMake what we sell, not sell what we make.



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Business value of SCM systems Match supply to demand

Reduce inventory levels

Improve delivery service Speed product time to market

Use assets more effectively

Reduced supply chain costs lead to increased

profitability

Increased sales



f


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Management Information SystemsSUPPLY CHAIN MANAGEMENT SYSTEMS

THE FUTUREINTERNET-DRIVEN

SUPPLY CHAIN

The futureInternet-drivensupply chainoperates like a

digital logisticsnervous system. Itprovidesmultidirectionalcommunicationamong firms,

networks of firms,and e-marketplaces sothat entirenetworks of supplychain partners can

immediately adjustinventories orders Prentice Hall 201125

M I f i S


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CRM integratespeople, process. and technology to

maximize relationships with all customers. CRM is acomprehensive approach that provides seamless

coordination between all customer-facing functions.CRM increasinglyleverages the Internet.

CUSTOMER RELATIONSHIP MANAGEMENT SYSTEM

M t I f ti S t


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Knowing the customer In large businesses, too many customers and too many

ways customers interact with firm

Customer relationship management (CRM) systems

Capture and integrate customer data from all over theorganization

Consolidate and analyze customer data

Distribute customer information to various systemsand customer touch points across enterprise

Provide single enterprise view of customers

Customer Relationship Management Systems


M t I f ti S t


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Management Information SystemsCustomer Relationship Management Systems

CUSTOMERRELATIONSHIPMANAGEMENT (CRM)

CRM systemsexamine customersfrom a multifaceted

perspective. Thesesystems use a set ofintegrated applicationsto address all aspectsof the customerrelationship, including

customer service,sales, and marketing.


M t I f ti S t

C S O O S G S S S


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CRM packages typically include tools for: Sales force automation (SFA)

E.g. sales prospect and contact information, and salesquote generation capabilities

Customer service E.g. assigning and managing customer service requests;

Web-based self-service capabilities

Marketing

E.g. capturing prospect and customer data, schedulingand tracking direct-marketing mailings or e-mail

CUSTOMER RELATIONSHIP MANAGEMENT SYSTEMS


Management Information S stems


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Management Information SystemsCUSTOMER RELATIONSHIP MANAGEMENT SYSTEMS

CRM SOFTWARE

CAPABILITIES

The major CRMsoftwareproducts supportbusiness

processes insales, service,and marketing,integratingcustomerinformation from

many differentsources.Included aresupport for boththe operationaland analytical

aspects of CRM. Prentice Hall 201130




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CUSTOMER LOYALTY MANAGEMENT PROCESS MAP

This process map shows how a best practice for promoting customer loyalty through customerservice would be modeled by customer relationship management software. The CRM softwarehelps firms identify high-value customers for preferential treatment.





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Operational CRM: Customer-facing applications

E.g. sales force automation, call center and customer

service support, and marketing automation

Analytical CRM:

Analyze customer data output from operational CRMapplications

Based on data warehouses populated by operationalCRM systems and customer touch points






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ANALYTICAL CRM DATA WAREHOUSE

Analytical CRM uses a customer data warehouse and tools to analyze customer data collectedfrom the firms customer touch points and from other sources.




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Business value of CRM Increased customer satisfaction

Reduced direct-marketing costs

More effective marketing

Lower costs for customer acquisition/retention

Increased sales revenue

Reduce churn rate

Number of customers who stop using or purchasingproducts or services from a company.

Indicator of growth or decline of firms customer base


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