management information systems, 3 rd edition effy oz 1 chapter 11 edi, supply chain management, and...

Management Information Systems, 3rd EditionEffy Oz

1

Chapter 11EDI, Supply Chain Management, and Global Information Systems


2

Learning Objectives• When you finish this chapter, you will:

– Understand the importance of interorganizational and international ISs.

– Recognize the role EDI plays in saving costs in business operations.

– Be able to describe the vertical and horizontal information integration among companies.

– List the legal, cultural, and other challenges to implementing informational exchange systems.


3

Sharing Information Systems

• Interorganizational Information Systems– Systems shared by two or more organizations

• Built and owned by one organization

• Increases efficiency and effectiveness

• Organizations use similar systems to serve

international sites


4

Vertical Information Exchange

• Vertically related– Output of one organization used in processes of

another – Integrating ISs between vertically related

organizations highly beneficial• Saves time and money

• Better serves customers


5

Vertical Information Interchange

Figure 11.1 Vertical relationships among organizations


6

Electronic Data Interchange

• What is EDI?– Exchange of electronic data using

interorganizational information systems

– Set of hardware, software, and standards that accommodate the EDI process


7


• Benefits of EDI

– Cost Savings– Speed– Accuracy– Security– System Integration– Just-in-time Support


8

Figure 11.3 Benefits of EDI



9


Figure 11.4 Suppliers, manufacturers, and retailers cooperate in some of the most successful applications of EDI.


10

Electronic Data Exchange

• How does EDI work?– Supplier’s proposal sent electronically to

purchasing organization.– Electronic contract approved over network.– Supplier manufactures and packages goods,

attaching shipping data recorded on a bar code.– Quantities shipped and prices entered in system

and flowed to invoicing program; invoices transmitted to purchasing organization.


11

Electronic Data Exchange

– Manufacturer ships order.– Purchasing organization receives packages,

scans bar code, and compares data to invoices actual items received.

– Payment approval transferred electronically.– Bank transfers funds from purchaser to

supplier’s account using electronic fund transfer (EFT).


12


Figure 11.5How EDI works


13

Electronic Data Interchange• EDI Standards

– EDI requires companies to agree on standards• Compatible hardware and software

• Agreed upon electronic form format

– Established EDI standards• Automotive Industry Action Group (AIAG)

• X.12 de facto umbrella standard in U.S. and Canada

• EDI for Administration, Commerce, and Trade (EDIFACT) umbrella of standards in Europe


14


• How to Subscribe to EDI– Larger companies purchase hardware and

software– Medium and small companies seek third-party

service• Value-added networking (VAN)

• Managed network services available for a fee


15


• EDI on the Web– Advantages of Web EDI

• Lower cost

• More familiar software

• Worldwide connectivity

– Disadvantages of Web EDI• Low speed

• Poor security


16


• Legal Problems of EDI– Increased risk of unauthorized interception– Contractual responsibility for incomplete or

corrupted telecommunications– Questionable validity of digital contracts – Protection against the ease of collaborative

pricing and other activities that may violate antitrust laws


17


• The Importance of EDI– Need for timely, reliable data exchange in

response to rapidly changing markets– Emergence of standards and guidelines– Spread of information into many organizational

units– Greater reliability of information technology– Globalization of organizations


18

Horizontal Information Interchange

• Horizontal Information Interchange– Organizations performing similar activities

share information• Real estate agencies maintain multiple listing

service

• Financial institutions share financial information

• Airlines share reservation systems

– Legal implications and risks similar to those of EDI


19

Horizontal Information Interchange

Figure 11.2 Horizontal information interchange


20

International and Multinational Organizations

• Multinational organizations need integrated ISs– Flow of information across borders

essential– Managers increasing attention to

international IS integration– Some large companies build their own

international ISs


21

Figure 11.8 The importance of international integration to companies with international operations

International and Multinational Organizations


22

Using the Web for International Commerce

• International Web Commerce Benefits– Increased revenues

• Increased international Web participation

• Potential Web participation

– Cost savings• Printing and shipping costs

• Customer service costs


23

Challenges to Global Information Systems

• Technological Challenges– Non-uniform information infrastructures

• Payment Mechanisms– Non-uniform preferred payment method


24


• Language Differences– Translation delays– Laws forbid foreign language accounting and

other systems

• Cultural Differences– Cultural imperialism


25


• Economic, Scientific, and Security Interests– Government restriction on sharing sensitive

information

– Varying treatment of trade secrets, patents, and copyrights

• Political Challenges– Fear that access to information threatens sovereignty

– Government pressure to buy only national software


26


• Standards– Varying standards for date format, measurements,

etc.

• Legal Barriers to International Data Transfer– Incompatible data privacy laws in U.S. and

Europe


27

Ethical and Societal IssuesThe Electronic Immigrant

• Electronic Immigrant – Telecommutes to company in another country

• Competes with local workers in foreign countries• Often can work for less

– Drawbacks• Reduced government control of foreign labor• Pockets of unemployment in host country

– Advantages• Ultimately benefits consumer by lowering costs• Helps limit ‘physical immigration’• Satisfies unmet demand for developers

management information systems, 3 rd edition effy oz 1 chapter 11 edi, supply chain management, and...

Documents