Introduction to MIS 1

Copyright 1998-2002 by Jerry Post

Introduction to MIS

Introduction to MIS 2
Outline
How do you process the data from transactions and integrate the
operations of the organization?
How do you efficiently collect transaction data?
What are the major elements and risks of a transaction?
Why are transactions more difficult in an international environment?
How do you track and compare the financial information of a firm?
What are the transaction elements in the human resources
management system?
Can a company become more efficient and productive?
How do businesses combine data from operations?
How do you combine data across functional areas, including production,
purchasing, marketing, and accounting?
How do you make production more efficient?
How do you keep track of all customer interactions? Who are your best
customers?
How can a manager handle all of the data in an ERP system?
How does the CEO know that financial records are correct?
Introduction to MIS 3
Transactions and Integration
Central Computer
Sales Reports
POS
Cash
Registers
Customers
EDI
Supplier
Bank
Process Control
Additional
Stores
Strategy
Tactics
Operations
Warehouse
Inventory
Management
CEO Information
Introduction to MIS 4
Data Capture
Collecting transaction data at the point of sale ensures accurate data,
speeds transactions, and provides up-to-the-minute data to managers.
Sales
Process Control
Banking and Finance
Workers
Introduction to MIS 5
Radio Frequency Identification (RFID)
Scanner from: http://www.rfidinc.com

C
B

E
antenna
Capacitor:
collected energy
Transistors:
data
RFID tag
RFID reader
Radio/microwaves
Data:
Alter the waves
Introduction to MIS 6
Process Control
Various Production machines: lathe, press, dryer, . ..
Control Terminal
Production data:
Quantity
Quality
Time
Machine status
Control settings
and commands
Introduction to MIS 7
Electronic Data Interchange
The price of paper
$30 to $40 for each purchase order
$24 to $28 for suppliers to handle
EDI
$12 for orders
0.32 for suppliers
Proprietary EDI
Commercial providers and standards
Introduction to MIS 8
EDI: Proprietary
Supplier
Customer 1
Queries &
Orders
Invoices &
confirmation
Order
Database
& Accounts
Customer 2
Firms must support multiple data
formats and sometimes different
computers for each contact.
Production
Database
& Accounts
Convert
Convert
Introduction to MIS 10
EDI Standards
Message
Segment
Composite Data Element
Data Element
Code Lists
UN Edifact
US ANSI X12
Segments for each area
Detail data formats
Introduction to MIS 11
ANSI X12 Segments
Partial List of
segments
Detailed
specifications for
each segment
Data needed
Format
104 - Air Shipment Information
110 - Air Freight Details and Invoice
125 - Multilevel Railcar Load Details
126 - Vehicle Application Advice
127 - Vehicle Buying Order
128 - Dealer Information
129 - Vehicle Carrier Rate Update
130 - Student Educational Record (Transcript)
131 - Student Educational Record (Transcript) Acknowledgment
135 - Student Loan Application
139 - Student Loan Guarantee Result
140 - Product Registration
141 - Product Service Claim Response
142 - Product Service Claim
143 - Product Service Notification
144 - Student Loan Transfer and Status Verification
146 - Request for Student Educational Record (Transcript)
147 - Response to Request for Student Ed. Record (Transcript)
148 - Report of Injury or Illness
Introduction to MIS 12
EDI On The Internet
The Internet
Advantages
Low cost.
Anyone can connect.
Worldwide reach.
Many tools and standards.
Edifact Message
Introduction to MIS 14
Transaction Risks
Vendor
Customer
Government
1. Receive payment.
2. Legitimate payment.
3. Customer not
repudiate sale.
4. Government not
invalidate sale.
1. Receive product.
2. Charged only as agreed.
3. Seller not repudiate sale.
4. Legal transaction.
1. Transaction record.
2. Tax records.
3. Identify fraud.
4. Track money for other
cases (drugs).
Credit card company
accepts risks for a fee.
Introduction to MIS 15
Security and Trust
Security
Each transmission is
encrypted.
Prevent interception.
Keys generated by
certificate authority (e.g.,
Verisign).
Security on individual
servers is the responsibility
of vendor.
There have been some
thefts of data (e.g., credit-
card numbers.)
Vendor is motivated to
secure the server.
Commercial software exists
to provide secure sites.
Trust
Is the vendor legitimate?
Consider: Internet gambling.
What if offshore vendor
refuses to pay off a bet?
As long as Internet
gambling is illegal (in the
U.S.) consumer has no
recourse.
Otherwise, use credit cards
and rely on banks.
Secure certificates.
Is the customer legitimate?
Rely on credit card data.
Some vendors will ship only
to billing address.
Certificate authority.
Introduction to MIS 16
International Transaction
Issues
http://worldwind.arc.nasa.gov
Shipping
Currencies
Languages
Customs and tariffs
Jurisdiction for disputes
Different laws and
systems
Verify seller and
purchaser
Payment methods
Introduction to MIS 17
Accounting
Financial data and reports
What do things really cost?
The accounting cycle
Inventory
Checks and balances
Double-entry
Separation of duties
Audit trails
Introduction to MIS 18
Accounting
Suppliers
Customers
Management
Shareholders
Banks
and
Creditors
Departments
& Employees
Sales &
Accounts
Receivable
Produce
Management
Accounting
Reports
Produce
Shareholder
Reports
Sales & Receivables
Inventory Changes
Purchases &
Payables
Loans & Notes
Expenses
Equity
Shareholder
Reports
Management
Reports
Product
Inventory
Orders &
Accounts
Payable
Inventory
Management,
& Fixed Asset
& Cost Acct.
Payroll &
Employee
Benefits
Cash
Management,
Investments,
Foreign
Exchange
Supply &
In-process
Inventory
Governments
Tax
Filing &
Planning
Strategic
& Tactical
Planning
Inventory Changes
Payables
Capital Acct
Sales Tax
Tax Filings
Tax data
Receivables
Inventory &
Assets
Payroll
Planning Reports
Planning
Data
Introduction to MIS 19
Accounting Software
General Ledger
Sample chart of accounts
Automatic posting
Automatic entry of vendors
Fiscal years
Keep past data books open
Post to prior years
Allocate department expenses
Accounts Receivable
Automatic early discounts
Interest on late payments
Multiple shipping addresses
Sales tax
Automatic reminder notices
Automatic monthly fees
Keep monthly details
Accounts payable
Check reconciliation
Automatic recurring entries
Monitor payment discounts
Select bills from screen
Pay by item, not just total bill
General Features
Printer support
Use of preprinted forms
Custom reports
Custom queries
Security controls
Technical support costs
Introduction to MIS 20
The Role of Accounting
Transaction Data
Journal entriesdouble entry: money and categories
General ledgersummary data by categories
Information is defined by the chart of accounts
Purchases, Sales, Loans, and Investments
Inventory Control
Process and Controls
Double-Entry Systems
Separation of Duties
Audit Trails
Exception reports
Introduction to MIS 21
Human Resources Management
Management
Managers
Employees
Customers
Government
Process
Payroll
Benefits
Vacation
Compile
Merit
Evaluations
& Salary
Changes
Job
Applicants
Produce
Management
Employee
Reports
Screen
Jobs &
Applications
Produce
Government
Reports
Employee Data
Files
Employee
Data
Evaluations
Salary
Merit &
Salary
Sales Data &
Commission
Employee
Data
Merit
Applicant
Data
Employee
Summaries
Job &
Applicant
Data
EEO
Data
Government
Reports
Management
Reports
Introduction to MIS 22
Production
Information
System
Production Management
Bill of Materials
Crank UL6500
Pedals LK3500
Stem UL6600
Saddle Selle

Purchase
Orders
Customer Order
Shipping
Receiving
Production
and Assembly
Quality
Quality
Quality
Suppliers
Customers
Introduction to MIS 23
Production Management Issues
factories
Customers
or stores
Multiple factories produce many
items that need to be distributed to
multiple stores.
How do you schedule
efficient production?

How do you ensure the
right products go to the
right locations?
Ask Gitano Jeans
in the 1980s
Introduction to MIS 24
Distribution Center
Factories
Customer
or stores
Split the mass production shipments into
smaller units and distribute to stores
immediatelywithout holding inventory.
Need to match orders exactly, and carefully
schedule arrival time of shipments.
Introduction to MIS 25
Integrated Report Example
Production
Plant Quantity Quality Costs Prior Month
Boise 260,721 9.6 $41,222,697 219,961
Decatur 171,371 8.75 $31,094,809 188,862
Yaounde 314,856 9.4 $29,119,967 406,859
746,948 9.25 $101,437,473 815,682
Wtd. Avg. 135.80
Sales
Region Quantity Avg.Price Sales Prior Sales Wtd. Cost Net
US East 225,091 $289.17 $65,965,373 $53,533,640 30,567,941 $35,397,432
US West 204,725 $273.20 $56,217,470 $42,018,759 27,802,185 $28,415,285
Canada 65,763 $192.00 $12,561,225 $12,327,456 8,930,786 $3,630,439
South America 67,495 $133.50 $9,013,737 $11,281,515 9,165,996 ($152,259)
Other 47,313 $169.00 $7,991,533 $8,120,900 6,425,228 $1,566,305
610,387 $211.37 $151,749,338 $127,282,270 82,892,136 $68,857,202
Sales
$0
$10,000,000
$20,000,000
$30,000,000
$40,000,000
$50,000,000
$60,000,000
$70,000,000
US East US West Canada South America Other
$0
$5,000,000
$10,000,000
$15,000,000
$20,000,000
$25,000,000
$30,000,000
$35,000,000
$40,000,000
Sales
Prior Sales
Net
Introduction to MIS 27
Changes
sales
data
3 reports
(printed)
weekly reports
1970s
Sales
Terminals
Sales
Terminals
Central
computer:
create reports
Manager:
Integrate, graph
analyze
Secretary:
type & revise
Management
sales
data
3 reports
(printed)
weekly reports
1980s
Sales
Terminals
Sales
Terminals
Central
computer:
create reports
Manager:
Integrate, graph
analyze
Management
personal computer
sales
data
1990s
Sales
Terminals
Sales
Terminals
DBMS:
On-line data
Personal Computer
Weekly reports &
ad hoc queries
(applications)
Management
query
data
Introduction to MIS 28
Integration in 2000s
sales
data
Sales
Terminals
Sales
Terminals
DBMS
Executive Information
System
Personal Computer
Or PDA
Or Browser
Management
query
data
Suppliers
Banks
Production/
Service
Enterprise Resource
Planning
Introduction to MIS 29
ERP Integration
Database
Headquarters
(England)
Database
Subsidiary
(Spain)
Financial data
General ledger
Payroll

Manufacturing
Product details
Inventory

Use inventory item.
Deduct quantity.
Update inventory value.
Check for reorder point.
Order new item through EDI.
Update Accounts payable.
Project cost report.
Daily production report.
Weekly financial status.
Cash flow.
Budget versus actual cost.
Introduction to MIS 30
ERP Primary Functions
Accounting
All transaction data and all financial statements in any
currency
Finance
Portfolio management and financial projections
Human Resources Management
Employee tracking from application to release
Production Management
Product design and manufacturing lifecycle
Logistics/Supply Chain Management
Purchasing, quality control, tracking
Customer Relationship Management
Contacts, orders, shipments
Introduction to MIS 31
Enterprise Resource Planning
Integrated systems
Examples
SAP
PeopleSoft
Oracle Financials
Basic features included
Accounting
Purchasing
HRM
Investment management
International environment
Multiple currencies
Multiple languages
Procedures and practices
Follows local (national) rules
Follows consolidation rules
Example
U.S. firm with European
subsidiaries.
Data is entered once
European reports are
generated for subsidiaries
following local rules
Results are converted and
consolidated to U.S. firm
following international and
U.S. rules
Introduction to MIS 32
Supply Chain Management
Vendors Customers
Design &
Engineering
Marketing
Distribution
Manufacturing
Purchasing
Administration & Management
HRM Accounting Finance MIS
Just-in-Time
Quality control
& Custom orders
Quick
Response
Designs and Quality
Mass
Customization
Demand-pull
Design feasibility
& production costs
product planning
partnerships
& joint
development
partnerships
& joint
development
planning
& monitoring
planning
& monitoring
Introduction to MIS 34
Supply Chain: Purchasing
Introduction to MIS 35
Customer Relationship Management
Multiple Contact Points
The goal is to provide a single, integrated view of all customer
activity, available to all employees who interact with the
customer.
Feedback, Individual Needs, and Cross Selling
Having better information enables workers to provide better
service, meet the individual needs of each customer.

Introduction to MIS 36
CRM: Sales Management
Introduction to MIS 38
PeopleSoft CRM: Customer Perspective
Introduction to MIS 40
Executive IS
Production
Distribution
Sales
Central Management
Executives
Data
Data
Sales
Production Costs
Distribution Costs
Fixed Costs
Production Costs
South
North
Overseas
0
500
1000
1500
2000
2500
3000
3500
4000
4500
5000
1993 1994 1995 1996
South
North
Overseas
Production: North
Item# 1995 1994
1234 542.1 442.3
2938 631.3 153.5
7319 753.1 623.8
Data
Data
Introduction to MIS 41
Audits and Sarbanes-Oxley
Financial
Statements
Bank
Cash
Inventory
Sales
Customer
Inventory
Some financial numbers
are tied to the outside
world.
Validate these to anchor
the statements.