1 Block 3 Session 2 Continue.. & Session 3 Distribution systems, EDI and the organization: –Major developments over the last 30 years have been achieved in information technology, this is due to the advancement and development of computer systems and improvements and innovations in telecommunications. Networks and distributed system: –In the last decade many organizations have adopted the policy of installing several geographically distinct computers within their organization and linking these with telecommunications. Org. benefits of distributed systems: (P.66,67 Readings) –Increased user satisfaction:- –Flexibility of systems development:- –Lower telecommunication costs. –Fail-soft:- –Trans-border data flows:- –Lower data communications costs:- –Response time:-

2 Block 3 Session 2 Continue.. Electronic data interchange (EDI) –Definition:” The transfer of electronic data, from one organization’s computer system to another’s, the data being structured in a commonly agreed format so that it is directly usable by the receiving organization’s computer system” –The difference between EDI and other electronic communications (Fax, mail, telephone and telex) is that the data can be immediately processed by the receiver’s system without the necessity for human interpretation and translation before action. –The benefits of EDI. P.72 readings. –Case example p.73 “McKesson” pharmaceutical company. The search for opportunity: p. 96 readings –Can IT build barriers to entry? A successful entry barrier offers not only a new product or service that appeals to customers but also features that keep the customers ‘hooked’. The harder the service is to emulate (imitate), the higher the barrier to entry. The complexity of the IT-enabled product caught competitors off guard; it took several years for them to develop a similar product, which gave the initiating company valuable time to establish a significant market position.

3 Block 3 Session 2 Continue.. –Can IT build in switching costs? Ideally, an IT system should be simple for the customer to adopt at the outset, but then, through a series of increasingly complex-yet very valuable-enhancement, the IT system becomes tightly intertwined (tangled) with the customer’s daily routine, which makes it hard to change due to increasing switching cost. –Can IT change the basis of competition? In some industries IT has enabled a firm to fundamentally alter the basis of competition within the industry. This occurs when a firm uses IT to radically change either its cost structure (cost advantage) or its product/service offerings (differentiation advantage). Dramatic cost reduction can significantly alter the old ground rules of competition, enabling companies to find strategic opportunity in the new cost-competitive environment. –Can It change the balance of power in supplier relationship? The development of IT systems that link the manufacturers and suppliers has been a powerful role for IT within the firm. For example, just-in- time inventory systems have dramatically reduced inventory costs and warehouse expenses, while also improving order fulfillment time.

4 Block 3 Session 2 Continue.. –Can IT generate new products? IT can lead to products with higher quality, faster delivery, or less cost. Similarly, at little extra expense, existing products can be tailored to meet a customer’s special needs. Analyzing the value chain for IT opportunities:- –Inbound logistics: In many settings IT has accelerated acquirement of materials, for example, installed hundreds of PCs on supplier premises to enable just-in-time, online ordering. –Operation and product definition: Information systems technologies can also influence a manufacturer’s operations and product offerings, investment in new computer-controlled manufacturing facilities for a product line can slash order response time from 10 weeks to two days. –Outbound logistics: IT can also influence the way services and products are delivered to customers. ATMs, Theatre-ticket and airline-ticket machines, allow cash and services to be rapidly and reliably delivered to customers where they work or shop. –Marketing and sales: In many firms, the sales force has been supplied with a wide range of personal portable technologies that enable firms to collect detailed customer and market data, and then to package and deliver the data back to sales force- and directly to customers.

5 Block 3 Session 2 Continue.. –After-sales service: IT is also revolutionizing after-sales service, like installing online diagnostic devices to identify potential problems before the customer notices a difficulty, thus enabling the services to be done before break-down, reducing repair costs and increasing customer satisfaction. –Human resources: To facilitate important personnel decisions, providing PCs and online access to detailed personnel files helps in taking the right decisions in the right time.

6 Block 3 Session 3 Planning and control of work: The management of capacity. –Plan: is a worked out set of actions and decisions that we will undertake in the future…… it tells the people of the operation how they will meet the volume and variety demands of the users. –Control: obtaining information on the implementation of the plan and comparing progress against its details is the control aspect of managing capacity. –Management of capacity: is the ability of an organization to process the amount of work demanded of it. Capacity planning and control: –The role of forecasting demand: The basic task of capacity planning is to provide the resources necessary to cope with the volume and variety of demands placed by the users of the operation. So it is very crucial to forecast the future patterns of this demand to plan tasks. –Dependant and independent demand: In some cases the demand is known for certain; like, when there is a future order for a firm or an operation is dependant on a certain amount of material, this is called dependant demand. If demand is to be estimated, then it is independent demand.

7 Block 3 Session 3 –The components of demand: Demand patterns usually show a trend and often some elements of seasonality. The trend is the general direction of the demand pattern, which might be for the demand to rise or fall over a given period of time.