Part three: Winning Competitive Advantages with IT

1. Case Study: UPS 1. Case Study: UPS 2. The key applications in business 2. The key applications in business 3. Strategic Information systems 3. Strategic Information systems

Case: UPS In late 2000, best known for reliable,efficient package delivery. In late 2000, best known for reliable,efficient package delivery. Delivery 13.6 million packages a day set by 1.8 million shippers to 7 million consignees. Delivery 13.6 million packages a day set by 1.8 million shippers to 7 million consignees. In 1999, its revenue is $27 billions In 1999, its revenue is $27 billions IT/IS in recent decade: IT/IS in recent decade: 1990:.UPS Net 1990:.UPS Net 1993: DIAD(Delivery Information Acquisition Device) 1993: DIAD(Delivery Information Acquisition Device) mid of 1990: API +tracking system mid of 1990: API +tracking system By late 2000: 6 OnLine Tools By late 2000: 6 OnLine Tools Late of 2000: e-commerce, e-logistics+ …… Late of 2000: e-commerce, e-logistics+ ……

Case Study: UPS What are the input, processing, and output of UPS ’ s package tracking system? What are the input, processing, and output of UPS ’ s package tracking system? What technologies are used? How are these technologies related to UPS ’ s business strategy? What would happen if these technologies were not available? What technologies are used? How are these technologies related to UPS ’ s business strategy? What would happen if these technologies were not available? What change in UPS management and organization when they use the package tracking systems? What change in UPS management and organization when they use the package tracking systems?

Case Study: UPS Input: Input: Package information, customer signature, pickup, delivery and timecard data, data location(while on route), and billing and customer clearance document. Package information, customer signature, pickup, delivery and timecard data, data location(while on route), and billing and customer clearance document. Processing: Processing: Mainly,the data is transmitted to a central computer and stored for retrieval. Mainly,the data is transmitted to a central computer and stored for retrieval. Output: Output: Mostly the same data as the input----pickup and delivery time, location while on route, who signed for the package. Mostly the same data as the input----pickup and delivery time, location while on route, who signed for the package.

Case Study: UPS Technologies used include handheld computers with devices to automatically capture shipping information, barcode scanners, telecommunications for transmitting data, cellular phone network, and computer. Technologies used include handheld computers with devices to automatically capture shipping information, barcode scanners, telecommunications for transmitting data, cellular phone network, and computer. The strategy is still the original one: ” best service and lowest rate ”. Technology allows UPS and its customers to always know where a package is. The strategy is still the original one: ” best service and lowest rate ”. Technology allows UPS and its customers to always know where a package is. If the technology were not available, then UPS would, as it has through most of its history, attempt to provide that information to its customers, but at a high price. Note the pressure to reduce process time and cycle time If the technology were not available, then UPS would, as it has through most of its history, attempt to provide that information to its customers, but at a high price. Note the pressure to reduce process time and cycle time

TYPES OF INFORMATION SYSTEMS DATA WORKERS KIND OF SYSTEM GROUPS SERVED STRATEGIC LEVEL SENIOR MANAGERS STRATEGIC LEVEL SENIOR MANAGERS MANAGEMENT LEVEL MIDDLE MANAGERS OPERATIONAL OPERATIONAL LEVEL MANAGERS OPERATIONAL OPERATIONAL LEVEL MANAGERS KNOWLEDGE LEVEL KNOWLEDGE & SALES & MANUFACTURING FINANCE ACCOUNTING HUMAN RESOURCESMARKETING

MAJOR TYPES OF SYSTEMS TRANSACTION PROCESSING SYSTEMS (TPS) TRANSACTION PROCESSING SYSTEMS (TPS) MANAGEMENT INFORMATION SYSTEMS (MIS) MANAGEMENT INFORMATION SYSTEMS (MIS) DECISION SUPPORT SYSTEMS (DSS) DECISION SUPPORT SYSTEMS (DSS) KNOWLEDGE WORK SYSTEMS (KWS) KNOWLEDGE WORK SYSTEMS (KWS) OFFICE AUTOMATION SYSTEMS (OAS) OFFICE AUTOMATION SYSTEMS (OAS) EXECUTIVE SUPPORT SYSTEMS (ESS) EXECUTIVE SUPPORT SYSTEMS (ESS)*

TYPICAL TPS APPLICATIONS Sales & Marketing Systems MAJOR FUNCTIONS OF SYSTEMS: Sales management, market research, promotion, pricing, new products Sales management, market research, promotion, pricing, new products MAJOR APPLICATION SYSTEMS: Sales order info system, market research system, pricing system Sales order info system, market research system, pricing system*

TYPICAL TPS APPLICATIONS Manufacturing & Production Systems MAJOR FUNCTIONS OF SYSTEMS: Scheduling, purchasing, shipping, receiving, engineering, operations Scheduling, purchasing, shipping, receiving, engineering, operations MAJOR APPLICATION SYSTEMS: Materials resource planning systems, purchase order control systems, engineering systems, quality control systems Materials resource planning systems, purchase order control systems, engineering systems, quality control systems*

TYPICAL TPS APPLICATIONS Finance & Accounting Systems MAJOR FUNCTIONS OF SYSTEMS: Budgeting, general ledger, billing, cost accounting Budgeting, general ledger, billing, cost accounting MAJOR APPLICATION SYSTEMS: General ledger, accounts receivable, accounts payable, budgeting, funds management systems General ledger, accounts receivable, accounts payable, budgeting, funds management systems*

TYPICAL TPS APPLICATIONS Human Resources Systems MAJOR FUNCTIONS OF SYSTEMS: Personnel records, benefits, compensation, labor relations, training Personnel records, benefits, compensation, labor relations, training MAJOR APPLICATION SYSTEMS: Payroll, employee records, benefit systems, career path systems, personnel training systems Payroll, employee records, benefit systems, career path systems, personnel training systems*

TYPICAL TPS APPLICATIONS Other Types (e.g., University) MAJOR FUNCTIONS OF SYSTEMS: Admissions, grade records, course records, alumni Admissions, grade records, course records, alumni MAJOR APPLICATION SYSTEMS: Registration system, student transcript system, curriculum class control system, alumni benefactor system Registration system, student transcript system, curriculum class control system, alumni benefactor system*

KNOWLEDGE LEVEL INPUTS: DESIGN SPECS INPUTS: DESIGN SPECS PROCESSING: MODELLING PROCESSING: MODELLING OUTPUTS: DESIGNS, GRAPHICS OUTPUTS: DESIGNS, GRAPHICS USERS: TECHNICAL STAFF USERS: TECHNICAL STAFF EXAMPLE: ENGINEERING WORK STATION KNOWLEDGE WORK SYSTEMS (KWS)

OFFICE AUTOMATION SYSTEMS (OAS) TOWARD A “ PAPERLESS ” OFFICE TOWARD A “ PAPERLESS ” OFFICE REDESIGN OF WORK FLOW REDESIGN OF WORK FLOW INTEGRATED SOFTWARE INTEGRATED SOFTWARE ERGONOMIC DESIGN ERGONOMIC DESIGN BRIGHT, CHEERFUL WORK SPACE BRIGHT, CHEERFUL WORK SPACE EXAMPLE: PRESENTATION GRAPHICS

MANAGEMENT LEVEL INPUTS: HIGH VOLUME DATA INPUTS: HIGH VOLUME DATA PROCESSING: SIMPLE MODELS PROCESSING: SIMPLE MODELS OUTPUTS: SUMMARY REPORTS OUTPUTS: SUMMARY REPORTS USERS: MIDDLE MANAGERS USERS: MIDDLE MANAGERS EXAMPLE: ANNUAL BUDGETING MANAGEMENT INFORMATION SYSTEMS (MIS)

STRUCTURED & SEMI-STRUCTURED DECISIONS STRUCTURED & SEMI-STRUCTURED DECISIONS REPORT CONTROL ORIENTED REPORT CONTROL ORIENTED PAST & PRESENT DATA PAST & PRESENT DATA INTERNAL ORIENTATION INTERNAL ORIENTATION LENGTHY DESIGN PROCESS LENGTHY DESIGN PROCESS* MANAGEMENT INFORMATION SYSTEMS (MIS)

MIS MIS FILES SALES DATA UNIT PRODUCT COST PRODUCT CHANGE DATA EXPENSE DATA MIS REPORTS MANAGERS TPS Order Processing System Materials Resource Planning System General Ledger System ORDER FILE PRODUCTION MASTER FILE ACCOUNTING FILES TPS DATA FOR MIS APPLICATIONS

MANAGEMENT LEVEL INPUTS: LOW VOLUME DATA INPUTS: LOW VOLUME DATA PROCESSING: INTERACTIVE PROCESSING: INTERACTIVE OUTPUTS: DECISION ANALYSIS OUTPUTS: DECISION ANALYSIS USERS: PROFESSIONALS, STAFF USERS: PROFESSIONALS, STAFF EXAMPLE: CONTRACT COST ANALYSIS DECISION SUPPORT SYSTEMS (DSS)

FLEXIBLE, ADAPTABLE, QUICK FLEXIBLE, ADAPTABLE, QUICK USER CONTROLS INPUTS/OUTPUTS USER CONTROLS INPUTS/OUTPUTS NO PROFESSIONAL PROGRAMMING NO PROFESSIONAL PROGRAMMING SUPPORTS DECISION PROCESS SUPPORTS DECISION PROCESS SOPHISTICATED MODELING TOOLS SOPHISTICATED MODELING TOOLS* DECISION SUPPORT SYSTEMS (DSS)

STRATEGIC LEVEL INPUTS: AGGREGATE DATA INPUTS: AGGREGATE DATA PROCESSING: INTERACTIVE PROCESSING: INTERACTIVE OUTPUTS: PROJECTIONS OUTPUTS: PROJECTIONS USERS: SENIOR MANAGERS USERS: SENIOR MANAGERS EXAMPLE: 5 YEAR OPERATING PLAN EXECUTIVE SUPPORT SYSTEMS (ESS)

TOP LEVEL MANAGEMENT TOP LEVEL MANAGEMENT DESIGNED TO THE INDIVIDUAL DESIGNED TO THE INDIVIDUAL TIES CEO TO ALL LEVELS TIES CEO TO ALL LEVELS VERY EXPENSIVE TO KEEP UP VERY EXPENSIVE TO KEEP UP EXTENSIVE SUPPORT STAFF EXTENSIVE SUPPORT STAFF* EXECUTIVE SUPPORT SYSTEMS (ESS)

INTERRELATIONSHIPS AMONG SYSTEMS ESS TPS KWS OAS DSSMIS

SYSTEMS FROM A FUNCTIONAL PERSPECTIVE SALES & MARKETING SYSTEMS SALES & MARKETING SYSTEMS MANUFACTURING & PRODUCTION SYSTEMS MANUFACTURING & PRODUCTION SYSTEMS FINANCE & ACCOUNTING SYSTEMS FINANCE & ACCOUNTING SYSTEMS HUMAN RESOURCES SYSTEMS HUMAN RESOURCES SYSTEMS*

SALES & MARKETING INFORMATION SYSTEM SYSTEMDESCRIPTIONORGANIZATIONAL LEVEL ORDER PROCESSING ENTER, PROCESS, TRACK ORDERS OPERATIONAL MARKET ANALYSIS IDENTIFY CUSTOMERS & MARKETS KNOWLEDGE PRICING ANALYSIS DETERMINE PRICES MANAGEMENT SALES TRENDS PREPARE 5-YEAR FORECASTS STRATEGIC

MANUFACTURING INFORMATION SYSTEM SYSTEMDESCRIPTIONORGANIZATIONAL LEVEL MACHINE CONTROL CONTROL ACTIONS OF EQUIPMENT OPERATIONAL COMPUTER-AIDED-DESIGN DESIGN NEW PRODUCTS KNOWLEDGE PRODUCTION PLANNING DECIDE NUMBER, SCHEDULE OF PRODUCTS MANAGEMENT FACILITIES LOCATION DECIDE WHERE TO LOCATE FACILITIES STRATEGIC

FINANCE & ACCOUNTING INFORMATION SYSTEM SYSTEMDESCRIPTIONORGANIZATIONAL LEVEL ACCOUNTS RECEIVABLE TRACK MONEY OWED TO FIRM OPERATIONAL PORTFOLIO ANALYSIS DESIGN FIRM'S INVESTMENTS KNOWLEDGE BUDGETING PREPARE SHORT TERM BUDGETS MANAGEMENT PROFIT PLANNING PLAN LONG-TERM PROFITS STRATEGIC

HUMAN RESOURCES INFORMATION SYSTEM SYSTEMDESCRIPTIONORGANIZATIONAL LEVEL TRAINING & DEVELOPMENT TRACK TRAINING, SKILLS, APPRAISALS OPERATIONAL CAREER PATHING DESIGN EMPLOYEE CAREER PATHS KNOWLEDGE COMPENSATION ANALYSIS MONITOR WAGES, SALARIES, BENEFITS MANAGEMENT HUMAN RESOURCES PLANNING PLAN LONG-TERM LABOR FORCE NEEDS STRATEGIC

SHIPPINGINVENTORY PLANNING & FORECASTING ORDER PROCESSING PRODUCTION PROCUREMENT ACCOUNTING SUPPLIERSCUSTOMERS LOGISTICS SERVICES DISTRIBUTORS INTRANET INTRANET SUPPLY-CHAIN MANAGEMENT

HOW INFORMATION SYSTEMS FACILITATES SUPPLY CHAIN MANAGEMENT

Decide when, what to produce,store, move… Decide when, what to produce,store, move… Rapidly communicate orders… Rapidly communicate orders… Track order status… Track order status… Check Inventory Availability, monitor levels… Check Inventory Availability, monitor levels… Track shipments… Track shipments… Plan production based on actual demand… Plan production based on actual demand… Rapidly communicate product design changes… Rapidly communicate product design changes… Provide product specifications… Provide product specifications… Share information about defect rate, returns... Share information about defect rate, returns...

TRADITIONAL VIEW OF SYSTEMS WITHIN THE BUSINESS: There are functions, each having its uses of information systems WITHIN THE BUSINESS: There are functions, each having its uses of information systems OUTSIDE THE ORGANIZATION ’ S BOUNDARIES: There are customers and vendors OUTSIDE THE ORGANIZATION ’ S BOUNDARIES: There are customers and vendors FUNCTIONS TEND TO WORK IN ISOLATION *

Sales & Marketing Accounting Finance Manufacturing Human Resources ENTERPRISE SYSTEM Business Processes Enterprise-wide Business Processes VendorsCustomers

INDUSTRIAL NETWORKS LINK FIRMS INTO INDUSTRY-WIDE SYSTEM LINK FIRMS INTO INDUSTRY-WIDE SYSTEM HORIZONTAL: Link firms in same industry, including competitors HORIZONTAL: Link firms in same industry, including competitors VERTICAL: Link firm with suppliers in same industry VERTICAL: Link firm with suppliers in same industry*

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