Management Information Systems, 4 th Edition 1 I. Sharing Information Systems Vertical market –A market in which the goods of one business are used as raw materials or components in the production or sale process of another business Horizontal market –All players in the market buy or sell the same products; they are in competition Chapter 11 Supply Chain Management and Global Information Systems

Management Information Systems, 4 th Edition 2 Vertical Information Interchange

Management Information Systems, 4 th Edition 3 Horizontal Information Systems

Management Information Systems, 4 th Edition 4 II. Electronic Data Interchange What is EDI?(p.441) –Exchange of electronic data using interorganizational information systems –Set of hardware, software, and standards that accommodate the EDI process

Management Information Systems, 4 th Edition 5 What are benefits of EDI p. 441 Cost Savings Speed Accuracy Security System Integration Just-in-time Support

Management Information Systems, 4 th Edition 6 1.Supplier’s proposal sent electronically to purchasing organization 2.Electronic contract approved over network 3.Supplier manufactures and packages goods, attaching shipping data recorded on a bar code 4.Quantities shipped and prices entered in system and flowed to invoicing program; invoices transmitted to purchasing organization How does EDI work? P. 442

Management Information Systems, 4 th Edition 7 5.Manufacturer ships order 6.Purchasing organization receives packages, scans bar code, and compares data to invoices actual items received 7.Payment approval transferred electronically 8.Bank transfers funds from purchaser to supplier’s account using electronic fund transfer (EFT) How does EDI work? (Cont.)

Management Information Systems, 4 th Edition 8 How does EDI work? (Cont.)

Management Information Systems, 4 th Edition 9 Business partners subscribe to service and use VAN’s private communication lines, mailboxes, and special software VAN mediates EDI communication, translates business documents into EDI documents Batches transmitted several times per day Two Types of EDI: Value Added Network EDI

Management Information Systems, 4 th Edition 10 Advantages: –Transaction integrity –Privacy and security –Nonrepudiation –Solid standards Value Added Network EDI (Cont.)

Management Information Systems, 4 th Edition 11 Majority of EDI still done through VAN lines Decreasing rapidly in favor of the Web All new EDI implementations use Web technologies Reduces cost Use of XML standards allows business partners to create their own tags Two Types of EDI: Web EDI

Management Information Systems, 4 th Edition 12 WEB EDI Advantages –Lower cost –More familiar software –Worldwide connectivity –Fast communication –Real time information exchange Web EDI (Cont.)

Management Information Systems, 4 th Edition 13 III. Supply Chain Management Less money being tied to inventory Management of supplies throughout the manufacturing process, from one organization to the next Monitoring and controlling the supply chain is Supply Chain Management (SCM)

Management Information Systems, 4 th Edition 14 Supply Chain Management (Cont.) Monitoring and controlling the supply chain is Supply Chain Management (SCM) SCM applications streamline operations from suppliers to customers(p. 447) –Reduction in inventories –Reduction in cycle time –Reduction in production cost

Management Information Systems, 4 th Edition 15 SCM systems most effective when all businesses in the chain link their systems and share all information pertinent to planning production and shipment Not all organizations are willing Systems can be used beyond the sale (after-the- sale services) The Importance of Trust p. 448

Management Information Systems, 4 th Edition 16 RFID: Radio Frequency Identification Very small microprocessor with antennas With lower cost, will be embedded in many products for tracking Microchips communicate with wi-fi devices when in production lines, packed, shipped, unloaded and more The Future of SCM: RFID

Management Information Systems, 4 th Edition 17 IV. Multinational Organizations Headquarters in a single country, operation of divisions and subsidiaries in different countries A company’s nationality is not clear NAFTA may result in the internationalization of many corporations

Management Information Systems, 4 th Edition 18 Using the Web for International Commerce The Web is important for both B2B and B2C commerce Opportunities for businesses all over the world Organizations must be sensitive to local audiences (globalization)

Management Information Systems, 4 th Edition 19 International Web Commerce: Designing Web Sites

Management Information Systems, 4 th Edition 20 Challenges to Global Information Systems Technological Challenges –Non-uniform information infrastructures Regulations and Tariffs –Executives concerned about hassle-factor –Software can reduce confusion Differences in Payment Mechanisms –Non-uniform preferred payment method

Management Information Systems, 4 th Edition 21 Challenges to Global Information Systems (Cont.) Language Differences –Translation delays –Laws forbid foreign language accounting and other systems Cultural Differences –Cultural imperialism

Management Information Systems, 4 th Edition 22 Challenges to Global Information Systems (Cont.) Conflicting 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

Management Information Systems, 4 th Edition 23 Challenges to Global Information Systems Different Standards –Varying standards for date format, measurements, etc. Legal Barriers –Incompatible data privacy laws in U.S. and Europe

Management Information Systems, 4 th Edition 24 Summary Markets can be viewed as either vertical or horizontal, or both There are differences between traditional and Web-based EDI Supply chain management systems have various benefits Global information systems play an important role in business