Management Information Systems

IS 300
Summer 2020

Supply Chain Management

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 The Supply Chain
• Within each organization, the supply
chain includes all functions involved in
fulfilling a customer request
• Includes: product development,
marketing, operations, distribution,
finance, customer service
– Upstream – Suppliers
– Downstream – Customers
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 Supply Chain Management
• SCM Activities
– Scheduling plant activities to optimize the use of resources
– Reallocating materials and resources from one order to another
– Managing inventories
– Grouping similar work orders for efficiency
– Planning material requirements based on current and forecasted
demand
• Demand Forecast
– Demand for a product can be influenced by numerous factors such as
competition, price, weather conditions, technological developments,
overall economic conditions, and customer confidence.

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 Generic Supply Chain

Procurement Portal: for a company’s Distribution Portal: for a company’s

suppliers (upstream) this type of portal customers (downstream) automate the
automates the business processes involved in business processes involved in selling or
purchasing or procuring products between a distributing products from a single
single buyer and multiple suppliers. supplier to multiple buyers.

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 Supply Chain Flows
• Material Flows: the physical products, raw materials, supplies,
and so forth that flow along the chain. Material flows also
include reverse flows.
• Reverse Flows (or reverse logistics): returned products that are
damaged, unwanted, or in need of recycling.
• Information Flows: data related to demand, shipments, orders,
returns, and schedules, as well as changes in any of these data.
• Financial Flows: involve money transfers, payments, credit card
information and authorization, payment schedules, e-payments,
and credit-related data.

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 Five Basic Components of SCM
• Plan: the strategic component of SCM that involves developing a set of metrics to
monitor the organization’s supply chain to ensure that it is efficient
• Source: organizations choose suppliers to deliver the goods and services they need
to create their product or service.
• Make: the manufacturing component in which managers schedule the activities
necessary for production, testing, packaging, and preparation for delivery. This is
the most metric-intensive part of the supply chain, where organizations measure
quality levels, production output, and worker productivity.
• Deliver: (or logistics) is where organizations coordinate the receipt of customer
orders, develop a network of warehouses, select carriers to transport their
products to their customers, and create an invoicing system to receive payments.
• Return: a responsive and flexible network for receiving defective, returned, or
excess products back from their customers, as well as for supporting customers
who have problems with delivered products.

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 Supply Chain: Problems & Solutions
• Two Primary Sources of Problems
– Uncertainty & inefficiency cut into a company’s operating costs
– Need to coordinate multiple activities, internal units, and business partners.
• Bullwhip effect
– As a result of uncertainty, companies often hold a safety stock of inventory (just in case) to act as
buffer for unexpected increases in demand
– Information about product demand gets distorted as it passes from one entity to the next
resulting in erratic shifts in orders
• Just-in-time strategy (JIT)
– Materials used in production arrive as they are needed
– Finished goods are shipped immediately after leaving the assembly line
• Information Sharing: facilitated by electronic data interchange and extranets
• Vendor-Managed Inventory (VMI): occurs when the supplier, rather than the retailer, manages the
entire inventory process for a particular product or group of products.
• Vertical Integration: a business strategy in which a company purchases its upstream suppliers to
ensure that its essential supplies are available as soon as the company needs them.
• Synchronous Material Flow (SMF)
– A process that produces a continuous flow of products utilizing the best mix of resources and
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materials among several facilities
The Bullwhip Effect

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SCM Models

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 Electronic Data Interchange (EDI)
• Electronic data interchange (EDI)
– A communication standard that enables business partners to exchange routine
documents, such as purchasing orders, electronically.
– EDI formats these documents according to agreed-upon standards (e.g., data formats). It
then transmits messages over the Internet using a converter, called translator.
– Enables the computer-to-computer exchange of standard transactions such as invoices
and purchase orders
– A system for electronic document exchange initially implemented through exchange
value-added network (VAN) companies
• More companies are now increasingly moving away from EDI to cloud architectures for
linking transactions between firms.
– locate the lowest-cost supplier
– search online catalogs of supplier products; and
– negotiate with suppliers
• Intranet: network used only by employees of an organization
• Extranet: network shared by employees of different organizations, e.g., business partners
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Electronic Data Interchange (EDI)

Kenneth C. Laudon and Jane P. Laudon. Management Information Systems, 2012 11

Electronic Data Interchange (EDI)

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Management Information Systems

IS 300
Summer 2020

Delivering Information Systems

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 Learning Objectives
• Discuss the importance of the IT planning process
and formulating an IT strategic plan.
• Enumerate the primary tasks and the importance of
each of the processes involved in the systems
development life cycle (SDLC)
• Describe agile methods, when to use them, and the
practices and predefined roles of the SCRUM
methodology.

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Delivering Information Systems

“How projects get started”

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 Project Delivery Context
• The environment in which organizations operate today is complex. The customer or client
typically issues a change request (CR) to the organization. A CR is a formal request for
implementing software improvements based upon business needs. CR’s address two areas:
– Problems
• Missing functionality in an existing software system
• Cost control issues. Examples: Defect, Production Issue
– Opportunities
• Solutions for improvement
• Revenue drivers. Examples: Enhancements, New development
• Operations & Maintenance (O&M) Activities
– Debugging: troubleshooting the performance of the software in terms of defects. This
process that continues throughout the life of the system.
– Updating: changes to accommodate software enhancements or compliance issues (e.g.
adjusting to new governmental regulations).
– Adding: new development or functionality without impacting operations
• Application Portfolio: a list of CRs that a company examines for system improvements which
should be prioritized and implemented in an upcoming software release. 16
 Problem Statement Generation
• A concise and clearly written narrative that describes what is
wrong, why it is wrong, and options for correcting it
• Emphasis on understanding context
• Explicitly states any underlying assumptions
• Describe the consequences of inaction
• Questions:
– What is the reality of the situation?
– What are the specific set of conditions that prevent goal achievement?
– Who are the stakeholders?
– Which systems might have to be changed?
– What are the impacts both internal and external to the organization?
– What is the scope?
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 Strategic Planning
• IT Strategic Plan: a set of long-range goals that describe the IT
infrastructure and identify the major IT initiatives needed to
achieve the organization’s goals.
• Three Objectives of an IT Strategic Plan:
– Must be aligned with the organization’s strategic plan
– Provide for an IT architecture
– Efficiently allocate IS development resources
• IT Steering Committee: comprised of a group of managers
and staff who represent the various organizational units, is
created to establish IT priorities and to ensure that the MIS
function is meeting the organization’s needs.
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 Cost-Benefit Analysis (CBA)
• Review the following material and videos from Investopedia.com
which provides an excellent explanation
• These are the three common approaches for CBA which are
utilized in corporate finance:
– Net Present Value: Using this method Analysts convert future values of
benefits to their present-value by “discounting” them at the organization’s
cost of funds. NPV addresses the fundamental problem of inflation which
erodes the time value of money. In other words, earnings in the future aren’t
as valuable as earrings today!
– Return on Investment (ROI): measures management’s effectiveness in
generating profits with its available assets. ROI is calculated by dividing the net
income generated by a project by the average assets invested in the project.
– Breakeven Analysis: determines the point at which the cumulative dollar value
of the benefits from a project equals the investment made in the project.
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Traditional SDLC

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 Systems Investigation
• 3 basic alternatives :
– Do nothing and continue to use the existing system unchanged
– Modify or enhance the existing system
– Develop a new system
• Systems Investigation: The initial stage in a traditional SDLC is systems investigation and
the primary task of this stage is a feasibility study
– Feasibility Study: analyzes which of three basic solutions best fits the particular
business problem.
• Provides focus for the project and narrows potential alternative courses of action
• Identifies opportunities for improving previous assumptions in the software
development process
• Enhances probability of success by mitigating factors early on that could affect
the project
• Provides confirmation that system requirements are fully understood and
addressed
• Go / No Go Decision
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Comparison of User & Developer
Involvement Over the SDLC

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 Systems Investigation
• Technical Feasibility: determines whether the company can
develop and/or acquire the hardware, software, and
communications components needed to solve the business
problem.
• Economic Feasibility: determines whether the project is an
acceptable financial risk and, if so, whether the organization
has the necessary time and money to complete the project.
• Behavioral Feasibility: addresses the human issues of the
systems development project.

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 Systems Analysis
• Systems analysis: the process whereby systems analysts
examine the business problem that the organization plans to
solve with an information system.
– Describes a method for systematically studying a business
problem or opportunity for an organization and specifying
the requirements
– Examination of the current “as-is” system: What
• A major deliverable of the systems analysis phase is the
system requirements deliverable.

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 What is a requirement?
• Statement of what the system shall do
– Not How
• Functional Requirements
• Describe the mandatory system features
• Customer usually specifies them
• Non Functional Requirements
• Imposes some type of constraint on the system
– Response time
– Hardware / software performance
– Related to system operations, capacity or processing time
• Are derived based upon functional requirements

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 Systems Design
• Systems Design:
– Describes a method for decomposing requirements from the
systems analysis to construct a detailed technical solution to
solve the business problem or opportunity
– Examines the future prescribed “to-be” system: How
• Technical Specifications include following:
– System inputs, outputs, and user interfaces
– Hardware, software, databases, telecommunications,
personnel, and procedures
– A blueprint of how these components are integrated
• Scope Creep: Adding functions after the project has been initiated
causes the time frame and expenses associated with the project
expand beyond the agreed-upon limits. 26
 Alternative Methods for Systems
Development
• Joint Application Design (JAD): a group-based tool for collecting user requirements and
creating system designs. It is most often used within the systems analysis and systems design
stages of the SDLC. JAD involves a group meeting attended by the analysts and all of the users
that can be conducted either in person or via the computer. During this meeting, all users
jointly define and agree on the systems requirements.
• Rapid Application Development (RAD): a systems development method that can combine
JAD, prototyping, and integrated computer-assisted software engineering (ICASE) tools to
rapidly produce a high-quality system. In the first RAD stage, developers use JAD sessions to
collect system requirements. This strategy ensures that users are intensively involved early
on. The development process in RAD is iterative.
• Agile Development: a software development methodology that delivers functionality in rapid
iterations, which are usually measured in weeks. To be successful, this methodology requires
frequent communication, development, testing, and delivery.
• End-User Development: an approach in which the organization’s end users develop their
own applications with little or no formal assistance from the IT department.
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 Implementation
• Conversion strategies
– Parallel
– Phased
– Direct or Cut-over
– Pilot

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