22 Chapter 2 BB aetrvten S an organization grows, it becomes important to segregate the functions cf the organization on the basis of specific functional aspects. Every organization, depending on the product it manufactures or service it renders, is divided into the following functional aspects 1. Marketing 2. Finance 3. Production 4. Inventory 5. Human resource Various functional areas work in close coordination to achieve one common objective Bach functional area is managed by an independent manager. These functional managers work in a highly dynamic and competitive environment. Earlier, the scope of work that these functional areas performed used to be limited; but currently, the scope of work increased tremendously and it is not possible for the functional managers to manually handle these functional areas.. Moreover, as each functional area performs a'specific task that is clearly demarcated for that area alone, the information needs and requirements are different for each functional area. Therefore, it is not possible to use one common information system for all functional areas. This results in the use of specific functional area-wise information systems for helping managers to take prompt decisions. Funcrtionat Inrormation Systems Management information system (MIS) finds extensive application in the fun areas and helps the organizations to manage them effective functional areas, MIS can be categorized as follows: tional On the basis of specific 1, Marketing management information system 2, Human resource information system 3, Financial management information system 4, Production and inventory management information system ARKETING MANAGEMENT INFORMATION System Marketing is an important functional area of an organization and a huge amount of money is invested in marketing activities. The operation of the marketing department Scanned with CamScannerFunctional Information Systems 23 — Pecapotd has changed-Wrastially o¥tr a period of time. Earlier, organizations used to focus only on sales; but now, organizations are focusing on a number of other important activities, which include the following: * 1, Segmentation: To serve the customer in a better way, firms segment their con- sumers on the basis of certain characteristics. Theoretically, the consumers can be segmented on the basis of demographic characteristics; such as, age, income, occu- pation, and gender; psychographic characteristics; such as, personality and lifestyle; and personal characteristics)For example, NFL segments consumers geographi- cally as its fertilizer market is spread nationally, and regionally. As the properties of the land vary with region, and therefore, different kinds of fertilizers would be required 2, Target Market: Targeting strategy helps the organizations to focus on_aselect group of customers. As the demands of the customer increase, it is not possible for “any organizatiorr to serve all the customers. It is very beneficial to target a select group of customers, which helps in offering the right product and services to the customers. Advertising Through Print and Electronic Media and Internet: At the present time, it is important for organizations to inform the customers about their product or services. The organization can choose from different media to reach its custom- ers, which include print media, electronic media, or the Internet. However, it is also important for the organizations to select the right kind of medium so as to inform the target segment in a better and effective manner. 4. After-sales Service: Almost all the firms give a similar offer in the market; there- ~ fore, to differentiate its products and services from others, the firms are adopting after-sales service to create a unique selling proposition for itself in the market and thus satisfy the customers) Benefits of Marketing Management Information System Just like banks have key accounts, each firm has its own key customers, who need to be given priority. The marketing management information system (MMIS) aids the mager to identify the key customers. The MMIS can be used to generate reports d on time, region, and so on, and the manager can use these data from the mrts to see which customer is generating maximum revenue. This customer can be n special attention in the form of personalized after-sales service, maximum dis- its, new offers, prioritizing their orders, and so on to maintain the loyalty of that mer. ganizations are striving for customer satisfaction, it is very important to identify jet market and segment the customers to enable the use of proper marketing for the right set of customers. No firm operates in mass markets; however ig the stiff competition, most of the firms with similar offers differentiate through the experience they create for the customers. The buzzword is vice. Organizations are paying more attention to proper after-sales service. Scanned with CamScanner24 chapter 2 jectives, St inputs all the The MMIS helps the organizations to accomplish all these objet asies ee 2 as data received from various sources, which include sales figure, past trends, and gov ses these data to get the useful information as outpu ernment policies; and proce: ra : ¢, when you buy some which is utilized by managers for taking decisions, For example, when you buy items from a retail store, you get the bill; and the data are fed into the ee es the end of the day, the manager gets the consolidated statement using which be analy the products in demand, and if some discount scheme was offered, what is the’ ee of that discount scheme. He also analyses the performance of the sales team in the store. Marketing Management Information System—NFL NTE bg Case Abstract his case explains how an MMIS is used for better reporting and presentation of a comprehen- sive picture of the marketing activities in various geographical regions. It elaborates how the information system integrates all the marketing information on a common platform, which enables the marketing managers to take better deci- sions. The basic functions of the MMIS can be illustrated through this case. It explains how the information system can be used to generate reports based on time paramete (monthly, daily, and seasonal) or regional parameters (zone or state-wise), The MMIS can also be used to track the order sta- tus; such as, plant details from which it is dispatched, delivery details, and stock status. This case would be extremely benefi- for the course on MIS, as it provides practical implementation of various aspect: of MMIS. Introduction: About National Fertilizers Limited National Fertilizers Limited (NFL) was incor porated by the Government of India in 1974 to set up fuel oil-based urea plants in Panipat (Haryana) and Bhatinda (Punjab). Later, NEL took over Fertilizer Corporation of India’s plant at Nangal (Punjab) and set up a na tal gas-based urea plant at Vijaipur. It has the country’s second las addition, it is the first company in India to be permitted by the Government of India to manufacture and market neem-coated urea Its head office is locate d at Noida. The ¢ compa- ny’ marketing office in Noida; three zonal offices at Bhopal, Lucknow; and Chandigarh; 16 state offices; and about 38 area offices spread across the country est capacity for urea. In marketing network comprises a central Scanned with CamScannerMarketing Management Information System at NFL in the marketing department of NFL, func- tional information system is being used; that is MMIS, an Oracle-based software. In this system, the data are stored in a cen- sralized database, which is very fast and seliable and helps a lot in having the work done on time. The system ensures smooth flow of data between various departments and individuals as and when needed. SiS at the NFL is used in the following acuvities: 1. Tracking of the full information about the marketing of NFL's products Z Preparation of reports both on daily, monthly, and yearly basis Functional Information Systems 25. 3, Decision making and planning of mar- keting strategies by the managers on the basis of these reports 4. Easy access to the information regard- ing the marketing of each area, zone, and state Security Concerns in MIS Security is the key concern for any infor- mation system. An information system is the data repository of a firm and it might contain a large amount of confidential information. Therefore, to ensure security. each employee of NFL is issued a user ID and password. The login page of the infor- mation system in NFL is shown in the fol- lowing screenshot: National Fertilizers Limited Marketing Management & information System first step is to enter the user ID and | No user without an authenti- ID and password can gain access to information system of NFL. Therefore, ‘user has to access the informa- , the login page appears, which the user's credentials and then jentry into the system. Information Processing by MIS The MMIS has various facilities that aid t managers to take prompt decisions, as infor- mation regarding the various activities of marketing is collected by using example, the following scre the application of zone-wise sales, generation of state-wise sales. In 4 sales, various reports are available; such as, state-wise or agency-wise sales. Scanned with CamScanner26 Chapter 2 When the manager selects ‘State wise Sales’ from the previous menu, the following screen appears: Here, the manager can generate and anal- yse the reports for different products and for different periods. The figure shows the state-wise sales report for the state of Andhra Pradesh for the product ‘Plain Urea! Within a given state, it clearly depicts the sales for different districts, the existing rate of sale, the applicable sales tax, and total sales amount and quantity: ‘The marketing manager is often con- cemed about the highest-selling product the least-selling product, which state fetches the maximum revenue, which state pays the highest tax, and so on and takes decision Scanned with CamScanneraccordingly. To understand the benefits of the MMIS in decision making, let us assume that the firm wishes to stop selling fertiliz. exsin those districts that have the least sales numbers. From the report (shown in section ‘specimen of State-wise Sales Report’), the ‘manager now knows that the sales is least in Mahbubnagar district and therefore neces- sary action should be taken. Functional Information Systems 27 Specimen of State-wise Sales Report The MMIS gives the information about sales in Andhra Pradesh with district-wise sales record in quantity and amount. The marketing manager can use this informa- tion for further analysis. Similarly, the manager can use the Teports to Compare the sales in different ‘states of India and identify the most prof- itable and least profitable states. On the ofthis information, further discount chemes or incentives can be offered. For iple, if sales in Punjab are the high- the manager can reward the sales in Punjab to motivate them and set ple for others. The manager can segment the states based on sales [RACoONOR Sire eS Teer TRZAMABAD sim LT ie ei and offer different sales target to boost sales in already high-selling regions Specimen of Daily Performance Report The MMIS also gives daily performance report of the various products, which gives managers a clear information regarding the quantity manufactured so that the man- agers can accordingly fix targets on how much to sell. Scanned with CamScanner28 Chapter 2 No production and marketing firms can work without setting targets. Therefore, an important task for a manager is to measure the performance of differ- nt units against the established targets \d take corrective action, if required. ie above-mentioned report presents a rr picture of the daily, monthly, and ly production of different products given unit and the yearly target set at unit. It also shows the inventory for each product at each unit. reover, because production cannot ithout raw materials, the report also consumption level for different for three time parameters— and yearly. This information inager to keep a daily track and take corrective mea- in case the performance from the target. In addi- anager needs to know nt times and regions quate supply of raw materials at all times. This report enables the manager to view how much inventory exists to manufacture the ordered quantity, and how much quantity is produced daily. This information can be used for further analysis such as trend analysis to deter- mine the stock and production level at any given time of the year and ensure a balance between supply and demand. Benefits of MMIS at NFL There are several benefits of using the MMIS| at NFL. The key benefits are as follows 1. Data are stored in a centralized database. 2. Quick data access is available as and when required. 3. The data stored through this informa- tion system are more reliable than the manual data-keeping 4. The authenticity of data is maintained as all the records are kept in computer- ized form. Scanned with CamScannerFunctional Information Systems 29 5, The system is helpful in pre ; the daily reports ween ji btePar 8 Therepor helps in tracking the full infor i nformation i ri regarding production dispatch, wmace mation about the sales of NFLs products. rial used, energy consumption, and s0 on. Case Study Questions 6, Monthly reports are also prepared using ‘1+ How does an MMIS aid a manager to the MMIS. These reports help the top take better decisions? management in accessing information about marketing of each area, zone state, and so on. sim 2. If the MMIS had not been incorporated in this firm, what do you think would have been the issues faced by the mar- 7. MMIS-generated reports help the man- keting department and the firm? agement in comparing and taking 3. prompt decisions for improvement in the future. What characteristics can you identify for an MMIS in light of the above-mentioned case? | 2.4 | Human Resource Inrormation SysTEM Human resource information system (HRIS), as the name suggests, is the intersec- tion of information system and human resource management. This information sys- tem aidst “human resource (HR) department and its various functional heads to perform Various HR activitieg In a nutshell, HRIS merges different HR activities and processes with information technology to eliminate the complexity of performance of tasks and aid the HR manager in taking better and timely decisions.(In general, an HRIS encompasses all the activities carried out by the HR department, which are as follows: ; L made uy Payroll Module: The pay of an employee is compiled after taking into account several components; such as, deduction for tax, provident fund, leave taken, atten- dance logged, previous tax reports, and any incentive (generally a percentage of the basic pay) to be paid on the basis of performance. appraisal. The HRIS helps to manage the payment process by gathering data on all the above-mentioned components and any other, as applicable to the firm. Data in the system are fed from other modules such as performance appraisal module and attendance mod- ule and are integrated to generate the net payable amount. This is also further linked to the financial management information system (FMIS) for clearance of funds. pet Attendance Module: This module is used to gather data regarding time: and work-related information. In general, this would include hours logged in by the employee for a given workday and the number of days present or absent This formation can be further used to analyse the efficiency at work in a given work- lay and calculate the average time required to perform a task. This can further be to deduce which employee is most efficient or identify the areas that are less icient. a Scanned with CamScanner30 = Chapter 2 3. Benefits Administration Module: A major component of compensation is ben. efits, All firms in the present time offer different benefits to the employees; such as 1s. Now, this varies with the employee's job category insurance and medical clai thus, HRIS can secthisinmciation to work out the benefit that can be availed by ar, employee in a particular job band. 4. HR Management Module: This component covers many other HR aspects from joining to retirement. This module contains basic demographic data; such as, per. | Sonal Wetails, address, mode of selection, different training programs offered, capabil- | ities and achiéVements of the employee until date, skills management, compensation planning records, and other related activities. Human resource management func. tion involves recruiting, selecting, compensating, training, promoting, and providing superannuation. An HRIS integrates all these functions 5. Training Module: Evolution of concepts such as ‘learning organizations’ in which the firms learn from their previous performance and continually adapt themselves to the changing environment has led to the development of the ‘learning manageme: system’ (LMS). This module is used to administer and track the employee's training and development efforts. This system contains details regarding educational qualifica- tion of the employee and offers appropriate courses to develop skills. It also instructs which mode of learning—such as CDs, books, and e-learning courses—would be ben- eficial. It automatically generates a list of training modules that are applicable to employees to develop their skills. The HRIS also aids the manager to view the appro- priate date at which the particular training module can be taken and the budget for training. 6. Employee Self-service: HRIS can be used by the employees to answer their que! ling different HR activities. For example, an employee can view details of salary and the deductions that have been made jn a-particular month-or he can ge information about the leave he has availed for a particular month and also the p. ing leave, without seeking assistance from the HR personnel % Many firms today outsource these tasks to a third-party firm, which manages all their FIR processes, or implement readily available HRIS software offered by different prov es; such as, SAP and PeopleSoft. The HRIS deals with the important HR activities of an ‘organization. For any organization, the employees are the most important asset and the onganizations are going the extra mile to effectively manage the manpower. One of most important functions of the HR department is the right selection of employees. Here, the HIRIS works extensively to scan vast information available on the Internet, with place ment agencies, and from colleges of campus placement. It helps the managers te seen and select the right candidate forthe job. Training and development is also a very tmopox tant task to groom the right candidate, Managers can use the HRIS to decide the tere training required for each employee and the time required for training The Ue ay helps the managers to evaluate the employees in an effective manner It a: : ager to receive proper feedback from the employees, For implementin, g HRI: important for the analyst to first perform a detailed analysis of the 4 nalyst should list down all the key activities of the organization in de also the man. it is very organization, The tail so that proper ee Scanned with CamScanner& 5, with the help of the information avail- > ple in the HRIS, NFL can do effective manpower planning and succession planning. Case Study Questions }, How does an HRIS aid a manager to take better decisions? Functional Information Systems 41. 2. If the HRIS had not been incorporated in this firm, what do you think would have been the issues faced by the HR department of the firm? 3. What characteristics can you identi in the HRIS in the light of the abov mentioned case? INANCIAL MANAGEMENT INFORMATION SYSTEM Financial management information system finds extensive application in managing the financial matters of an organization. The FMIS helps the organizations to manage var ous important financial parameters which include the following and outflow of cash, and such details. a ae 2. Getting Processed Financial Information: It is important to pri specified format with clear heading, which FMIS can be used to generate different financial reports.in a precise format so that the reports are easy to read and can be used for further analysis in general, the firms use a relational database system) to store data. This 3, Storage of Financial Informatio a precise manner. gement of Long-term Fund and Liquid Fund: Financial management | structuring, budgeting, appraisal, and control of from two maifi sources—equity and debt. Equity adly has the functions of capital . Any firm can avail financ daily tran RDBMS (relational database management fn tables, which are interlinked using a primary key. This helps in managing the data ds from shareholder ce shareholder gets a fixed dividend, has limited ty, and gets a preference over equity shareholders. Which source of funds would be best suited for its firm and which causes least reaps more gain. The FMIS can also be used.to decide how much money ¢ raised from equity and how panks. Financial information system helps the banks to manage all the tional data in the form of withdrawals, demand draft, and and convert them into useful information banks to securely store the information. ‘The FMIS finds a wide array at top, middle, and bottom level management. For implementing the ation system, it is very important that the analyst much from de! ‘0 helps to process these data 1. Managing Daily Financial Information: FMIS helps to determine how many transactions have occurred in a day, week, and so on, what was the amount of inflow nt the data in a n be easily read and interpreted. The tores the data ‘s. This can take the form of preference n FIMS aids the manager The FMIS has wide appli hould first have a Scanned with CamScanner42 Chapter 2 detailed insight of the key, financial activities a blueprint of all the critical financial activitie: an FMIS. Case Abstract his case explains how an FMIS 'is used for performing financial activities both effectively and efficiently. The case details the critical activities performed by the NFL at the strategic, operational, and middle level of management. Moreover, it illustrates the decisions that the financial manager has to take. The FMIS provides a common plat- form for the integration of information and data, which enables the finance manager to take better decisions. The basic functions of EMIS can be illustrated through this case. It explains how the information system can be used to generate various financial reports. This case would be extremely beneficial for the course on MIS as it provides prac- tical implementation of various aspects of MIS, such as the following, 1. Developing an FMIS that would perform all the financial activities 2, Understanding different’ functions of a finance manager and the type of data that the manager has to deal with 3. Use of FMIS reports to enable better decision making ee Financial Management Information BS eed Cay of the organization. The analyst ma 's of the organization before designing Financial Management Information System or Module in NFL In the finance department, finance m Inance is being used. It helps in various activities such as, budget making, standard fixing cost review mee contribution analysi ings, and opportunity cost analysis. Let us look at the various functions that FMIS aids in 1, Budget Making: It helps in budget ing; that is, in preparing the budgets fo various business processes of the orga- nization. While making budgets various financial requirements are taken ii account, and then these budgets are compared with the actual expenditures 2, Standard Costing: In this applic: tion, some standards, which are to be achieved by the organization durir a fixed period of time, are fixed. Lat these standards and actual results are compared to determine the va ance and then corrective actions are taken, 3. Contribution Analysis: In this appli- cation, the company analyses the con- tribution of its different products with Scanned with CamScanner48 Chapter 2 Case Study Questions 3, What characteristics can you identify jn 1. How does an FMIS aid a manager to take : ag FMIS in light of the above-mentioneg 2. If the FMIS had not been incorporated in this firm, what do you think would have been the issues faced by the firm? case? | Propuction ano Inventory MANAGEMENT nrormation System control of all those activi. Production management is concerned with the planning and c ties that help in transforming inputs into output. The production management is the functional sub-part of an organization that converts inputs into output by adding some value to it. It deals with the following important activities: 1. Production Planning: Production planning means planning and managing of all the activities that are important in the production of the desired output. Production planning includes the following: a (a) Routing: Routing identifies in detail all the operations required to manufacture the desired output. (bp scheduling: Scheduling describes the time required at each step. It describes “A when a particular step will start and when it will end ((©/ Loading: Loading helps in describing the capacity and efficiency of each and every machine. 2. Production Control: Production control helps to maintain the quality of the output by ordering, follow-ups, and inventory.control: 7 ———S ‘a) Ordering: Ordering identifies the inputs required to manufacture the output. It helps to identify the raw materials that will be supplied by vendors as well as the quality of the materials. Follow-ups: Regular follow-ups help in understanding the progress of the pro ~nduction cycle. Inventory Control: Inventory control helps in managing the stored items more effectively and efficiently. 3. Product Design: Designing includes all the activities that give shape, size, and spe cific pattern to the product, whereas product development includes all those activities that help to create product according to the pre-decided design. Product development is done using the following ‘Standardization: It means to standardize the product size and shape for mass production. Scanned with CamScannerFunctional Information Systems 49 6) specialization: It means dev. ©) the organizations to develop implification: It mea . r f & Seroess: ns the elimination of unproductive steps of the produc- piversification: It is the Opposite of speci i aati ; i ial 1S organizations (O) Raovelop products in divers genio! “Pecialization and helps the orga , Pant Location-and Layout: Location helps the organizations to,jgcate the plant in a place where production can be ‘carried out without any_hdestes, ft helps the orga- ization in the optimum utilization of space by arranging the machinery in such a way that it occupies less space and does not hinder the free movement of man and materials, loping expertise in a particular field, which helps products in that specific area. ‘the production information system helps the organizations to accomplish all these objec- ‘ives. As the organizations work in a highly dynamic environment, the data regarding the production process have increased; as a result, it is not possible to collect and store ~ such voluminous data from internal and external sources. The production information helps the organizations to store and manage these data and guides the manager ‘effective control of production activities. In addition, one of the most important tions of the production information system is the inventory control system. As ‘manufacturing facility grows big in size, it becomes increasingly difficult to manu- manage inventory. Hence, organizations are using inventory information s: ems | @overcome these problems. Inventory Management Information System—NFL CNG ‘Scanned with CamScanner