Role of Information Systems in Small Scale ‘Ready to Eat’ Food Business

Role of Information Systems in Small Scale ‘Ready To Eat’ Food Business Assignment 1B COIS20024—Systems Management Overview Term 1, 2010 Prepared and Submitted by Jessvin Roosevelt D’Souza S0189717 Tutor: Asif Syed Due Date: 18 May 2010 Date Submitted: 18 May 2010 Executive summary <Briefly describe the purpose of the report and the date on which it was requested, a brief summary of your major findings, conclusions, and recommendations > Contents Introduction1 Information System2

Types of Information systems could be used to support ‘Ready to Eat’2 2. (a) Business Functions and the role of Information systems in a business3 (b) Need of transaction Processing system (TPS) in a Business:4 3. (a) Poter’s Competitive Forces Model:4 (b) Role of Information System to counteract the competitive forces:5 4. (a) Information Requirements of ‘Ready to Eat’6 (b) Business function to be computerised6 5). Use of computer networks to improve collaboration and among key stakeholders7 6.

The management challenges affecting organisational change during the implementation of the computerised information system8 7. Security and ethical issues due to the introduction of information systems in the business9 Conclusion10 Recommendations10 References11 Introduction The report aims to explain the importance of information system to fulfil the information requirements of the business. It explains the role of computer and information system to achieve operational excellence in business functions, competitive advantage and business expansion.

It emphasises that the tools of information system like intranets and extranets can be used as measures of information. These tools are very helpful to provide ready information to the outside parties associated with business and management for various parties. Ready to Eat is a sole business being managed and controlled by owner herself and with one kitchen hand who was also a delivery person. Later, owner hired four more staff. RTE prepares and supplies pre –packed healthy meals.

Rebecca, owner of the company wants to know that how computer will help her to manage the business. The report explains how information system can envelop the limitation of one women organization for control, management and timing flexibility. Information System is important for RTE due to following reason. * To streamline the business function * To get benefits of information integration * For successful and controlled expansion of the business * To gain customer loyalty and more market share * To provide ready information to the stakeholders

In this report, the objectives to the business have been discussed like implementation of information system and managing the business. The report discusses different information system application like Transaction Processing System, Supply Chain management and Customer Relationship management. It also discusses scope for intranet, extranet, websites and e-commerce in Ready to Eat. There is an analysis of business functions and how information system helpful in achieving the competitive advantage. Information System

An information system can be any organized combination of people, hardware, software communication networks, and data resources that collects, transforms, and disseminates information in an organization. Information systems rely on people, and a variety of hardware, software, data and communications network technologies as resources to collect, transform, and disseminate information in an organization. Three activities in an information system produce the information that organization need to make decisions, control operations, analyse problems and create new products or services.

These activities are input, processing and output. Input captures or collects raw data from within the organization or from its external environment. Processing converts this raw input into a meaningful form. Output transfers the processed information to the people who will use it or to the activities for which it will be used. Information systems also required feedback, which is output that is returned to appropriate members of the organization to help them evaluate or correct the input stage. There are three fundamental reasons for all business application of information technology.

They are found in the three vital roles that information systems can perform for a business enterprise. * Support of its business process and operations. * Support of decision making by its employees and managers. * Support of its strategies for competitive advantage. Types of Information systems could be used to support ‘Ready to Eat’ Ready to Eat tends to manage its business problem. For the successful, the business has to be more competitive and reduce its operational difficulty to become a long run player doing business in tomorrow’s markets.

This situation ,related to the absolute need to build feasible critical mass in almost every business segment the need to fulfil the increasing and sophisticated client requirements have created opportunities for the firm to develop information system so that it can address the new and challenging market reality. Mckeown (2007) have explained their book how organization handle the present through information system that enables them to sell good service as well as to order and pay for raw materials. They have also discussed the three IS functions which are handling the present, remembering he past and preparing the future. There are different types of information system that coexist in an organization to carry out the three IS functions. To streamline the routine business processes of ‘Ready to Eat’ and provide real time organization wide data the following information system can be suggested: * Transaction processing System (TPS): TPS records all the business transaction at operational level. It converts raw data produced by the transactions into a usable, electronic form and forms the basis for handling the present.

It generates all internal data that are stored in organizational memory and then used in various other information systems, O’Bren and Markas (2009). Ready to Eat can employ TPS to handle transactions, generate data about them and form the basis for much of what the organization known about its operations. * Supply Chain Management (SCM): Supply Chain involves managing the flow of material into through and out of the organization. The supply chain can be divided into three parts which are product flow, information flow, information flow and financial flow.

It helps to generate the information associated with ordering of material, status of the payments to the suppliers and receipts from the customers. Supply chain can help ‘Ready to Eat’ to make it possible to have constant and complete knowledge of their product from supplies to final customer. (Mckeown 2007). * Customer Relationship Management (CRM): CRM is widely implemented system for managing the company’s interaction with the customers and sales data . It aims to streamline the sales and marketing processes to achieve higher sales productivity, improved customer service, loyalty and retention. Ready to Eat’ can use CRM to target better customer profiling and increased market share at reduced expenses and higher profitability. 2. (a) Business Functions and the role of Information systems in a business The main reason for the slow development of an organization is due to organization’s management. A single system can’t be responsible for the development of an organization since it can’t provide all the necessary information that an organization needs. All the system should provide necessary information in order to run the business effectively.

All the system should be computerized to deliver the rapid and accurate information across the organization. The following are the business functions that need to be look after in an organization. * Sales and marketing: The main function of this system is to identify the customer, knowing what the customer need is and developing those products and finally, contacting the customer and selling those product and services. This system provides relevant information to all the people in an organization. * Manufacturing and Production: This deals with producing goods and services that customer wants.

While going through this process, these systems also handle with the planning, development and maintenance of the material. * Finance and Accounting: This system handles the firm’s financial assets and is also responsible to find the new financial assets. * Human Resource: This system takes care of the entire employee requirement for the organization. It is responsible for identifying the best employees and hiring them so as to use their skills * Customer Service: After the sales services it is important to monitor the distribution of the products to gain the view of the customers.

It basically handles customer enquiries, offering advice to customers and dealing with customer complaints (Laudon & Laudon 2005) (b) Need of transaction Processing system (TPS) in a Business: TPS offer enterprises to rapidly process transaction to ensure the smooth flow of data and the performance of business process throughout the enterprise. It collects, stores, modifies and retrieves the data transactions of an enterprise. The success of an enterprise depends on the reliable processing of transactions. There can be various business transactions and each transaction.

There can be various business transactions and each transaction may need to go through different process to be completed. At each process the system develops the information that the management level requires to manage and monitor the business. The main characteristics of TPS are: * Rapid Processing: It is vital to the success of any enterprise. * Reliability: managers rely on PS for making better decisions. Organization such as UPS and airlines would have failed if there have been a failure in TPS. * Accessibility: The access to TPS is restricted to the person in the organization who requires their use.

Managers need TPS to monitor the operations and to monitor the relation of an organization with the external environment. 3. (a) Poter’s Competitive Forces Model: Laudon and Laudon (2006) have explained this model in their book. This model shows the effect of competitive forces on firm’s general business environment. The business strategies of a firm depend upon the existing competitors, new entrants, suppliers, substitute products and customers. Management Information Systems, Laudon and Laudon (2006) According to Laudon and Laudon (2006), many of the business firm uses information system to achieve competitive advantage.

There are four major types of competitive advantage: 1. Barriers to Entry that Restrict Supply 2. Demand Control 3. Economics of Scale 4. Process Efficiency Porter’s competitive force model is a widely used model that tells weather the business can attain any of those advantages. This model is about the firm’s general business environment. According to this model, the success of the business depends on the five competitive forces shown below: a) Traditional competitors: All companies are in attempt to compete with their competitors by introducing new products and better service to attract the customer. ) New Market Entrants: It is always free to enter the market place for new companies. Due to this they can use the strategy of the business in their favour but sometimes it can act against the company due to lack of knowledge. c) Substitute Products and Services: Due to technology there is always a need to create new products in the market depending on the demand of the customers. Sometimes, it creates huge margins by attracting a lot of customers but again at times due to more substitutes it becomes difficulty in the pricing of the product and finally, ends up in lower profit margins. ) Customers: The fate of the company depends on the customer and if company can attract a lot of customer then they can create huge profit margin else there will be a loss in the business. e) Suppliers: A firm also depends on the suppliers in term of pricing, quality and delivery of the products. (b) Role of Information System to counteract the competitive forces: Information Technology (IT) and internets are the strongest means to enlarge its products, services and overall capabilities which help company to gain major advantages over the competitive forces.

Laudon and Laudon (2006) have explained four strategies for dealing with competitive forces which are enable by using IT as follows: * Low-cost leadership * Product Differentiation * Focus on market niche * Strengthen customer and supplier intimacy Chris Lin and Hsieh (2006, vol 17) illustrate in their article how internet contributes to implement self service technologies and assess the customer’s perceptions resulting into competitive advantages to the business. Use of the internet for retail services save time, and also provides faster and higher quality information to the customers.

Therefore, transferring routine process to the internet helps improve productivity and increase profits by allowing retailers more time for research and development. Hence tool of information system are very important to provide ready information to the stakeholders like customers, dealers and owners etc. 4. (a) Information Requirements of ‘Ready to Eat’ The following are information requirements of the business * Record of book-keeping, invoicing and payroll function * Data related to customer’s need and market demand Enable the trouble free sharing of proper information with the third parties like suppliers and providers * Quantity of procurement and inventory taking for inventory management * Sales progress of individual employees and generating reports at the weekends * Well designed website to provide ready information to the information to the customers and maintain the record of customer information * Online access to information for decision making by the stake holders (b) Business function to be computerised ‘Ready to Eat’ needs to computerise the business functions based on the above mentioned information requirements.

Computerisation of these functions will help the business to fulfil the information requirements to achieve business goals like lowered inventory levels, Quickened information response time, enterprise wide integrated data etc. The major business functions which can be computerised are as follows: * Financial Accounting * Order entry * Sales order processing and distribution * Marketing * Human resource * Supply information Intranet Extranet Internet Planning & Scheduling Procurement Production Inventory Order Processing Shipping Suppliers Customers Logistics Services

Distributors Retailers 5). Use of computer networks to improve collaboration and among key stakeholders Internet, Intranet and Extranet are immensely important to share information across the organization. The above diagram that intranet and extranet are important to communicate and collaborate the information among customers, retailers, distributors and suppliers. ‘Ready to Eat’ need the computer networks for sharing of information within the organization and outside the organization and performs all the functions with their helps as mentioned in the above diagram.

Intranet: An intranet is network within the organization using internet protocols and technology so that insiders can access all forms of manuals and data base some of which are highly confidential. These systems include security software that prevents unauthorised access to company’s information. An intranet is designed to serve the internal informational needs of a business organization. Extranet: An extranet is a private intranet that is extended to authorised users outside a company. It can grant access to business partners, suppliers and customers to controlled portion of the business enterprise’s network.

It combines the privacy and security of intranets with the global reach of the internet. Internet: Internet has opened numerous possibilities for doing business at a local and global level. It enables the business organization to interact with other business organizations and with customer more directly. Information on orders, invoice approval of exchanged directly through the internet. Internet is increasing the importance for business use in widest sense by e-commerce, e-business, and e-marketing. The business functions are performed electronically with the possibility of greater efficiency, effectiveness and convenience. . The management challenges affecting organisational change during the implementation of the computerised information system Today is the world of high bandwidth networks and mobile internet connections. Due to competition new technologies, strategies and terminologies are developed. For the successful implementation of the computerised information system, it is necessary to consider various kind of issue such as initiating and communicating a new behaviour within the organization, analysis of competition and risk factor and identifying the experts to implement the new systems and approaches.

The change process deals with the process of change resulting from the introduction of technology or policy. Galio & Rajagopalan (2009) believes that the change process can be divided into four categories: * Initiation: This is the early stage that often includes experimentation and feasibility study which is followed by the decision to use or not to use the technology’ * Systems developments: This includes installation and development of new system along with system study, system design and system testing. * Reutilisations: This deals with process of using the technology involving user and training management. Diffusion and expansion: new technology is diffused and expanded over various business units of an organization as well as externally to trading partners. Implementation of computerized information system brings opportunities as well as challenges to the management. Managers need to address these problems by careful planning and management. Following are some of the management challenges: * Loss of management control * Organizational change requirements * Connectivity and application Integration * High cost of enterprise computing * Scalability, Reliability and security . Security and ethical issues due to the introduction of information systems in the business Due to use of information system in business today, there is a rise in the ethical issue. This includes the use of customer information, the potential of personal privacy, and the protection of intellectual property. Information system has created a threat to the today regarding the security of information of the individual. All the customer details including their credit card can be theft from the net by the hackers which results in a great loss financially to the customer.

Other information such as date of birth, mobile number is openly published in the internet. Ji Chao and Min (2008) illustrate such problem has been encountered in china due to the lack of individual’s privacy concerns and lack of mechanisms of public protection and the situation would be more serious if no any major measures are applied. To deal with such issues, businesses and governments should find solutions through legislations, law enforcement and new technologies. Due to lack of privacy of the customer it would affect the business, so, the organization should carefully look into this matter.

This creates a bad relationship with the customers and gradually the number of customers switches to a better firm which has secured system. Conclusion Recommendations References Huber,M. ,Piercy,C. , & Mc Keown,P. 2007, Information Systems, John Witely & Sons USA. Ji, BS, Chao,SS & Min,FQ 2008, Systems plan for Combating Identity Theft-A Theoritical Framework, Journal of Science, Service & management, vol. 1, pp . 143-152 Kawalek, J. Paul 2008, Re-thinking information Systems in Organizations, Routedge, New York. Laudon,K & Laudon ,J 2006, Management Information Systems, 10th edn, Prentice- Hall, New Jersey.

O’Brien, J ; Marakas, G 2009, Management information systems, 9th edn, McGraw Hill, NewYork. Williamson,E. , Harrison,D. ; Jordan M. 2004 Information systems development within supply chain management: International Journal of Information Management,Volume24, pp 375-385. Winter, J,Galio, C ; Rajagopalan, H 2009, The Value of Information Systems to Small and Medium-Sized Enterprises: Information and Communications Technologies as Signal and symbol of Legitimacy and Competitiveness, International Journal of E-Business Research,vol. 5,no. 1,pp. 65-91