Information system & their application in different industry
Branches of Chaity group:
- Chaity Composite Ltd.
- Chaity Garments Ltd.
- Chaity Apparels Ltd.
- Nice Apparels Ind. Ltd.
- Ashique Fashion Wear Ltd.
- Ashique Jeans Apparels Ltd.
- Ashique Dress Design Ltd.
- Chaity Classic Sportswear (Mfg.) Co. Ltd.
- The Plasticman Ltd.
- Kitway Pack. (Pvt.) Ltd.
- Chaity Embroidery Ltd
Among these we selected the “Chaity Garments Ltd” for our assignment.
|Director Chaity Apparels Ltd.|
|Director Nice Apparels Ind. Ltd.|
|Director Ashique Fashion Wear Ltd.|
|Director Ashique Jeans Apparels Ltd.|
|Director Ashique Dress Design Ltd.|
|Director Chaity Classic Sportswear (Mfg.) Co. Ltd
|GM. Garments Division Knit|
|GM. Garments Division Woven|
|ADM & HR Manager|
|Director Plasticman Ltd.|
|Director Chaity Embroidery Ltd|
|Director Kitway Pack. (Pvt.) Ltd.|
|Director Chaity Composite Ltd.|
|M.D. Garments Division|
|M.D. Textile Division:|
|Chaity Garment Ltd|
|Board of Directors|
Here is some of their information:
General More Information:
Wages and benefits
|Salary / Wages||The current monthly minimum wages is taka equivalent of tk. 1663.|
|Wages Breakdown||Basic +Medical Allowance +House Rent (30%of Basic pay)|
|Overtime||Over time is fully voluntarily and work after 8 hours would be considered as overtime. Maximum working hours in a day 10 hrs, per week is 60 hrs, average 56 hrs in a year.|
|Overtime Allowance||A worker gets double of basic pay.|
|Overtime Calculation||(Basic pay 208 hrs) X 2 X Actual overtime hrs= Total overtime payment.|
|Festival Bonus||Two festival bonuses, each bonus is equivalent half of one month basic pay is paid to workers in each year.|
|Incentives||If any worker in any month is not absent for a singe working day then he / she gets Tk.200 as attendance bonus. Production Incentive Bonus From time to time other incentive bonus may also be given.|
|Annual Increment||Annual increment is given by following the Company policy. At times Special increments may be given to those who have confirmed extraordinary experience or skills.|
|Working Hours||Normal working Hour 8:00 A.M to 5:00 PM, (1hr Break Between) Voluntary over time 5 :00 PM to 7 PM (Working hour in day shall 10 Hours)|
|Bonus||Full Basic Salary Service length more than 1 year Half Basic Salary- Service length more than 6 months.|
|Increment||Yearly increment based on performance evaluation|
|Promotion||Promotion based on skill test|
|Advance||Advance against salary & deduct on monthly basis. Compensation against accident If accident occurred on the job then total cost bearded by the company|
|Medical Facilities||Doctors room with 3 bed, free Medical Service, Full time doctor with one nurse, First Aider with first aid box in every floor, Ambulance Facility|
|Health & Safety||Sanitary Toilet, Pure Drinking Water, Using Safety Guard, Using mask, goggles and Eye guard. Using earplug, metal gloves & other PPE.|
|Child Care||Neat & Clean Child care facilities with two day care mates|
|Weekly Holiday||01 day in a week|
|Festival Leave||11 days per year|
|Earned Leave||1 day for 18 Working days in a year|
|Casual Leave||10 days per year|
|Sick Leave||14 days per year (full pay)|
|Maternity Leave||112 days|
What is Information System?
Information is the collected and organized data that is useful and meaningful to people. To take any decision people need information and the term system refers to an assembly of components or elements connected together in an organized way to produce output.
So information system can be any organized combination of people, hardware, software, combination of networks, data resources, and policies and procedures that collects, stores, retrieves, transforms and disseminates info in an organization. Information systems help in planning and decision making, co-ordination, controlling and analyze problems and creating new products.
In a nut shell, info system is
· A set of interrelated components.
· Collect, process, store and distribute information.
· Support in managing, analyzing and creating new products
That’s why information system is a set of components that collect, process, store and deliver information to help in decision making to interested users.
Role of info system in Business/ Why is important in the Business word/ why org depends upon is?
The profit and survival of any business depends upon how effectively it can operate its business, takes right decisions at right time, ensure proper utilization of resources. Information system helps organizations in these circumstances. Today in this technological era, we can’t think about any business without technology.
Information technology And business are interrelated now. Organization depends upon information system
· To set goal
· To reduce cost
· To develop product/service
· To take competitive advantage.
More clearly organizations use information system in following aspects.
For operational excellence:
Without excellence at operation organization can’t get competitive advantages. To achieve higher profitability it has to be excellent at operation. Info technologies help manager to achieve higher level of efficiency and productivity in business operations.
In new product services and business models:
A business model is a description about how an organization produces, delivers and sells a product or service. Information technology helps managers in creation of new product or service and to develop a new business model.
Customer and supplier intimacy:
Relationship with supplier and customer is a precondition for survival in market. If organizations have good relation with supplier and customer then their operational cost will low customer will buy more and ultimately profit will be higher. With information technology organization can engage more with its suppliers and can know it customers.
Improve decision making:
To take proper decisions managers need right information at right time. Sometimes they depend upon forecasting, best guesses, and luck which lead to over or under production, misallocation of resources. So costs increases and organizations lost its customers. But information technology gives right information and helps in decision making.
Competitive advantage refers to achieving more advantage than competitors. When an organization can doing things better than its competitors, deliver quality products at low cost, quick response to customer and supplier than organization may have some loyal customer which increases profit. Information technology helps organizations in these circumstances and thereby to get competitive advantages.
Sometime to face competition or to survive in the market, organizations need to change it strategies and have to use information technology. Without using information technology they can’t survive in the market.
So we can say that, information system is important in all levels of the organization to perform functions.
Components of Information System
An information system refers to a system that accept data, process into information & deliver output to interested people.In an information system model,it has some components. These are:
People are important element of into system they include:
· End user
· IT specialist
End user are customer, saleperson, clerks, accountants, managers, knowladge, workers and are all levels of an organizayion. They use information system or information for decision making. Information technology specialists are system analyst, soft developer, system operators and other tcehnical personnel who develop and operate information system.
There are two important element which has radically changed in the sector of information system as well as organization activities.
A) Softwer resources
B) Hardware resources
Softwer resources refer to all sets of instructions that process information. It consist of..
· System softwer
· Application softwer
Softwers are not only instructions which direet and control computer hardware but also instructions which are needed by people.
Hardware resources are all physical devices and materials used in information processing
- Computer system
- Computer peripherals
Data are more than raw material of info system. Data are raw facts or observation. The data to create a simple list of an organizations customers are protected as the cash in a bank vault. Data are life blood of todays org, and the effeetive and efficient mgt of data is considered an integral part of organizational strategy. It include
- Data base
- Knowlahe base
The concept of network resources emphasizes that commumications technologies and networks are a fundamental resource component of all is. Communication teehnologies and networks like the internet intranets extranents are essenticl to operations of any business. Network resources include.
- Communication media
- Network infrastruvture
Communication media includes, twisted pair wire, coaxial and fiber optic cables, cellular and satellite wireless tech. And network infrastructure are hard/saff or any teeh that are needed to support the operation and use of communication network.
How does is works Its function?
Is collects input data, processes data into info and give output to users. That means is tcransform raw data info into meaningful info throught three activities/functions.
Input involves colleetion of raw data from within or external envirnoment of the org and which being processed End users typically enter data direetly into a computer system or record data transaction on some type of physical medium. In some formal cases data is entered from sourcedocuments.
Processing convert data into information. Processing activities are such as calculating, comparingm, storing, classifying and summarizing. These activities organize analyze and manipulate data, thus converting them into information for end users.
Output refers to transfer of the processed information to interested users for decision making. The informations are transferred through message, report forms, images, or other medias. By using information organizations or any other stakeholder can take a right and best decision which causes the value addition to the business process and increase profit and growth.
In above three activities also there are two supporting functions.
Storage of data:
Storage is the is activity in which data are retained in a organized manner for later use.
Control of system performance:
An is should produce feedback about its input, processing, output and storage activities. This feedback must be monitored and evaluated to determine if the system is meeting established standard.
In this way information system adds value in organization and helps in decision making.
Business processes are the flow that performs the activities like- organization, coordination, decision making to produce a valuable product or service in different functional areas which are interconnected to each others.
Business processes become competitive strength & assets when it serves better than competitors. And it also becomes liabilities processes do not give better results.
There are different business processes in a firm according to functional areas.
|FUNCTIONAL AREA||BUSINESS PROCESS|
|Manufacturing & Production||Assembling the products|
|Sales & Marketing||Identifying customers|
|Finance & Accounting||Creating financial statements|
|Human Resources||Hiring employees|
Information System & Business Processes
Each business processes needs information to do their works effectively &efficiently. And information system makes it possible for firms
Ø To manage all their information
Ø Make better decision
Ø Improve the execution of their business processes.
Information technology enhances businesses mainly in two ways-
Ø Increasing efficiency of existing processes by automating steps that were manual.
Ø Enabling entirely new processes that are capable of transforming the businesses
· Change flow of information
· Make possible to access and share information
· Replacing sequential steps with parallel steps
· Eliminating delays in decision making
Types of Information system
A business firm has different system that supports to make decision. But operation management, middle management & senior management each use a specific type of system to support the decisions to run the company successfully. These are:
Ø Transaction Process System(TPS)
Ø Management Information System(MIS)
Ø Decision Support System(DSS)
Ø Executive Support System(ESS)
Transaction Processing Systems:
Transaction process system is the system that serves the operational level, monitors the daily activities, and supports the daily routine work in organization for transaction. They collect the information from both internal external operations. Here manager take the routine decision, which are highly structured. When the decisions are pr defined is called structured decision. They are the source of the other systems in the cases of proving operational level information.
For example: order, receive payment, sales etc.
The principle purposes of this system are:
· To answer routine questions and to track the flow of transaction through the organization
· To make the routine decision by pre defined criteria whether the customers meet the criteria.
· To monitor the internal operation
· To maintain the relation with external environment.
· To monitor the daily sales and report and report for all branches.
Management Information Systems:
Management Information System is the study of information system in business and management which designates the specific category of middle management. They take decisions on the basis of activities not in transaction. This decision is also structured. It helps the manager through providing report about current performance. This report or information is used to monitor and control the business and predict future performance. Most MIS reports condense information from TPS and are not highly analytical. MIS generally provide answer to routine question that have been specified in advance and have a predefined procedure for answering them. MIS also compare between the actual sales and planned sales
|Planned Sales||Actual sales||Deviation|
Decision support systems:
Decision support system is the system supporting management decisions that are unique and rapidly changing using advanced analytical models and data analysis capabilities. It supports non-routine decisions making for middle management. Generally DSS use internal information from TPS& MIS. They often collect information from external source( Like as-current product prices of competitors). When MIS face a problem in any activities, they will provide this problem to DSS to analyze it & judge the market for strategic decision.
Executive support System:
Executive support System is the system that supports senior management by proving data. Data are often in the form of graph and charts delivered via portals using many sources of internal and external information. They identify the goals and mission. They address the strategic issues and long- term trends.
Ø What are the competitors’ movements?
Ø What is the market position in the organization
Ø What will employment level in 5 years?
When they collect information from external environment they assessment on these information, then they store them. Based on this information they take unstructured decision. They are decision maker.
Enterprise applications automate process that span multiple business functions and organizational levels and may extend outside the organization.
Enterprise systems also known as Enterprise resource planning which integrate the key business processes of an entire firm into a single software system that enables information to flow seamlessly throughout the organization. These systems focus primarily on internal processes but may include transaction with customers and vendors.
- It helps to resolves the problem fragmented, redundant data sets and systems.
- Coordination of daily activitiesby loweringcosts and increasing customers satisfaction
- Efficient response to customer orders
- Provide valuable information for improving management decision making.
SUPPLY CHAIN MANAGEMENT SYSTEM (SCM)
It automates the flow of information between a firm and its suppliers in order to optimize the planning, sourcing, manufacturing and delivery of products and services. That’s why it is also called interorganizational system.
It helps the suppliers, purchasing firms, distributors and logistics companies by sharing information about-
- Inventory levels
- Delivery of products and services.
Ø Make better decisions about how to organize and scheduling sourcing, production and distribution
Ø Achieve the right amount of products to destination with lest amount of time and lowest cost.
CUSTOMER RELATIONSHIP MANAGEMENT SYSTEM (CRM)
It helps firm to manage their relationship with their customers. CRM provide information about customers to help in
Ø Coordinate all of the business processes
Ø Identify, attract and retain the most profitable customers
Ø Provide better service to the existing customers and
Ø Increase sales.
CRM system consolidates and integrates customer’s information from multiple communication channels. Thus the accurate knowledge and preferences of customer’s helps firms increase the effectiveness of marketing campaign.
KNOWLEDGE MANAGEMENT SYSTEM (KMS)
KMS enables originations to better manage processes for acquiring, storing, distributing and applying knowledge and expertise.
Ø It also collect all relevant experience in the firm
Ø Make it available wherever and whenever it is needed
Ø Helps to improve business processes and management decisions.
Ø It l inks firms to external sources of knowledge
Ø This knowledge is difficult to imitate, unique and can be leveraged into long- term strategic benefits.
Ø It includes enterprise –wide systems for managing and distributing documents, graphics and digital knowledge objects.
Ø Example-Engineering work station.
Intranet means internal networks built with same tools and standards as internet.
Ø Used for internal distribution of information to employees
Ø Typically utilize private portal providing single point of access to several systems
Ø May connects to company’s transaction systems
Private intranet that is accessible to authorized outsiders.
Ø Expedite flow of information between firm and its suppliers and customers
Ø Can be used to allow different firms to collaborate on product design, marketing and production
What is an organization?
Generally, organization means a structure that defines and indicates the authority of employees to do a job.
But now, it is not meat that organization only a general structure. It is now a stable and social structure that takes resources from environment and processes them to produce outputs.
This technical definition focuses three elements which capital and primary production factors provided by the environment. The organization transforms theses into products and services in a production function. The products and services are consumed by environment in return for supply input.
On the other hand, behavioral view of organization defines it as the collection of rights, privilege, obligation, and responsibilities that is delicately balanced over a period of time through conflict and conflict resolution.
However, the technical definition tells us how thousands of firms in competitive markets combine capital, labor, and information technology whereas the behavioral model takes us inside the individual firm to see how that technology affects the organization’s inner working procedures.
How does IT Impact on Organizations?
Information technology has become a well known factor that impacts all sectors. It also effects an organization because it has fundamentally altered the economics of organizations and greatly increased the possibilities for organizing the work.
So its (in brief) impact on an organization is all around about..
Ø Economic impacts
Ø Organizational and Behavioral impacts
From the point of view of economics..
Cost of labor:
Information technology should result in a decline in the number of middle managers and clerical workers as IT substitutes for their labor. For Example_ Wal-Mart’s continues replacement system sends order for new merchandise directly to suppliers as soon as consumers pay for their purchasers at the cash register that reduces the labor amount who carry these from production house to showroom.
Cost of capital:
Earlier we saw that IT reduces the cost of labor. When it reduces the cost of labor ultimately reduces the cost of capital. Because when a firm uses more labor it has to pay more money for their salary. Besides this buildings and other machineries have to arrange for their comfortable work place.
For entering into new market, a new comer organization has to pay for locating and communicating with distinct suppliers, monitoring contract compliance, buying insurance, obtaining information for products and so forth.
But when firm, especially the use network, can help lower the cost of market participation cost, making it wirthwhile for firms to contract with external suppliers of using internal sources.
Information technology helps in reducing agency costs because it becomes easier for managers to oversee a greater number of employees.
We know that organizations have to communicate among their intra departments and levels for taking various important decisions. If the firms use TPS, DSS, MIS, ESS, CRM, SCM, these ultimately reduce the importance of huge employees for clerical work and middle managers. So IT reduces the cost the agency cost.
Organizational and Behavioral impacts
Information technology also impacts the organizational and behavioral pattern of an organization. These are..
IT organizations flattens
Information technology rushes decision making rights lower level on the organization because lower level employees receive the information what they need to make decisions without supervision
On the other hand by using some especial software firms can take much more decision in effectively and efficiently, so they less employees than before they had.
Organizations flatten because in postindustrial societies, authority increasingly relies on knowledge and competence rather than formal positions.
Organizational resistance to change
• Information systems become bound up in organizational politics because they influence access to a key resource – information
Organizational Resistance and the Mutually Adjusting Relationship between Technology and the Organization
• Information systems potentially change an organization’s structure, culture, politics, and work
• Most common reason for failure of large projects is due to organizational and political resistance to change
By above ways Information Technology affects an organization.
What are the competitive advantages (forces) and how a firm can achieve these by using IT?
Competitive advantages are those advantages which a firm enjoys over its competitors. Which firms or organizations are in leading position in the market, they all enjoy competitive advantages over their competitors, Wal-Mart in retails business, Google in web browsing, and so on.
In 1985, Michael Porter has indicated a model of competitive forces in which parties enjoy competitive advantages. This model is discussed below..
Michael Porter’s competitive forces model
All firms or organizations who continuously exist in market for these firms or organizations competitive advantages are lunching new products or services, efficiencies, switching costs, new idea for attracting customers and captured market shear.
New market entrants
When a new firm entries into a market; it has new equipments, young workers (less expensive but more innovative and energetic), huge capital. So these are the competitive advantages for new enters.
Substitute products and services
Substitutes customers might use if your prices become too high, e.g. iTunes substitutes for CDs, fiber-optic telephone lines to the home substitutes for TV lines. So, substitute’s products and services making firms’ competitive advantage is high price of competitors’ products.
If there are more variety in products and services in the market, customers can impose their bargaining power to collect needed products or services e.g. on line customers have extraordinary power over used book firms because they can find multiple suppliers of just about any text book in a few seconds.
Market power or bargaining power is also competitive advantage of suppliers because firm cannot raise prices as fast as suppliers. On the other hand, manufactures must have to collect raw materials from their.
Four generic strategies for dealing with competitive forces, enabled by using IT
Earlier we discussed what competitive advantages an organization can get but there is a question how these can be achieved? The answer is an organization can get these benefits by using information technology (IT). For this they have to four strategies. These are..
· Low-cost leadership
· Product differentiation
· Focus on market niche
· Strengthen customer and supplier intimacy
An organization can produce products and services at a lower price by using IT than competitors while enhancing quality and level of service. For Examples, we can see the Wal-Mart’s Inventory Replacement System. By using IT Wal-Mart pays only 16.6% of his revenue for overhead than competitors while paying 24.9% of their revenue.
By using software, firms can analyze the daily transactions’ behavior of customers and can know what they want, what are their preferences. On the basis of this information they can enable new products or services, for greatly changing customer convenience and experience. For Examples, we can see that Google continually is changing their searching features and add unique search service.
Focus on market niche (segmentation)
A firm can use information systems to enable a focused strategy on a single market niche. Because information system enables companies to analyze customers buying patterns, tastes, and preference closely so that they efficiently focuses on smaller and smaller targets markets.
Strengthen customer and supplier intimacy
By using information a system (Inventory Replacement System) Wal-Mart develop strong relationship with suppliers and also makes ties and loyalty with customers by delivering on time products and services.
By above ways information technology helps organizations to achieve their competitive advantages.
How a manager can achieve competitive advantages in specific way and in which stage of value chain a manager use information system to achieve competitive advantages?
Porter’s model is very helpful for achieving competitive advantages but it does not indicate what exactly do and does not provide a methodology to follow for achieving competitive advantages.
The value chain model identifies specific task where competitive advantages can be best achieved. The value chain model views the firm as a series of basic activities that a new margin of value to a firm’s products and services. These activities can be divided into two categories e.g. 1) Primary activities 2) Supportive activities.
· Primary activities
These activities are mostly related to the production and distribution the products and services.
Ø Inbound logistics includes receiving and storing materials for the production procedures.
Ø Operations transform inputs into finished products.
Ø Sales and marketing includes promoting and selling the finished goods.
Ø Services activities include after sales services.
Ø Outbound logistics responsible for storing and distributing the finished goods.
· Supportive activities.
Supportive activities basically help to the primary activities for better output by administration and management, human resources, technology, and procurement.
Now we will discuss where an organization uses information system for success in their operation of business in brief.
Where an organization will use information technology, it depends upon their strategic objectives?
Strategic applications of information technology to supportive business process are identified by the value chain model.
Ø If organizations want to dramatically improve administrative coordination and supportive service in the management body by employees, then they will use information technology in the Administration and Management sight of value chain system model.
Ø If organizations want to help the human resource management function by easy self-service access in the benefits information to the up coming employees, then they will use information technology in the Human Management Department sight of value chain system model.
Ø If organizations want to develop more and more new products and services for satisfying their existing and potential customers or market, then they will use information technology in the Technology Development Department of value chain model.
Ø If organizations want to improve procurement of resources by providing online market places for firms’ suppliers. Then they will use information technology in the Procurement of resources Department of the value chain model.
Strategic applications of information technology to primary business process are identified by the value chain model.
Ø If organizations want to improve the relationship with their customers and suppliers, they will use information technology in the Inbound and Outbound logistics by the help of Customers Relationship Management (CRM) system and Sourcing and Procurement system (CPS) in the value chain model of organization.
Ø If organizations want to improve operation excellence in the Operations of value chain model in organization, then they will use information technology in the operation department of those organizations.
Ø If organizations want to increase and also capture new market, then they will use information technology in the Sales and Marketing department of organization.
Ø If organization want to create loyal customers and want to develop cross marketing activities, then they will use information technology in the Customers Service Department of the organization.
By above ways organizations can create new value for achieving Competitive Advantages by using Information Technology in the value chain model.
Chaity Garment Ltd is a leading organization in garments sector in Bangladesh. Today in the technology era, to survive in the market, Chaity Garment Ltd. has to take technology for its operation. Because they think that, with the help of information technology it can take competitive advantages.
Chaity Garment Ltd needs various types of raw materials such as cotton, zipper, button, dyes, elastic and small machineries etc. Usually they collect raw materials from foreign market by import.
The buyers of Chaity garment are various international recognized brands such as GAP, JC Penny H&M, Wal-Mart, Rebook and Addidas.
Chaity produce and sell products as per customers’ requirements. When they get order from their customers then they go for production. As they think about customized production strategy, so they collect raw materials as per customers’ requirements. That is why they need not to maintain any specific level of inventory of raw materials. They communicate with suppliers for raw materials through e-mail. Chaity makes contract with suppliers through e-mail. Chaity maintain inventory level (not important) in manually.
Chaity Garment is a multidivisional organization. It has HR, Administration, Production, Sales, IT, departments through LAN & WAN. They communicate with one another both in letter and e -mail.
The employees of Chaity Garment report to one another through both the Email and formal letter.
HR IT OM AC MKT FIN
Chaity has an Information Technology department. Information Technology department is responsible for all technical work. Chaity has a database system. It has big storage capacity. The employees collect information from internal & external source & store in their own database. All the departments are liked in the database by LAN & WAN. Employee can share their documents, reports & all the other necessary data through LAN & WAN.
For day today work Chaity depends upon both Information Technology & paper documents. The manager collect performance of worker manually & then put it into database. The executives of accounting Human resource, Finance, Marketing use software & paper document for communication. The Information Technology department of Chaity group introduces some software for various departments for communication. Accounting department are tally, payroll & Accounting information system software for their communication.
Production department use Production Management System (PMS). For automated production Chaity us ORATEX, TDS system. Thus the Operation of Chaity Garment is fully automated. That’s why they enjoy “Operation Excellence” competitive advantage from their competitors. The managers of Chaity communicate through Email. By using LAN, WAN.
Also they use extranet for their overall management & communication. Chaity maintain relationship with supplies & customers through mail. Chaity has a dominated website (www.chaitygroupbd. com). The customer & suppliers can also communicate with Chaity by using their website.
· When we met with them we have find out that they use functional informational system such as Accounting Information system, Production Management System, Tally, Payroll, ORAGETX, TDS, HR Management System.
· They also use Executive Support System (ESS) to make strategic decisions.
· They use Information system & Technologies in their Operation activities of value chain model.
Thues they enjoys operation execellence in the RMGs in Bangladesh, and this is the competitive advantage of them.
· Although they use some software to run their business but they do not use all tyeps of information system such as TPS, MIS or DSS, ERP, SCM, CRM, and KMS in their organization.
Thus they cannot enjoy all types of benefits of information system.