Management Information Systems Overview

Course Structure

• The course covers supply chain and logistics background.
• It includes ERP system - SAP.
• The course continues with ERP - Manufacturing use case.
• Finally, it covers SCM - Top 10 Technology.

Topics

• The topics cover logistics background.
• The topics cover supply chain management.
• The topics include information system types.
• One topic is enterprise resource planning (ERP).
• Sub-topics include SAP – ERP, SAP – Material Management (MM), SAP – Sales and Distribution (SD), and SAP – Production and Planning (PP).

Background of Logistics

• Logistics covers inbound and outbound processes.
• Supply chain management is also a component of logistics.
• SCM vs logistics is a key topic.
• Information systems, and ERP are also included in the background.

Logistics Management

• Logistics is the process of planning, implementing, and controlling the efficient flow and storage of raw materials, in-process inventory, finished goods, and related information from point of origin to point of consumption.

What is Logistics Management?

• The objective is to plan and coordinate all activities to achieve a desired level of delivered service and quality at the lowest possible cost.
• Logistics encompasses the complete gamut of activities from raw material procurement and management to the final delivery to the customer.
• The ultimate goal is customer satisfaction.

Logistics Types

• The diagram illustrates inbound and outbound logistics.
• It shows a path from supplier to warehouse to hub to factory and then warehouse to hub to buyer warehouse.

Logistics Elements

• The logistics system relates to customer service, inventory management, transportation, storage and material handling, packaging, information processing, demand forecasting, and purchasing and facility location.

Supply Chain Management

• Supply Chain Management (SCM) integrates suppliers, factories, warehouses, and stores to efficiently produce and distribute merchandise in the right quantities, locations, and time, minimizing total system cost while satisfying service requirements.
• Integration, involvement of everyone, and a systems approach to reduce cost are key elements.

The Chain from Original Supply to Final Consumption

• The diagram illustrates the flow from supplier to manufacturing to distribution to retail outlet to consumer, highlighting information flow and cash flow.

What's the Supply Chain?

• The diagram visually depicts the supply chain from raw material to final product delivery.

SCM vs Logistics

• SCM involves integrating key business processes from end user to original supplier, providing information and services that add value for customers and other stakeholders.
• Logistics is part of the supply chain process, planning and controlling the efficient flow and storage of goods and services.

What is the SCM?

• The integration of all activities through improved supply chain relationships delivers a sustainable competitive advantage.
• Life cycle processes include physical, information, financial and knowledge flows satisfying user requirements with products/services from multiple suppliers.
• Design, maintenance, and operation of supply chain processes meet end-user needs.

Basis for Logistics and SCM

• Logistics Management is the process of integrating goods movement to organization.
• SCM coordinates supply chain activities.
• Logistics has been developed before SCM.
• Logistics is a smaller part of SCM.
• Organization involvement in SCM is multiple, compared to one in logistics.

What is Digital Supply Chain?

• Digital supply chains leverage new techniques and methods with data analytics to create value through different aspects.
• The foundation is Web-enabled capabilities and often combines paper-based and IT-enabled processes.
• True digital supply chains fully capitalize on connectivity, system integration, and 'smart' components' information-producing capabilities.

What is E-SCM?

• Effective utilization of internet and business processes to deliver goods, services, and information from the supplier to consumer in an organized and efficient way.
• Collaborative use of technology to improve supply chain activities and supply chain management.

The Merger of SCM and the Internet

• Internet technologies have expanded supply chain management to a whole new dimension.
• The internet eliminates the gap between multiple SCMs.
• Web applications enable full supply chains to share data, forecasts, inventory, and capacity plans globally, 24/7/365 with 100% accuracy

Characteristics of E-SCM

• E-SCM enables a new perspective on the function of information in supply chains.
• E-SCM supports customer-winning relationships between enterprises and supply chain partners.
• Supply chain synchronization (timing is crucial) is a core characteristic.

Information Speed

• Fast firms eat slow firms, according to a quote by Klaus Schwab.

1 - Information in the Supply Chain

• Companies can use e-information to design real-time and simultaneous systems for supply chain data.

1.2 Supply Chain Event Management

• Agile supply chains respond to planned and unplanned events.
• E-information helps extend supply chain visibility and control.

1.3 "Real Options" Management

• E-information metrics enable time-based information to mitigate risks associated with supply chains.
• Strategically plan and deploy safety stocks, and allocate capital for efficient product postponement.
• It bridges company-level optimization planning with the global demand of the business network.

1.4 Supply Chain Systems Integration

• E-SCM's impact is measured by the interconnectedness among channel members.
• E-information enables real-time information flow, bypassing channel inventory buffers.

1.5 Collaborative Relationships

• E-information facilitates new collaborative strategies and networked business planning for supply chains.
• E-information supports channel collaboration from product design to customer service.

What is Management?

• Management involves accomplishing tasks with proper resources at the correct cost, place, and schedule.
• Management directs resources (human and material) to meet set goals.

Elements of Management

• Key elements of management include planning, organizing, directing, coordinating and controlling.

Levels of Management & Information Flow

• Levels of management include top management, middle management and operational management.
• Strategic leadership in top management.
• Tactical decision-making in middle management.
• Operational efficiency in lower management.
• Information flow is communicated vertically through these levels.

What is Information?

• Information is processed data, a meaningful form of recorded facts, events, and transactions.
• Data are raw inputs that become information after filtering through processes.

Difference between Data & Information

• Data are raw facts stored in the background, and information are processed facts presented in a useful manner.
• Data are technology-oriented, and information is business-oriented.

Classification of Information

• Information can be classified by the following: source, nature, level, time, frequency, use, and form. There may also be more criteria for classification depending on how granular the needed information is.

The Characteristics of Good Information

• Good information is relevant, accurate, complete, reliable, presented to the correct person in time, contains the right level of detail, and is communicated using the correct communication channels.
• Meaning should be clear and understandable.

Characteristics of Perfect Information

• Perfect information should be relevant, accurate, complete, and readily understandable.

What is MIS?

• Management Information Systems (MIS) is a software tool that provides a holistic overview of processed information to guide strategic and tactical decision-making.
• MIS supplies information for managing organizations efficiently and effectively.

Effectiveness and Efficiency

• Effectiveness refers to achieving the intended results.
• Efficiency is about performing tasks with minimum waste of time and effort.

The Importance of Management Information (MIS)

• MIS provides valuable data for decision-making in an analytical way.
• Reports, dashboards, charts, trends are used for logical and analytical comparisons.

Role of MIS?

• Effective business decision-making depends strongly on quality analysis, cost/budget analysis, risk analysis, market analysis, Inventory analysis, SWOT analysis, stakeholder analysis, feedback analysis, and behavior analysis.
• Report and Dashboard preparation is a key aspect of MIS.

Classification of Information Systems

• Hierarchical information systems supports operations (business transactions, operational control) and management decisions (managerial reports and decision support, interactive decision support).
• Types involve transaction processing, process control, enterprise collaboration, management information, decision support, and executive information systems.

Types of MIS

• Different types of MIS exist for various purposes.
• Management information systems focus on pre-planned, regular reports for middle and operational managers.
• Decision support systems support problem-solving and decision-making for middle managers.
• Executive information systems provide quick access to summarized information from different levels of the company to top management.

Advantages of MIS

• MIS highlights company strengths and weaknesses through reports on revenues, employee performance, and other key aspects.
• It gives an organizational overview and aids in communication and planning.
• Aligning business processes to customer needs is facilitated by availability of customer data and feedback. Effective marketing is facilitated.
• Provides an important asset for any company in the modern world, providing a better understanding consumer trends and behaviors.

Outputs of MIS

• SAP system-generated reports include scheduled reports (daily, weekly, monthly), key-indicator reports (summaries of the previous day's critical activities), and demand reports (information requested by managers).
• Exception reports are automatically generated when unusual situations need managerial action.

Role of Information System in Current Business Scenarios

• Information systems are transforming businesses with increased wireless technology, media and advertising shifts and new federal security/accounting laws.
• Globalization provides opportunities and challenges with reduced operating costs and opportunities and challenges.
• The emerging fully digital firm relies heavily on digital networks and digital business relationships.
• Digital firms have increased flexibility due to time and space-shifting factors.
• Businesses are more interconnected, leveraging information technology for corporate strategy implementation and achieving corporate goals.

7- Operational Excellence

• Efficiencies, profitability, productivity, and superior replenishment system are all tools achieved through improved information systems and technology in business operations.

8- New Products, Services, and Business Models

• Business model describes how products or services are produced delivered, and sold leading to wealth.
• New products/services utilize technological advancements/innovations.

9- Customer and Supplier Intimacy

• Customer service and return of business leads to increased revenue and profits.
• Supplier intimacy enables access to more cost-effective vital inputs.

10 - Improved Decision Making

• Reliable information is crucial to avoid inaccuracies like overproduction/underproduction, misallocation of resources, poor response times, and unhappy customers.

11 - Competitive Advantage

• Superior performance and products are competitive advantages.
• Real-time response to customers and suppliers is highlighted. (Toyota Production System)

12 - Survival

• Information technologies are necessary for businesses to compete and potentially survive.
• Industry changes (e.g., ATM introduction) and government regulations (e.g., record-keeping acts) require modern information systems.

Overview of Information System Scope in Supply Chain

• Information systems (IS) encompass internal and external functions throughout a supply chain.
• Internal functions include finance, accounting, marketing, logistics, and purchasing.
• Examples of external functions are customers, vendors, carriers, and supply chain partners.
• Sub-systems for order management, warehouse management, and transportation management.

Application Database

• The application database is a central repository of data used by various components of an organization.

Functional Areas of Logistics

• Procurement logistics, production logistics, distribution logistics, inventory and warehouse logistics, transportation logistics, customs and compliance, internal and external logistics.

What is ERP?

• Enterprise Resource Planning (ERP) is business software that integrates various departments (finance, manufacturing, HR, supply chain, services, procurement) into a single system.

ERP Evolution

• Early ERP systems focused on inventory control, Material Requirements Planning (MRP), Manufacturing Resource Planning (MRP II), and then evolved into more comprehensive solutions.

MRP I

• MRP I, the initial evolution of ERP, focused on material requirements planning and aimed at increased accuracy and efficiency in production scheduling and inventory management.

MRP II

• MRP II built on MRP I and included payroll, shop floor control, and detailed capacity planning. It gave manufacturers the tools to compare forecasts to actual data to optimize efficiency.

ERP

• ERP systems combine all benefits of MRP II and add functionality in areas such as financial management, HR, and payroll management.
• Using ERP systems effectively streamlines data across different departments.

Enterprise Resource Planning Systems (ERP)

• ERP systems have integrated software modules with a central database which enables data sharing throughout an enterprise.

Functional Areas for MRP I, MRP II and ERP Software

• A comparison table showing the features of MRP I, MRP II and ERP software.

ERP Types

• ERP systems can be classified by type (out-of-the-box, custom, standard solutions, SaaS solutions), size (small, mid-sized, large enterprises) and ownership (proprietary or open-source).

ERP Deployment Types

• ERP deployment types could be on-premise, hosting, cloud, hybrid, with different levels of investment, hardware, software, and control.

Why ERP is Required?

• This section covers the motivations and necessities for using ERP systems in business.

Reasons for Implementing ERP Systems

• Reasons for implementing ERP systems include improvements in business performance, easier employee jobs, reporting/regulatory compliance, integrated systems across locations, replacing old systems, positioning for growth, better customer service, standardized operations, appeasement of stakeholders, and/or reduced working capital.

Top ERP Vendors

• List of top ERP software vendors.

What is SAP ERP?

• SAP ERP helps manage core business processes in departments financing, manufacturing, HR, supply chain, and services, procurement for organizations.
• The system is designed to adapt to change. It consists of continuous updates and provides easy scalability and reduced costs.
• Machine learning, digital assistance, advanced analytics are features of the modern ERP. The system is offered in a cloud based or local options, designed for easy deployment.

Key Features and Capabilities of SAP ERP

• Key features of SAP ERP (asset management, finance, manufacturing, R&D, engineering, sales, and service, sourcing and procurement, and supply chain).

Sample: Business Suite

• A diagram outlining the various interconnected components within a SAP business suite.

Why SAP ERP?

• SAP ERP solutions can be used for all types of companies, regardless of size.
• SAP ERP systems offer industry-leading technology for its solutions and applications are adaptable. The cloud-based system provides reliable, secure, and flexible offerings.

SAP ERP History

• A timeline of the different versions of SAP ERP software (R/1, R/2, R/3, My SAP ERP Suite 7, S/4HANA).

What is S/4HANA?

• S/4HANA is a simple, four-generation (fourth generation) underlying database technology developed by SAP.
• It builds on previous ERP systems to encompass all daily company processes.
• Industry-specific solutions are added to S/4HANA.

Fast Facts about SAP S/4HANA

• The system supports and optimizes company processes, enabling a smooth flow.
• It provides real-time flexibility and scalability for businesses of all sizes.
• The collection of logically related transactions facilitates business functions within the system.

Fast Facts about SAP S/4HANA Data Types in ERP Systems

• Data types in ERP systems including organizational, master, and transactional data are outlined.

Fast Facts – SAP S/4HANA On-Premise vs Cloud

• The different types of licensing for SAP S/4HANA, comparing on-premise and cloud-based deployment options.

Fast Facts about SAP S/4HANA Digital Transformation - Why?

• This section outlines the drivers of change within a digital transformation.

SAP MM (Material Management)

• SAP MM is one of the critical modules in SAP ERP Central Component (ECC), managing materials, warehouse inventory, and supply chain.

SAP MM Functionality

• Functionality related to SAP MM (Inventory Management, Purchasing, MRP, Physical Inventory, Valuation, Service Master, Invoice Verification, and Product Catalogs).

MM Master Data

• Components of the MM master data including vendor, material, purchasing information record, and condition master data are listed.

Vendor Master Data

• Vendor master data contains essential information needed to interact with external suppliers.
• It is used by purchasing and accounting departments, requiring a master record for each vendor.

Material Master Data

• This data contains comprehensive company information on a material.
• Used in inventory management, sales, production, and accounting/controlling.
• Material master data exists and is stored in segments called "Views".

Procure-To-Pay Process

• The procure-to-pay process steps are visually displayed in a circular flow including purchase requisition, vendor selection, purchase order, notify vendor, vendor shipment, goods receipt, and payment to vendor.

Purchase Requisition

• Purchase requisition is an internal document instructing purchasing department to request goods/services.
• Two methods used to create a purchase requisition exist. (Direct/Manual, Indirect/Automatic)

Requisition Sourcing

• Methods of requisition sourcing includes internal sourcing, source lists, outline agreements, and requests for quotations (RFQs).

Internal Sourcing

• Sourcing requests can use sources within the company such as a centralized warehouse or materials needed through a specific internal procurement transaction.

Source List

• A source list is a record of allowed sources for procuring materials within a particular plant and period. It can consist of a single vendor or a list of multiple vendors to choose from. The system reverts to a search for outline agreements if no source is specified.

Outline Agreement

• Outline agreements satisfy requisitions through existing long-term deals. Subdivided into contracts (defining material/service pricing), quantities specified, and values stated.
• Scheduling agreements specify total quantity, schedule details, delivery schedules with quantities, and delivery dates.

Request for Quotation (RFQ)

• To find a vendor, a request for quotation is issued.
• Accepted quotations generate purchase information records and help in price comparisons to select the best option.

Quotation from Vendor

• Quotation is a legally binding vendor offer for materials during a specific period.
• Quotation records for vendors' responses are documented in SAP.

Vendor Evaluation

• Vendor evaluation helps companies evaluate vendors by sourcing while monitoring vendor relationships.
• The method includes supporting a maximum of 99 main criteria and 20 sub-criteria for vendor evaluation (e.g., price, quality, delivery).

Purchase Order

• A purchase order is a formal request from the company to a vendor for specific materials or services under stated conditions.

Purchase Order Structure

• The structure of purchase orders highlights the header, item overview, conditions, and line items.

Purchase Order Output

• Purchase order output includes various forms for notification to the vendor (printed, e-mail, EDI, Fax, XML).
• Output formats include purchase order output, order acknowledgment forms, reminders, and schedule agreements.

Goods Receipt

• Goods receipt is the acceptance of materials based on a purchase order. This update the system with updated quantities and inventory.

Material Movements

• Material movement types are coded numerically to represent the movement of goods.

Effects of a Goods Receipt

• A series of events happens when a goods movement/receipt takes place, including creating material documents, accounting documents, updating stock quantities and values, and updating purchase orders.

Invoice Processing

• Incoming invoices are verified against purchase orders to confirm accuracy of prices/content..
• Discrepancies between purchase orders, goods receipts, and invoices generate warnings/errors.
• The system might block the invoice.

Invoice Processing

• The invoice applies liability on completion of goods receipt, updating purchase/material masters and generating accounting documents.
• Finalization marks the completion of the verification process and initiates the payment process in Financial Accounting.

Payment to Vendor

• Payment to vendors can be automatic or manual, using an outgoing payment or a dedicated payment program.
• Components of the payment transaction include payment method, paying bank, items to be paid, payment amount, and payment medium.

SAP SD – Sales and Distribution

• SAP SD is a core functional module in SAP ECC that facilitates data storage and management for customer and product-related information.
• SAP SD manages sales order, shipping, billing, and invoice processes for goods/services.
• SAP SD integrates with other modules in the cycle including order-to-cash transactions. SAP SD details all parts of the sales and distribution cycle.

SAP SD Functionality

• It handles various functions like sales, shipping, transportation, billing, credit management, and foreign trade.

SD Master Data

• The master data used with the sales and distribution module include sales and delivery data, vendor data, material master data, pricing condition data, and customer master data.

Customer Master Data

• The customer master data contains information about every customer, including contact details, address, payment terms, and order history.
• Separate organizational levels for sales, distribution, and divisions helps to identify specific customer information by sales organization and division.

Customer Master Data

• Customer master data is divided into General Data, Company Code Data, and Sales Area Data.

Material Master Views

• Different views (sections/segments) exist within SAP Material Master to store and access specific data.

Condition Master Data (Pricing)

• Condition master data encompasses all pricing-related details in the system, including prices, surcharges, discounts, freight, and taxes.

Output

• SAP systems produce different types of outputs, including e-mail, EDI, and XML.
• Specific examples like quotes, confirmations, and invoices are outputs of the system.

Sales Order Process

• The sales order process includes pre-sales activities, sales order entry, checking availability, picking materials, packing materials, post-goods issues, and customer invoice receipt.

Inquiry

• An inquiry is a customer request for information/quotation about products or services.

Quotation

• A quotation is a formally offered, legally binding price offer with product details, a timeframe for delivery, and a fixed price.

Delivery Scheduling

• The system calculates the delivery timeline based on requested dates, material availability, production scheduling rules.

Backward Scheduling

• Backward scheduling determines when production should start considering pre-set delivery deadlines for order(s) and considering all material requirements.

Forward Scheduling

• Forward scheduling determines the delivery date based on current date and scheduling using pre-set lead times.

Availability Check

• SAP availability checks determine the availability of materials given a requested delivery date.

Pricing

• SAP provides pricing information from both the header and line item levels, calculating and displaying price, discounts, surcharges, taxes, and freight.

Shipping

• The system handles order combination and partial as well complete deliveries to customers.

Goods Issue

• Goods issue updates the inventory levels, records cost of goods sold, and updates financial accounts associated with goods sold. This records the final step of the ownership transfer to the buyer.

Billing

• Billing creates customer invoices using data from sales orders and adjusts the customer's credit status.
• Transferring control to the Financial Accounting department handles payment and reconciliation.

Payment

• The payment step, a part of the sales order process, is managed by the Financial Accounting department.
• It covers posting payments, reconciling payment differences, and documenting in the financial ledger.

Document Flow

• SAP systems track order status, documenting every change made in the customer order lifecycle.

SAP – PP – Production Planning

• This module plans, tracks, and executes manufacturing processes, including material requirements planning, capacity constraints, and production planning proposals (order/purchase).

Production Planning Process in SAP

• Key steps involved in production planning, including sales and operations planning, demand management, long-term planning, master production scheduling, material requirement planning, shop floor control, and settlement.

1 - Sales and Operations Planning (SOP)

• SOP component in SAP manages sales and production, planning future targets using historical and current data.

2 - Demand Management

• Demand management in production planning uses the planning strategy and establishes methods to manufacture a product.
• The process includes planned independent requirements (PIR) and make-to-stock methods.

3 - Long-Term Planning

• Long-term planning checks future material and capacity needs, using simulation to check viability.
• Long-term planning can be based on current production BOMs or be adjusted for long term BOMs and routing.

4 - Master Production Scheduling (MPS)

• MPS plans for critical materials, optimizing availability and reducing storage costs independently of regular MRP runs.

5 - Material Requirements Planning (MRP)

• MRP is the core of production planning in SAP, connecting demand, supply, production, and proposing procurement strategies.
• The results of an MRP run are procurement proposals: plan orders and purchase requisitions to procure materials from external/internal suppliers.

6 - Shop Floor Control

• This control ensures smooth execution of production, identifying materials, quantities, and locations for manufacturing, using master production data.
• Shop floor processes consider production/process orders, routing, sequence, work centers, and materials consumption. Monitoring/controlling is key for supply chain management.

7 - Capacity Planning

• Capacity planning establishes production capacity, based on work centers (people, groups, machines) and minutes/hours constraints.

8 - Inventory Management

• Inventory management manages material stocks, documents movements, and performs physical inventory counts.
• It facilitates managing special stock types.

9 - Settlement

• Production orders are settled once completed, ensuring accuracy of financial management by evaluating variances.

ERP - Manufacturing use case - Pain Areas in Inventory and Planning Operations

• The module has pain areas in inventory planning.
• Examples include re-order point, min/max quantity calculation, and issues with multiple item units and conversions.

ERP - Manufacturing use case - Some of Pain areas in Inventory and planning operations

• Issues like re-order point problems, min/max quantity calculations, and issues with differing item units are handled using ERP systems.

Reorder Point

• The method for calculating reorder point is explained, including stock level, lot size, lead time for replenishment, and safety stock.

1.2 Min-Max

• Using min/max planning in SAP, you set minimum/maximum inventory levels for materials. When stock drops below minimum, a requisition or job is generated to replenish the inventory to its maximum.

How system will behave with Items reached Reorder point or MIN-Max items or result of MRP run

• ERP systems can generate automatic alerts, reports, and, in some systems, automatically create purchase requisitions when reorder points or min/max thresholds are reached.

1.3 Item Unit Conversion

• ERP systems can be used to help businesses with converting item units based on different purchasing, storage/inventory, and transaction units.

Technological Part

• This is about applying new technology to enable new digital supply chains in business, including Cloud Computing, EDI, RPA, 3D Printing, RFID, IoT, Barcode, Artificial Intelligence, and Virtual/Augmented Reality.

Digital as Enabler

• This section explores how digital enablers can overcome challenges in different sectors/industries using big data, analytics, cloud computing, IoT, social media, virtual/augmented reality, and Al to enable digital supply chains.

EDI- Electronic Data Interchange

• EDI is the computer-computer exchange of business documents in a standard electronic format between business partners.

RPA - Robotic Process Automation

• Robotic process automation uses specialized programs to automate and standardize repeatable business processes.

Benefits of Robotic Process Automation

• RPA advantages are high accuracy, a lower technical barrier for those using it, compliance with regulatory guidelines, non-invasive technology, increased productivity, improved employee morale, and greater reliability and uniformity in consistency of performance.

3D Printing

• 3D printing builds 3-dimensional objects layer by layer using computer-aided designs.

RFID

• RFID tags are used to identify people and objects using radio waves.

IoT

• The Internet of Things (IoT) is an ecosystem of connected physical objects that communicate through the internet.

Test your knowledge on the key concepts and advantages of Management Information Systems (MIS) and Decision Support Systems (DSS). This quiz covers topics like SWOT analysis, inventory analysis, and how these systems contribute to globalization. Perfect for students or professionals looking to deepen their understanding of information management.