Management Information Systems - UPS Case Study

Management Information Systems

• UPS uses information technology globally
• Interactive sessions available online
• Big data used to transform package deliveries (video link provided)
• Overnight shipping processes (video link provided)
• UPS package tracking system inputs, processing, and outputs
• UPS technologies and their relation to business strategy
• Business objectives addressed by UPS's information systems
• Consequences of system unavailability

Dimensions of UPS Tracking System

• Organizational dimension: Procedures for tracking packages, managing inventory, and providing information
• Management dimension: Monitoring service levels and costs
• Technology dimension: Handheld computers, bar-code scanners, networks, desktop computers, and other relevant tools

Information Technology Capital Investment

• Information technology capital investment, a category including hardware, software, and communication equipment, grew from 32% to 52% from 1980 to 2009.

The Interdependence Between Organizations and Information Technology

• A growing interdependence between a firm's information systems and its business capabilities
• Changes in strategy, rules, and business processes increasingly require changes in hardware, software, databases, and telecommunications
• Organizational capacity often depends on the abilities of its systems

Technology Dimension of Information Systems

• Computer hardware and software
• Data management technology
• Networking and telecommunications technology
• Networks, the Internet, intranets, extranets, and the World Wide Web
• IT infrastructures as platforms for systems

Information Systems

• Set of interrelated components for collecting, processing, storing, and distributing information
• Support decision-making, coordination, and control
• Data as raw facts and information as data shaped into meaningful form

Data and Information

• Raw data from a supermarket checkout counter is processed into organized, meaningful information, such as total unit sales of a product or sales revenue from a specific product category.

Three Activities of Information Systems

• Input: Capturing raw data from organizations or external environments
• Processing: Converting raw data into meaningful form
• Output: Transferring processed information to people or activities that use it

Feedback

• Output returned to appropriate members of an organization to evaluate or correct the original input stage

Computer/Computer Program vs. Information System

• Computers and software provide the technical foundation and tools similar to the materials and tools used in constructing a building

Functions of an Information System

• Information systems collect information about organizations and their environments
• Three basic activities (input, processing, and output) produce the needed information
• Feedback is output returned to appropriate individuals to evaluate and refine input
• Stakeholders, like suppliers, customers, competitors, regulatory agencies, and stockholders, interact with organizations and information systems

Levels in a Firm

• Business Organizations are hierarchies (three levels): Senior management, Middle management, and Operational management
• Information systems serve these levels.

Functional Managers

• Separation of business functions: Sales and marketing, Human resources, Finance and accounting, Manufacturing and production
• Unique business processes

Management Dimension of Information Systems

• Managers set organizational strategies to address business challenges
• Managers are evaluated based on their performance
• Managers need to be creative, creating new products and services, and occasionally restructuring the organization

Business Perspective on Information Systems

• Information systems as tools for creating value
• Investments in information technology lead to greater productivity, revenue, and superior long-term strategic positioning

Business Information Value Chain

• Raw data is transformed through different stages to enhance its value
• The value of an information system hinges on its ability to lead to better decisions, improved efficiency, and higher profit margins

The Business Information Value Chain

• Series of value-adding activities that focus on procuring, converting, and distributing information for effective decision-making, organizational effectiveness, and increased firm profits

The Role of Information Systems in Business Today

• Growing interdependence between the ability to apply information technologies and implement corporate strategies
• Businesses invest heavily in information systems to accomplish specific business objectives (Operational excellence, New products and services, Customer intimacy, Improved decision making, Competitive advantage, and Survival)

Operational Excellence

• Improves efficiency and profitability through information systems and technology
• The Walmart Retail Link system is an example that connects suppliers and stores

New Products, Services, and Business Models

• Business models demonstrate how companies create, deliver, and sell products/services to generate wealth
• Information systems play a crucial role in creating new products, services, and business models

Customer and Supplier Intimacy

• Companies gain customer and supplier insight which improves returns and profitability
• JCPenney's information system connects sales records with contract manufacturers

Improved Decision Making

• Accurate data is crucial for effective decision-making. Without it, managers rely on forecasts and luck, which can lead to problems like overproduction/underproduction, and misallocation of resources, poor response times, and loss of customers
• Tools like Verizon's web-based digital dashboard provide real-time data on customer issues

Competitive Advantage

• Delivering superior performance, pricing products competitively, and responding to customers/suppliers in real-time are key to competitive advantage
• Examples include Apple, Walmart, and UPS

Survival

• Information technology is considered a necessity for smooth business operations
• Industry-level changes, like the introduction of ATMs by Citibank, and government regulations like the Toxic Substances Control Act, and Sarbanes-Oxley Act, all drive the need for information systems.

Investing in Information Technology

• Investment in information technology does not guarantee successful returns
• There are variations in the return from system investments
• Successful implementation depends on the adopting the right business model and investing in complementary organizational capital