Management Information Systems - UPS Case Study

Management Information Systems

• UPS uses information technology (IT) to compete globally.
• There are videos available for how UPS uses big data to improve package deliveries and how overnight shipping works.
• UPS package tracking system: Inputs, processing, and outputs are important to understand.
• Technologies used by UPS are related to their business strategy.
• UPS's information systems address business objectives.
• The consequences of these systems not being available are significant.

Dimensions of UPS Tracking System

• Organizational: Procedures for tracking packages and managing inventory, providing information.
• Management: Monitoring service levels and costs.
• Technology: Using handheld computers, bar-code scanners, networks, desktop computers, and more.

Information Technology Capital Investment

• Information technology capital investment (hardware, software, communication equipment) grew from 32% to 52% from 1980-2009.

The Interdependence Between Organizations and Information Technology

• A growing interdependence exists between a firm's information systems and its business capabilities.
• Changes in strategy, rules, and business processes often necessitate changes to the organization's hardware, software, databases, and telecommunications systems.
• The organization's capabilities are conditioned by its information systems.

Technology Dimension of Information Systems

• Computer hardware and software are critical.
• Data management technology is also important.
• Networking and telecommunications technology, including networks, the Internet, intranets, extranets, and the World Wide Web.
• IT infrastructure provides the platform for all systems.

Information System

• An information system is a set of interconnected components.
• These components collect, process, store, and distribute information.
• These systems support decision-making, coordination, and control.
• Data are raw facts, while information is data shaped into meaningful form.

Data and Information

• Raw data from a retail environment can be processed and organized to provide meaningful information.
• Example : Total unit sales of dish detergent or the total sales revenue from dish detergent for a specific store.

Three Activities of Information Systems

• Input: Capture of raw data from the organization or the external environment.
• Processing: Converting raw data into meaningful format.
• Output: Transfer of processed data to people or activities utilizing it.

Feedback

• Output is sent back to the appropriate organization members to evaluate and correct the input stage.

Computer/Computer Program vs. Information System

• Computers and software are the technical foundation and tools of information systems, similar to raw materials and tools for construction.

Functions of an Information System

• An information system receives input from suppliers, processes it, and provides output for customers and other stakeholders.
• Processing activities consist of classifying, arranging, and calculating data.
• Feedback mechanisms are crucial for refining or correcting input.
• External environmental factors such as customers, suppliers, competitors, stockholders, and regulatory agencies interact with and influence organizations and their information systems.

Levels in a Firm

• Organizations are typically organized into three levels: senior management, middle management, and operational management.
• Information systems serve each of these levels in different ways.

Functional Managers

• Functional managers oversee distinct business functions like sales, marketing, human resources, finance, and accounting, among others.
• Different functional business processes need different information systems.

Management Dimension of Information Systems

• Managers set organizational strategies to respond to business challenges.
• Managerial performance is often evaluated based on how well they perform their assigned tasks.
• Managers must act creatively, leading to new products and service creation or organization re-creation.

Business Perspective on Information Systems

• Information systems are tools for creating value and resulting in improved productivity and revenue.
• Information systems improve long-term strategic positioning.

Business Information Value Chain

• Raw data is transformed into more valuable forms through systems.
• The value of an information system is determined by how well it enhances decision making, increases efficiency, and profits.
• The organizational and managerial nature of information systems is highlighted.

The Role of Information Systems in Business Today:

• Businesses invest heavily in information systems to improve operational excellence, develop new products, and services, understand customers better, improve decision making, gain a competitive advantage and potentially ensure survival.
• This growing interdependence between ability to use information technology and ability to successfully implement corporate strategies is critical.
• Operational excellence improves efficiency to attain higher profitability, for example, Walmart's Retail Link system.
• New products, services, and business models are enabled by information technology, such as Apple's iPad, Google's Android OS, and Netflix.
• Customer/supplier intimacy improves customer relations and reduces costs, for example, JCPenney's system.
• Accurate information improves decision-making; for example, Verizon's dashboard.
• Information systems foster competitive advantage by providing better performance, offering superior products, and enabling real-time response to customers and suppliers.
• For survival, information technologies are essential, as demonstrated by Citibank's introduction of ATMs and industry-level changes brought about by governmental regulations requiring record keeping.

Investing in Information Technology

• Investment in information technology alone does not guarantee benefits.
• The success rate of returns from IT system investments can vary significantly.
• Adopting the right business model and investing in complementary assets (organizational and management capital) are important factors affecting returns.

Explore how UPS utilizes information technology to enhance their global operations. This quiz covers UPS's tracking system, the role of technology in their business strategy, and the implications of IT investments on package delivery efficiency. Test your knowledge on the intersection of management and technology in this essential case study.