Chapter 7 ILS

• Traditional TPSs


  Support the various business functions of organizations that have not yet implemented ERP systems
• Electronic and mobile commerce

  Allow transactions to be made by the customer, with less need for sales staff, and open up new opportunities for conducting business
• ERP system

  A highly integrated set of systems, which can lead to many business benefits
• Operational systems


  Manage the day-to-day running of a company - cannot operate without them
• Operational systems include


  • TPSs - systems that sell products and services to customers
  • Supply chain management systems - a type of software that manages the flow of goods, data, and resources related to a product or service
  • Accounting Systems - systems that help to maintain tax records
• ERP system


  An alternative to having separate systems - one integrated system that does all of them
• ERP systems


  Evolved from systems (called materials requirement planning (MRP)) that allowed them to plan how much raw material they would need in the future, plan their production, control their inventory and manage their purchasing process
• Existing systems lacked the integration needed to coordinate the activities and to share valuable information across the company
• Costs were higher, customer service suffered/deteriorated
• Enterprise resource planning (ERP)


  A set of integrated programs that manage a company's vital business operations for an entire multisite, global organization
• ERP systems


  • Must be able to support multiple legal entities, multiple languages, and multiple currencies
• Core business processes supported by ERP systems


  • Manufacturing
  • Finance
• Additional business functions supported by ERP systems


  • Human resources
  • Sales
  • Distribution
• Transaction processing systems (TPSs)


  Every company has TPSs to process the detailed data necessary to update records about fundamental business operations
• TPS include


  • Order entry
  • Inventory control
  • Payroll
  • Accounts payable
  • Accounts receivable
  • General ledger
• Inputs to TPSs


  • Basic business transactions such as placing an order, paying an account, signing in and out each day
• Processing activities in TPSs


  • Data collection
  • Data editing
  • Data correction
  • Data manipulation
  • Data storage
  • Document production
• A TPS provide data which is input to other information systems (MIS/DSS/ESS)
• Batch processing system


  Computerized processing in which business transactions are accumulated over a period of time and prepared for processing as a single unit/batch
• Online transaction processing (OLTP)


  Computerized processing in which each transaction is processed immediately. Data in the system reflects the current status.
• Objectives of TPSs


  • Process data generated by and about transactions
  • Maintain a high degree of accuracy and integrity
  • Avoid processing fraudulent transactions
  • Produce timely user responses and reports
  • Increase labour efficiency
  • Help improve customer service
  • Help build and maintain customer loyalty
  • Achieve competitive advantage
• Activities included in the transaction processing cycle


  • Data collection
  • Data editing
  • Data correction
  • Data manipulation
  • Data storage
  • Document production
• Data collection


  Can be manual or automated via special input devices (such as scanners, point-of-sale devices, and terminals)
• Data should be collected at the source - this approach is called source automation
• Data should be recorded accurately, in a timely fashion
• Data Editing


  Checking data for validity and completeness to detect any problems
• Data editing examples


  • Quantity and cost data must be numeric
  • Names must be alphabetic
  • Verification that codes associated with an individual transaction are present in a database containing valid codes
• Data correction


  Re-entering data that was not typed or scanned properly. If invalid data is detected, system should provide error messages that alert the person responsible for data editing functions.
• Data manipulation activities


  • Classifying data
  • Sorting data into categories
  • Performing calculations
  • Summarizing results
  • Storing data in the organization's database for further processing
• Data storage


  Updating one or more databases with new transactions. After being updated, this data can be further processed and manipulated by other systems so that it is available for management decision making.
• Document production and reports

  • Hard-copy paper reports
  • Soft copy displays on computer screens
• Results from one TPS can be inputs to another system
• Typical uses of document production and reports


  • Checks and invoices
  • Management information
  • Decision support
  • Compliance with local, state, and federal regulations
• TPS applications


  • Order Processing Systems
  • Purchasing Systems
  • Accounting Systems
• Electronic commerce


  Conducting a business transaction (e.g., distribution, buying, selling, and servicing) electronically over computer networks, primarily the Internet but also extranets, and corporate networks
• Forms of e-commerce


  • B2C - business to consumer, allows customers to place orders, with their order processing system
  • B2B - business to business, where the customer is another business
  • C2C - allowing consumers to sell to other consumers. eBay is an example
• 1. government


  The use of ICTs to simplify the sharing of information, speed up previously paper-based processes and improve relationships between the citizen and the government
• Mobile commerce (m-commerce)


  Relies on the use of wireless devices, such as personal digital assistants, mobile phones, and smartphones, to transact
• B2Me


  A form of e- or m- commerce where each customer is treated as a separate marketing segment, and the customer experience is personalised somehow e.g. Woolworths offering targeted specials through email based on your previous purchases.
• Production and supply chain management systems


  1. Sales forecasting - estimates future customer demand

  2. Sales and operations plan - takes demand and current inventory levels to determine production for future demands

  3. Demand management - refines the production plan by determining the amount of weekly or daily production needed to meet the demand for individual products. The output is the master production schedule.

  4. Detailed scheduling - uses the production plan to develop a detailed production schedule specifying production scheduling details such as which items to produce first

  5. Materials requirement planning - determines amount and timing of placing raw material orders with suppliers

  6. Purchasing - uses the information from the materials requirement planning to place purchase orders for raw materials and transmit them to qualified/selected suppliers

  7. Production - uses the detailed schedule to plan the details of running and staffing the production operation