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A management-level system

Three main categories of information systems serve different organizational levels: operational – level systems, management-level systems, and strategic-level systems. Operational – level systems support operational manages by keeping track of the elementary activities and transactions of the organization, such as sales, receipts, cash deposits, payroll, credit decision, and the flow of materials in a factory.

The principal purpose of systems at this level is to answer routine questions and to track the flow of transactions through the organization. How many parts are in inventory? What happened to Mr. Williams’s payment? To answer these kinds of questions, information generally must be Williams’s payment? To answer these kinds of questions, information generally must be easily available, current, and accurate. Examples of operational-level systems include a system to record bank deposits from automatic teller machines or one that tracks the number of hours worked each day by employees on a factory floor.

Management-level systems serve the monitoring, controlling, decision-making, and administrative activities of middle managers. The principal question addressed by such system is this: Are things working well? Management-level systems typically provide periodic reports rather than instant information on operations. An example is a relocation control system that reports on the total moving, house-hunting, and

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home financing costs for employees in all company divisions, noting wherever actual costs exceed budgets.

Some management-level systems support no routine decision making. They tend to focus on less-structured decisions for which information requirements are not always clear. These systems often answer “what -if” questions. What would be the impact on production schedules if we were to double sales in the month of December? What would happen to our return on investment if a factory schedule were delayed for six months? Answers to these questions frequently require new data from outside the organization, as well as data from inside that cannot be easily drawn existing operational-level systems. (Source: Senn, J.A. Analysis and Design of Information System , 2002)

Strategic-level systems help senior management tackle and address strategic issues and long-term trends, both in the firm and in the external environment. Their principal concern in matching changes in the external environment with existing organizational capability. What will employment levels be in five years? What are the long-term industry cost trends, and where does our firm fit in? what products should we be making in five years?

Information systems also serve the major business functions, such as sales and marketing, manufacturing and production, finance and accounting, and human resources. A typical organization has operational-, management-, and strategic-level systems for each functional area. For example, the sales function generally has a sales system on the operational level to record daily sales figures and to process orders. A management-level system tracks monthly sales figures by sales territory and reports on territories where sales exceed or fall below anticipated levels. A system to forecast sales trends over a five-year period serves the strategic level. We first describe the specific categories of systems serving each organizational level and their value to the organization. Then we show how organizations use these systems for each major business function.

The term management. The term management information systems (MIS) also designates a specific category of information systems serving management-level functions. Management information systems (MIS) serve the management level of the organization, providing managers with reports and often online access to the organization’s current performance and historical records. Typically, Information System are oriented almost exclusively to internal, not environmental or external, events. Information System primarily serve the functions of planning, controlling, and decision making at the management level. Generally, they depend on underlying transaction processing systems for their data.

Information Systems on Haier’s basic operations. The basic transaction data from TPS are compressed and are usually presented in long reports that are produced on a regular schedule. Figure shows how a typical Information System transforms transaction level data from inventory, production, and accounting into Information System files that are used to provide managers with reports.  Transaction Processing Systems Management information systems (Source: Jaiswal Mahadeo, Mital, Monika (2005), Management Information Systems, Oxford University Press, New Delhi.)

Manufacturing and Production Systems

The manufacturing and production function is responsible for actually producing, the firm’s goods and services. Manufacturing and production systems deal with the planning, development, and maintenance of production facilities; the establishment of production goals; the acquisition, storage, and availability of production materials; and the scheduling of equipment, facilities, materials, and labor required to fashion finished products. Manufacturing and production information systems support these activities.

Table 2-3 shows some typical manufacturing and production information systems arranged by organizational level. Strategic-level manufacturing systems deal with the firm’s long-term manufacturing goals, such as where to locate new plants or whether to invest in new manufacturing technology. At the management level, manufacturing and production systems analyze and monitor manufacturing and production costs and resources. Operational manufacturing and production systems deal with the status of production tasks.

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