1. Chapter 1
(Narrative Report)
By:
Aala, Maryjane A.
Bainto, Mark Angelo F.
Francisco, Mark Jupiter
Reyes, Ivan M.
Yerro, Jennelyn L.
BSCS IV-A
Mr. Jomel Penalba

2. Professor
August 03, 2010
Business Functions and Supply Chains
In an economy that produces and consumes so much information, professionals must know how to use information
systems in virtually every business activity. Managers must have an overall understanding of all elements of a system, so that they
know what are available to control, quality, costs, and resources. Modern information systems encompass whole business cycles,
often called supply chains.
When you finish this chapter, you will able to:
• Identify various business functions and the role of ISs in these functions.
• Explain how to ISs in the basic business functions relate to each other.
• Articulate what supply chains are and how information technology supports management of supply chains.
• Enumerate the purpose of customer relationship management systems.
• Explain the notion of enterprise resource planning systems.
Effectiveness and Efficiency
Effectiveness
- defines the degree to which a goal is achieved. A system is more or less effective depending on:
1. How much of its goal is achieves, and
2. The degree to which it achieves better outcomes than the other systems do.
Efficiency
- determined by the relationship between resources expended and the benefits gained in achieving a goal.
Accounting

3. The purpose of accounting is to track every financial transactions within a company, from a few cents to multimillion dollar
purchases, from salaries and benefits to the sale of every item. Without tracking the costs of labor, materials, and purchased
services using a cost-accounting system, a company might discover too late that it sells products below what it costs to make them.
Finance
ISs can significantly improve financial management using Financial Information Systems that helps managing cash and
investment portfolios of one’s business.
Cash Management
Financial Information Systems help managers track a company’s finances. These systems record every payment and cash
receipt to reflect cash movement, employ budgeting software to track plans for company finances, and include capital investment
systems to manage investments through another system called cash management systems (CMSs).
Cash Management Systems – systems that deal specifically with cash.
Ex.: Electronic Funds Transfer (EFT) – is the electronic transfer of cash from an account tin one bank to an account in
another bank.
Investment Analysis and Service
ISs provide subscriber brokers and their clients with financial news, stock prices, commodity prices, and currency rates
from multiple locations across the world.
Some of the most important factors these managers must consider are:
1.) Risk – measured as the variability (degree of change) of the paper’s past yield.
2.) Expected Return
3.) Liquidity – a measure of how fast an investment can be turned into cash.
Engineering
Time to market – is the time between generating an idea for a product and completing a prototype that can be mass-
manufactured.
Brainstorming – (the process of a group of colleagues meeting and working collaboratively to generate creative solutions
and new ideas), developing a concept, creating mock-ups, building prototypes, testing and other activities that require investments
of time, labor, and money.
Rapid Prototyping – allows a model of a product to be produced within hours, rather than days or weeks.
Computer-aided Design (CAD) – is the use of computers in modifying designs quickly and store drawings electronically.
Computer-aided Manufacturing (CAM) – is the process of data to instruct machines, including robots, how to manufacture
the parts and assemble the product.
Supply Chain Management
Consist of monitoring, controlling, and facilitating supply chains. Supply chain management systems are information
technologies that support SCM. SCM system have been instrumental in reducing manufacturing costs, including the costs of
managing resources and controlling inventory, the manufacturing phase does not exist, so the term “supply chain” refers only to
purchasing of finished goods and the delivery to customer of those goods.
Supply Chain
Consist of three phases: procurement of raw materials, processing the materials into intermediate and finished goods, and
delivery of the goods to customer.
Material Requirements Planning and Purchasing
One area of manufacturing that has experienced the greatest improvement from IS is inventory control, or material
requirements planning (MRP). Traditional inventory control techniques operated according to the basic principle that future
inventory needs are based on past use, once used up, inventory was replaced. By contrast, replenishment in MRP is based on future

4. need. MRP programs take customer demand as their initial input. The main input to MRP programs is the number of product units
needed and the time at which they are needed; the programs then work back to calculate the amounts of resources required to
produce subparts and assemblies.
Economic Order Quantity
The Economic Order Quantity of a specific raw material is the optimal quantity that allows a business to minimize
overstocking and save cost, without risking under stocking and missing production deadlines.
Manufacturing Resource Planning II
Manufacturing Resource Planning (MRP II) combines material requirements planning (MRP) with other manufacturing
related activities to plan the entire manufacturing process, not just inventory. MRP II system can quickly modify schedules to
accommodate orders, track production in real time modify schedules to accommodate orders, track production in real time, and fix
quality slippage.
Monitoring and Control
Information system has been designed to control process, not just monitor them. Controlling process is important to ensure
quality. For example, Ford Motor Company implemented software that it calls Project Execution, which combines bar coding and
wireless technology to ensure quality. Since each vehicle is assembled on a chassis, each is tagged with a unique bar code. A bar-
code sensor is installed in each stop of the assembly line. The sensor transmits wireless signals to computers and electronically
controlled gates. The purpose of the system is to ensure that no assembly steps are skipped, and that each vehicle passes a series of
performance and quality test along the way. If a step is missed, the gate does not let the vehicle leave the plant.
RFID in SCM
The most important development in hardware to support SCM has been a technology called radio frequency identification
(RFID). RFID tags contain circuitry that allows contain circuitry, that allows recording of information about a product. When attached
to it. It contains circuitry that allows recording of information about a product. It also contains an lectronic product code (epc) which
replaces the Universal Product Code with much more information. The tag can include the date, destination, and many other details
that help track its movement and sale. The information can be read and also revised by special RFID transceivers. Item with
rewritable tags can contain maintenance history of products which helps optimize maintenance of the items.
The same technology can also used for other purposes: detection of items that should be recalled because of hazardous
components, detection of counterfeit products, and accurate condemnation of expired items, such as drugs and auto parts.
Customer Relationship Management
Customer Relationship Management (CRM) systems are designed to support any and all relationships with customers.
Mostly, they support three areas: marketing, sales and customer service. Modern CRM systems can help capture the entire
customer experience with an organization from response to an online advertisement to automatic replenishment of products, to

5. proactive service. They constantly strive to improve customer service and periodically contact anyone who has ever purchased
something from them to ensure repeat sales and encourage loyalty. Any information technology that supports thesae efforts is
considered a CRM system.
CRM systems also provide an organization with an important element: all employees of the company who directly or
indirectly serve a customer are “on the same page”. Through their individual computers, all can have immediate access to the status
of an order for an item or a resolution of a buyer’s complaint, or to any other information that has to do with the customer. All who
serve the customer are well- informed and receive the information from the same source.
Market Research
Market research systems can help to find the populations and regions that are most likely to purchase a new product or
service. They also help analyze how a new product fares in its first several months on the market.
Targeted Marketing
To save resources, businesses use IT to promote to people most likely to purchase their products. This activity is often
referred to as targeted marketing. The principle of target marketing is to define the prospective customers as accurately as possible
and then to direct promotional dollars to those people most likely to purchase products. To define target markets, businesses collect
data everywhere they can: from sales transactions and warranty cards, or by purchasing databases with information about
organizations and individuals. Using database management systems(DBMSs), special programs to build and manipulate data pools, a
company can sort and categorize consumers by age, gender, income, previous purchase of related product, or any combination of
these facts and other demographic information.
Telemarketing (marketing over the telephone) makes intensive use of IT. It is a method of direct marketing in which
a salesperson solicits to prospective customers to buy products or services, either over the phone or through a subsequent face to
face or Web conferencing appointment scheduled during the call.
Computer telephony integration (CTI) is a technique enabling a computer to use the digital signal coming through a
telephone line as an input in a computer system.
Data mining technique takes advantage of large date warehouses to find trends and shopping habits of various
demographic groups.
Customer Service
Web based CS provides automated customer support 24hrs per day, 365 per year. It saves company’s cost of labor if
humans provide the same service.
Salesforce Automation
It equips traveling salespeople with information technology to facilitate their productivity. It can increase productivity
significantly, making sales presentations more efficient and letting field representatives close deals on the spot, using preformatted
contracts and forms.
Ethical and Societal Issues
Consumer Privacy
• What Is Privacy? It is your right to control information about yourself.
• Business Arguments. Business leaders argue that they must collect and use personal data.
• Consumer Arguments. Consumer usually accepts that they must divulge some private information to receive services, but
many do not accept the mass violation of privacy.

6. • Losing Control. Once you provide information, you have a little control over it.
• The Eight Commandments of Personal Data Collection and Maintenance.
Purpose. Companies should inform people who provide information of the specific, exclusive purpose for which
the company maintains its data, and only use data for another purpose with the subject’s consent.
Relevance. Companies should record and use only data necessary to fulfill their own purposes.
Accuracy. Companies should ensure that the personal records they maintain are accurate.
Currency. Companies should make sure that all data about an individual is current.
Security. Companies should limit access to data to only those who need to know.
Time Limitation. Companies should retain data only for the time period necessary.
Scrutiny. Companies should establish procedures to let individuals review their records and correct inaccuracies.
Sole Recording. When using a recording technology, a company should ensure that no other party can take
advantage of the technology to record the same information.
Human Resource Management (HRM)
- It means employing people, developing their capacities, utilizing, maintaining and compensating their services in tune
with the job and organizational requirement.
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There are five classification of Human Resource Management:
 Employee Record Management - The human resource department must keep personnel records to satisfy both external
regulations and internal regulations, as well as for payroll and tax calculation and deposit, promotion consideration and
periodic reporting. Information Systems facilitate employee record management.
Ex. HR use IS to reduce the space in storing employees’ records.

7.  Promotion and Recruitment - Recruitment activities need to be responsive to the ever-increasingly competitive market to
secure suitably qualified and capable recruits at all levels. Automating the selection process significantly minimizes time and
money spent on promotion and on recruitment.
Ex. Intranets helps HR managers post position vacancy announcements from their own PCs.
 Training -It is an organized learning over a given period of time, to provide the possibility of performance change.
Multimedia Software Training is replacing training programs, such applications include interactive, three-dimensional
simulated environment.
Ex. Multimedia Software Training safely prepares the worker for the dangerous work instead of putting him at risk
for injury in actual work.
 Evaluation -An organization needs to take stock of its workforce and to assess its performance in existing jobs to improve
organizational performance.
Ex. Software helps managers standardize their employee evaluations by providing step by step guides to writing
performance reviews.
 Compensation and Benefits Management - Compensation includes topics regarding the wage and/or salary programs and
structures. And an Employee benefit typically refers to retirement plans, health life insurance, life insurance, disability
insurance. Special Software helps the HR department manage benefits and compensation efficiently and effectively.