Management Information SystemsManagement Information Systems

Competitive Advantage with Information Systems across Organizations

Chapter 8

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This Could Happen to You

DSI relies on inbound logistics to obtain components and materials

DSI business processes and supporting information systems cross into other organizations

Is there a way to use cross-organizational information systems to gain labor productivity?

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Study Questions

Q1. How do inter-organizational information systems provide competitive advantages?

Q2. What is the potential conflict concerning information systems between customers and vendors?

Q3. What are the major categories of inter-organizational information systems?

Q4. What technology is required for inter-organizational IS?

Q5. How do inter-organizational information systems benefit small businesses?

Q6. How will the increasing use of inter-organizational information systems change organizational structures?

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Q1. Information Systems that Cross Organizations

Integration of multiple-company operationsSelling

Purchasing

Check-clearing

Credit card processing

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Value Chain Activities across Organizations

Figure 8-1

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Inbound Logistics

ManufacturersAcquisition, inventory, and control of raw materials and

parts

Non-manufacturersAcquisition, inventory, and control of finished products

Operations activities only

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Customer-Centric Activities

Principal flows concern activities with customerSolicitation/order, shipment, query/response

Facilitates organization’s competitive strategy

Information systems must be designed to support different strategiesLowest cost vendor

Dell Computers

Differentiation based on quality Laguna Tools

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Q2. Potential Conflicts

Processes and flows exist between both company and customers and company and vendorsFor DSI to minimize cost of ordering, vendor must minimize cost of

selling

Information systems can be designed to minimize processing costs for both customers and suppliersOff-the-shelf software

DSI uses AutoCad

Custom software can be created to achieve mutual benefit

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跨組織的價值鏈活動事務之替代模型

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顧客∕賣家流程的兩個不同觀點

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Q3. Categories of Inter-Organizational Information Systems

E-commerce

Customer relationship management (CRM)

Supply chain management (SCM)

Inter-organizational transactional processing

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E-Commerce

Buying and selling goods and services over the WebVendors sell from Web-storefronts

Web servers process http protocol

Operate order-entry application software

Customers access through Web browsers

E-commerce clients are thin

Types:B2C, B2B, B2G

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Customer Relationship Management (CRM)

Track interaction with customers

Customer may install portion of vendor’s CRM on their system to facilitate purchasingThick-client software

Adds sufficient value to overcome risks of unknown software

Vendor creates competitive advantage Creates high switching costs

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Supply Chain Management (SCM)

Integrates primary inbound logistics business activity

Systems source, order, settle

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SCM系統的某些功能

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Inter-Organizational Transaction Processing

Systems process routine transactions between organizations

Oldest form of cross-organizational ISAutomated check clearing

Handles repetitive tasks

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MIS in Use: Dun and Bradstreet Sells Reports Using E-Commerce

D&B collects and publishes financial data and analysis

Use Web-based e-commerceSite runs 24/7

Saves data entry and administrative costs

Can change product easily

Mines customer purchase information

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Guide: A Trojan Horse?

Manufacturers install programs on distributor’s computers allowing direct ordering from CRMReduces lead time

Smaller inventory

Bypasses security Manufacturer’s programs will be behind firewall

May have access to entire system

How do you balance security and savings?

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Q4. Inter-Organizational Ordering/Selling Systems

Sellers induce buyers with e-commerce and CRM

Buyers want sellers to use SCM

Organization with system is server; organization utilizing system is client

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Technologies Used in Ordering/Selling Systems (1)

EmailLimited capacity

Attachments may be problematic

Security problems

FTPGreater capacity

Can be secured with password protection

Thin-client e-commerceClient needs only browser to participate

No software installed

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Thick-client e-commerceRequires software be installed on client’s system

Security risks

Can produce administrative problems

Joint custom applicationsBoth organizations meet to establish requirements

System jointly designed

Technologies Used in Ordering/Selling Systems (2)

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顧客在跨組織科技選擇上成本的連續

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Q5. Benefits of Inter-Organizational Systems

Organizations can focus on their core competenciesCan outsource most activities

Avoid time and expense of building infrastructure Reduces capital requirement

Requires fewer employees Lowers payroll and associated costs

Shortens time to market

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跨組織資訊系統讓價值鏈活動事務能外包出去

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Inter-organizational information systems produce virtual organizationsValue chain activities shared among several entities

Organizations look for the opportunity cost of time of employee performing activity to be greater than cost of outsourcing

Employees should work in business activity that is directly in line with organization’s specialty, or may be outsourced

Q6. Resulting Changes in Organizational Structure from Outsourcing

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Ethics Guide: The Ethics of Supply Chain Information Sharing (1)

Distributor has developed information system that reads data up and down supply chainBecause you can read both directions, you know retailers are in

need of product and manufacturer’s inventory is low. Believing you have only supply, you increase price claiming extra transportation costs.

Competitor has large supply as well and does not increase price, so you sell no product. You want to track competitor’s inventories, which can be estimated from information gained from reading supply chain.

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Your agreement with customers permits you to query their inventory levels for orders they have with you. System has a flaw and allows you to query all orders.

Your agreement with customers permits you to query their inventory levels for orders they have with you. Another retailer’s security is flawed. One of your developers writes a program allowing you to exploit the flaw and view all of their information.

Ethics Guide: The Ethics of Supply Chain Information Sharing (2)

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How Does This Knowledge Help You at DSI? (1)

Inter-organizational information systems can be used to improve the in-bound logisticsDSI sends ftp AutoCad files to manufacturers and

fabricators

Each project is color coded, and the parts are color coded for easy identification

DSI does not use JIT system Must move components in inventory

Would require serious procedural changes

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Could use RFID tags for easier locating of partsSave labor

Reduces damage because of less handling

How Does This Knowledge Help You at DSI? (2)