Uses of Computer Application in Different Fields of Management

2012

NOTES

RAHUL SHARMA

InputAccounting

InternalAuditSubsystem

FinancialIntelligenceSubsystem

ForecastingSubsystem

FundsManagementSubsystem

Control Subsystem

DataBase

DATA INFORMATION

Computer Application in Management

Relevance of computer Application in different functional areas of Management:

Financial Management:

Financial management is one of the most important functional areas of management, because the success of a company greatly depends on the proper utilization of its financial resources. The importance of financial management cannot be over-stressed. Some people feel that a financial manager is useful only in the private enterprises. However, sound financial management is necessary in all originations profit or non-profit where founds are required. Financial management is concerned with managerial activities like raising and utilization of funds for economic purposes. It deal with planning, organizing, directing and controlling financial activates of the enterprise. So uses of computer application in finance for keeping records of all activities in the organization and information relating to that called a financial information system.

FINANCIAL INFORMATION SYSTEM

The term financial information system to describe the CBIS subsystem that provides information to persons and groups both inside and outside the firm concerning the firm’s financial matters information is provided in the form of periodic reports, special reports, results of mathematical simulation, communications, and the advice of expert systems.

Model of Financial Information System:

Link the other functional information systems; the financial system consists of input and output subsystems. Two of the input subsystems, the accounting information system and a subsystem dedicated to gathering intelligence, are also fund in the other functional systems. The third, internal audit consists of the firm’s internal auditors who analyze the firm’s conceptual systems to ensure that they process financial data the proper way.

Input subsystem Output subsystem

InternalSources

Environmentalsources

Figure: Financial Information System

USERS

The three-output subsystem exerts an influence on the firm’s money flow. The forecasting subsystem projects the firm’s long-range activity in an economic environment. The funds management subsystem manages the money flow as it occurs, seeking to keep it balanced and positive. With the control subsystem, managers can get effective use from resources of all types that are made available to them.

Materials Management:

The term ‘material management’ is concerned with the determination of policy with regard to procurement of materials (quality, quantity and price etc.) and disbursement of the same to the respective jobs as and when it is required without any delays. In other words, material management is concerned with control of materials in such a manner which ensures maximum return on working capital.“Material Management is the planning, directing, controlling and coordination of all those activities concerned with material and inventory requirements, from the point of their inception to their introduction into manufacturing process.”

L. J. De Rose: “Material Management is concerned wit the location and purchase of needed materials, their storage and movement (internal). It also arranges to keep an account for them. It is also responsible for planning their movement through manufacturing processes, store rooms (or stock rooms or warehouses) and distribution channels.”

The scope of the term ‘materials management’ is very broad which includes purchases of material, its transportation, storekeeping, inventory control, materials handling and inspection of material. These are also known as elements of materials managements. These are explained in details in the subsequent pages.

Significance of Materials Management:

In case of non-manufacturing business undertaking (i.e. trading concerns) handling of cash is of utmost importance. Similarly the efficient handling of materials is of vital significance in the manufacturing business.The importance of materials management has been nicely highlighted by Bethel, Atwater and others. According to them “If materials are not adequate to meet the needs of manufacturing operations and marketing divisions of the company problems of inefficiency and skyrocketing costs, frequent manufacturing delays and broker delivery promises are inevitable. Thus, materials management is a continuous struggle between too much and too little, too soon and too late.”The utility of materials management increases with the proportion of material cost of the product to the total factory cost. Benefits derived from an efficient system of material management can’t enumerate as follows:-

(i) Material management can be used as an effective co-reduction device. It is easy to handle and control materials a compared to labor.

(ii) By introducing material management devices, inventory losses are minimized.(iii) Production time is minimized.(iv) It ensures proper and effective utilization of available equipment.(v) Problems relating to overstocking and under stocking are promptly tackled.(vi) Savings in the time of direct labor is ensured.

Design Maintenance and Other Department

SalesForecast

ProductionPlanning

Production

Computer Routine(Operational) andexception reports

Stores and Receiving

QualityControl

PurchaseDepartment

Material

Computer Applications in materials management:

Material management is an area in which the computers can be put to beneficial use. Since computerization of inventory control will provide better control and profitability, there is rich potential for computerization in materials management field. Materials management has emerged as an independent function. Top management has been gradually giving greater importance to this area. As the realization of the tremendous profit-making potential of this function has grown so have the expectations from it. Materials management is, therefore, faced with new challenges. How well it will convert opportunities into results will naturally depend on how well it uses the resources at its command. There are many resources available to materials management of which information plays a very vital role.

Integrated Computer system for Materials Management:

With their increasing variety and the heavy demand made on them, materials are today assuming every important role in the operational efficiency of an organization. Computers could be utilized to guide all the activities involved in getting the materials to the factory. This integrated computer system would involved the active participation of line personnel and would be more useful for operational information-management report could however be obtained as a by-product.The present use of computers in materials management is only to make computations easier and faster. The integrated computer system should be utilized for the sake of an integrated information system, which would result in the smooth operation of the materials functions. The main objective of such an integrated system should be accuracy in reporting demand and inventory. The integrated system also ensures a fast reaction to environmental changes – changes in either supply or price of materials or changes in customer taste and measurement of functions such as inventory, purchasing and vendors.

Figure: Material Information Syste

PRODUCTION MANAGEMENT

Meaning of Production:

Production is concerned with the creation of goods and services. It is concerned with transforming the inputs in form of raw materials, labour, machines, management and money into output i.e. goods and services with the help of certain production processes.

Production function is the most important function in an organization around which all other activities of an enterprise viz; marketing, financing, purchasing and personal etc. It is pertinent to note that production function should be managed in an efficient and effective manner for the achievement of the organizational goals.

Functions and Responsibilities of Production Management:

Following functions are performed by production manager.

(i) Production Planning. Production planning is the first function performed by the production manager. Production planning is concerned with thinking in advance what is to be produced, how it is to be produced and by what time should it be produced. It is concerned with deciding about the production targets to be achieved by keeping in view the sales forecast.

(ii) Production Control. Production planning cannot be properly achieved without an effective system of production control. It is infact concerned with successful implementation of production planning. It aims at completing well in time and also with lesser costs. A proper system of production control ensures continuous production, lesser work-in-progress and minimization of wastages.

(iii) Quality Control. The production manager is also concerned with maintaining required quality of the product. Quality control is concerned with (controlling the negative variables which affect the ultimate quality of a product. It is concerned with use of all the ways and means where by quality standards could be maintained.

(iv) Method Analysis. There are many alternative methods for manufacturing a product. Some methods are more economical than others. The production manager should study all the methods in detail by analyzing them in detail and select the best alternative out of them. The process of selecting the best alternative is known as methods analysis.

Methods analysis is considerably helpful in minimizing the cost of production and improving productivity of the concern.

(v) Inventory Control. The next important function to be carried by a production manager is to exercise proper control over the inventory. He should determine economic order size, maximum, minimum, average and danger levels of materials so that problems of overstocking and under stocking do not arise. This also helps in minimizing wastages of materials.

(vi) Plant layout. Plaint layout is primarily concerned with the internal set up of an enterprise in a proper manner. It is related to orderly and proper arrangement and use of available resources viz., men, money, machines, materials and methods of

production inside the factory. In other words it is concerned with maximum and effective utilization of available resources at minimum operating costs.

(vii) Work Measurement. Work measurement methods are concerned with measuring the level of performance of work by a worker. Time and motion studies techniques can be used for work measurement. If a worker work below the level fixed by work-measurement techniques, his performance must be improved through positive or negative incentives.

(viii) Other Functions. Apart from the above mentioned functions, the production also carries certain other functions viz., cost control, standardization and storage, price analysis and provision of wage incentives to workers etc.

Production management information system:

The objective of production management (PM) function is to provide manufacturing services to the organization. This involves the manufacture of products of a certain specific quality and within certain costs in a stipulated time fulfilling the promises given to the customers.Computers are playing important role in all stages of product design and manufacturing. Basic research, part and assembly design, material storage and retrieval, product manufacture, inspection and testing for quality control-all are being helped by computer based facilities. There is growing recognition in the product design sector of the economy that computer potential needs to be exploited to the full if companies are t survive in the modern competitive environment.

Inputs of Production Management Information System:

The production management is conducted through innumerable transactions. They relate to planning, issuing and controlling the various tasks involved in the course of production. The details are listed as under:

1. Process planning sheet.2. Quality assurance rating form.3. Production schedule.4. Job card.5. Finished goods advice.6. Materials requisition.7. Customer order.8. Breakdown advice.9. Material requirement.10. Production programme

The production management also uses standards and norms extensively developed over a period of time as inputs in the system. These are generally known is production rate, available capacity, labour complement, material usage standards, rejection norms etc.

The transaction documents mentioned above are indicative and may be more or less different, depending upon the type of production, nature of production and industry. The input data in each transaction would also vary from industry to industry as would the production methodology adopted by the organization. The system and procedures used by the organization in performing the production function also vary respectively.

Components of Production Management Information System:

The components of production management information system include:

1. Sales department finds out what the customer wants and compares this with what the firm can provide. It must then decide, in conjunction with the design department designs, to meet the customer’s particular demands, or in the case of standard catalogue items, take the order and pass it directly to the drawing office.

2. Design department designs new equipments and makes modifications to established items either to bring them up to date or to make them meet a specific requirement of the customer. This results in drawings and parts lists which can be either standard or particular to the job. The drawings will also contain parts, lists or bills of materials which can be used for the stores and purchasing functions.

3. Purchasing department buys the materials required at the best possible price and on the most reliable delivery to make the various items either on a one off basis for individual jobs or to replenish materials held in the stores on maximum and minimum levels.

4. Manufacturing process sees that the parts are produced as economically as possible for delivery at the time required by the customer and to the standard set by the design department. The goods are then passed back through dispatch to the customer. The duty of dispatch is to break the items down into packages of reasonable size by volume or weight for handling by lorry, ship or aircraft.

MARKETING INFORMATION SYSTEM

A well developed information system for marketing can give a competitive advantage offering better services to customers and better information for market penetration efforts.

Marketing information system (MIS) is defined as a compute-based system that works in conjunction with other functional information systems to support the firm’s management in solving problems that relate to marketing of the firm’s products. Two elements in the definition make key points. First, all of the functional information systems must work together and second, the problem-solving support is not limited to marketing managers.

Output Subsystem:

Each output subsystem provides information about its part of the mix. The product system provides information about the firm’s products. The place subsystem provides information about the form’s distribution network. The promotion subsystem provides information about the firm’s advertising and personal selling activities. The price subsystem helps the manager make pricing decisions. In addition, there is a fifth subsystem, the integrated-mix subsystem, which enables the manager to develop strategies that consider the combined effects of the ingredients.An example of the information provided by the integrated-mix subsystem is the sales forecast, which considers the interaction of all the mix ingredients.

Each of the output subsystem consists of programs in the software library. These programs enable the manager to obtain information in the form of periodic and special

reports, the results of mathematical simulations, electronic communications and knowledge-based system advice.

It is important that you realize that the output subsystems draw on each of the CBIS subsystems- AIS, MIS, DSS, the virtual office, and knowledge based systems contain all types of CBIS software.

Database:

The data that is used by the output subsystems come from the database. Some of the data in the database in unique to the marketing function, but much is shared with other functional areas.

Input Subsystems:

The accounting information system gathers data describing the firm’s marketing transactions. The marketing intelligence subsystem gathers information from the firm’s environment that has a bearing on marketing operations for the purpose of learning customer needs and improving marketing efficiency.

Accounting Information System:

Marketing plays a role in the firm’s AIS by providing sales order data. Perhaps the sales representatives enter the data from customer offices, using laptops. Or sales order personal at headquarters may take order data over the phone or by mail and enter it into keyboard terminals. In some cases customers enter order data directly into the firm’s computer, perhaps using the Internet.The data is used to prepare information in the form of periodic and special reports. The data also provides the input for mathematical models and knowledge-based systems.

Market Research and Intelligence Information System:

Market research and intelligence information system can be discussed under following sections:-

1. Customer Research (CR): CR is broader and more analytic than customer analysis associated with the sales information system. CR utilizes the information from sales order entry system and then provides information about the market environment as a context for it. And also uses information about customer’s financial and operating conditions and about there selling and purchasing dealings with the organizations competitors.

2. Market Research (MR): MR is broader than CR. In that, if focuses on the entire market place for the organization’s products. One purposes of MR is to access the overall size of the market for each product line and for each product within a product line.

3. Competitor Intelligence: A Company should gather information about its competitors. This includes information about the specification of

(i) Competitor’s Products(ii) Competitor’s operating strengths and weaknesses.(iii) Competitor’s customer service level and customer policies.

AccountingInformation

System

MarketingResearch

Subsystem

MarketingIntelligenceSubsystem

ProductSubsystem

PlaceSubsystem

PromotionSubsystem

PriceSubsystem

Integrated mixSubsystem

DataBase USERS

(iv) Competitor’s financial structure and strength.(v) Competitor’s new product plan(vi) Marketing goals and strategies.

Data Information

InternalSources

EnvironmentalSources

Figure: Management Information System

Human Resource Management

Computer Based Personnel Management Information System (CBPIS)

A CBPIS can be defined as a computer based personnel information system, which is designed to support operational, managerial and decision-making functions of the personnel division in an organization. A Management Information System has been compared with a pyramid in which the base consists of data or information for transaction processing in an operational environment. The next level consists of information, which is used to support the day-to-day management. The third level consists of information used at next level of management for tactical planning purposes. The top level consists of information, which is used by top management for strategic planning and policies development.

Scope of CBPIS: The personnel management packages have the facility to hold basis data about employees. They provide a number of standard reports and some facilities for adding new fields or altering the new sequences of the reports.

The CBPIS should be comprehensive enough to suffice the needs of personnel department of any organization. The following should be an integral part of any CBPIS:-

1) Personnel Records: This relates to identification of data, current and past salary, allowances data and various employee attributes.

2) Training Records: Data relating to each employee’s qualifications, skills and experiences and the training received by the employees at different times and levels.

3) Establishment: It relates to setting up of Budgets for staff levels throughout the organization. The system should be efficient enough to encompass between the projected or the budgeted staff members and the actual staff members.

4) Absence: The system should allow for the recording of various absence types, i.e., sick leave, earn leave, annual leave or special leave with or without pay.

5) Industrial relations and manpower planning data: The system should hold data to assist management in negotiations and in planning for alternative strategies.

6) Pension Records: The System should maintain all details of services entitlements of employees, contributions by both the employees and the organization to the pension scheme, details of dependents, spouse and children and details of entitlements of employees who have become pensioners.

7) Recruitment: Details of all vacancies and applicants should be held by the system. This should show the status of each vacancy and of each applicant should be able to correlate the two.

ManagementInformation for strategic

Planning policy formulation And decision-making

Management information for tacticalPlanning and decision making

Management information for day-to-day planningDecision making and control

Transactional processing general enquiry facilitates.

Figure: Personnel Management Information System

Control and feedback InputsFlow of data and information

DemographicSystem

BudgetSystem

FinancialSystem

PayrollSystem

ComputerProgram

RecruitmentData

Trainingdata

Employeedata

Administration data

Inquiry Retrieval Output