The contemporary business environment is characterized by intense competition between firms as each company seeks to maximize their profitability. Profit maximization requires firms to adopt the most efficient production methods to lower the operation cost and hence increase the net income. In light of the mentioned view, firms have adopted the concept of management information system (MIS) to collect and analyze external and internal data. There are various definitions of management information system. Carver and Turoff define MIS as the interaction between the humans and the computer to gather and process information crucial to a firm (36). Information analysis is important to a firm since it assists in decision-making. Besides, it assists managers in analyzing the alternative courses of action that are usually mutually exclusive.
Information is a great resource for firms just as land, capital, and the humans are. In that regard, the managers at each level of the organization must be equipped with the right skills to enable them to gather and use the information gathered to make suitable decisions. Information gathered should be processed, stored, manipulated, analyzed, and, distributed to the relevant departments in time. Timely processing and delivery of such information help managers to make the right decisions regarding various business issues affecting the firm. MIS centers on the following key concepts:
- The Collection of accurate and reliable data
- Organization and analysis of the data
- Distribution of the data to the various levels of management
- Storage of wide information
- Managerial control and analysis of data
Importance of MIS
The presence of an efficient MIS within an organization helps improve the productivity and the profitability of the firm. MIS facilitates the availability of information as and when it is required at different levels of the management (Willcocks 146). The timely delivery of information to the concerned department ensures that the processes are not derailed by delays in delivery of such information.
MIS fastens the decision-making process and alleviates risks associated with wrongful decisions. The use of computers in the analysis of the customers’ data enhances accuracy and makes the analysis process fast. The conventional MIS involved manual collection and analysis of data leading to delays in decision-making.
Customers’ satisfaction is another advantage accruing from the effective use of MIS. MIS allows the customers to interact with the company through the technology-based communication venues created by the system. Such interactions allow the managers to gain insight of the various aspects that cause dissatisfaction among customers (Laudon and Laudon 56). Corrective measures are adopted based on the information provided by the customers.
Willcocks argues that the effective use of MIS may help boost the company’s profitability through savings achieved by streamlining business practices (107). MIS is not a new concept as it traces back to many years ago. The conventional MIS revolved around the use of paperwork to gather and process information relevant to a firm. In contrast, the modern MIS involves the use of the computer in the analysis of the information. Though the two systems differ regarding the technology used, the objective of both is to collect information that would increase efficiency and help in the decision-making. The computerized MIS has numerous strengths over the conventional system among them being speed, accuracy, and a voluminous amount of data. The voluminous amount of data obtainable through the computerized system facilitates the consideration of various options during the decision-making process.
Oz argues that the information collected via the systems may be stored as a basis for the future forecasting or used to solve immediate problems affecting the firm (98). The systems adopted by the various firms vary depending on the specific needs of the company. In collecting the data, the following aspects must be considered
- The problem to be solved
- The amount of data to be collected
- How and when to collect the data
The key concept for the use of the MIS is to connect the firm’s operating subsystems through the medium of information exchange. MIS has evolved through decades and keeps changing depending on the needs of the modern businesses. Technology continues to shape the MIS as it presents better information collection and analyzing methods.
Galliers and Leidner argue that MIS is an association between humans and the computer machines to provide management support (146). Since decision-making is not restricted to a certain level of the organization, its application should be enhanced in the entire organization. The MIS adopted by a firm should target streamlining the business operations to minimize the operation costs. Organizations that embrace the concept of MIS tend to have an enhanced competitive advantage over those who do not have a sound MIS.
Ahn highlights the importance of MIS in the contemporary business environment (1564). He states that MIS could be a source of a sustainable competitive advantage since it provides managers with the information necessary for decision-making. His argument is that the computer-based collection and analysis of information is crucial to decision-making since it reduces the risks that may emanate from errors.
Management Information Systems – Ups Case Study
United Parcel Service, Inc. (UPS) is the global leader in the industry of parcel and cargo delivery. The company has its parent branch in the US, but it has subsidiaries in over 220 countries around the world (Beynon-Davies 67). The company operates under the principle of customer-centered services whereby the needs of the customer are prioritized. Recent data from the company indicates that it supplies over 15 million parcels daily to more than six million customers across the globe. Its distinguished performance in the parcel delivery business is attributable to the existence of a sound MIS.
One of the applications of MIS in UPS is evident in the parcel delivery system. The company has a package tracking system that connects all the stakeholders involved in the parcel delivery process (Oz 49). The system allows information sharing between the customer, the managers, and the employees, mainly the drivers. Under the system, the customer creates a bar-coded “smart” label via the internet. The label contains the customer’s specifications such as his/her identification, the location, and the package arrival times. The information is received directly by the company’s central computer that processes the information and sends it to the relevant distribution center where logistical planning takes place. The data is then sent to the Delivery Information Acquisition Devices (DIADs) that are in the possession of the company’s parcel deliverers. The devices have the ability to upload the customer’s specifications including the names, location, and the photos to the UPS network for storage and processing. All the information uploaded is available to all the relevant users via the company’s website.
The company’s MIS is composed of both the human capital and the computer devices that help gather and process the relevant information. The specific components of the system are:
- The bar code scanning systems
- Wireless networks
- Large mainframe computers
- Handheld computers
- The Internet
The hardware devices host software that helps to track parcels, calculate the charges, maintain customer data, and maintain logistics. The UPS network allows customers to retrieve information about their parcels from the company’s website. Moreover, it allows such customers to share information regarding proof of delivery, make inquiries, and express their concerns about the delivery process. Since the company is based on the principle of client-based services, such information is essential since it helps detect areas of dissatisfaction and make the relevant adjustments to seal the customer satisfaction gaps.
Benefits of the MIS to UPS
The company has greatly benefited from the adoption of an effective management information system. One of the benefits that the company boasts for is the increase in productivity and enhanced profitability (Beynon-Davies 56). Through the MIS, the company has lowered the operation cost and has increased its market share. The reduction in the costs has translated into competitive charges for parcel delivery. The reduction in the fees has helped the company attain a sustainable competitive advantage over the rivals since more customers tend to engage the companies that charge relatively lower prices.
The use of the computers and the internet has facilitated its penetration to the global market not to mention that the direct interaction between the customers and the company has created loyalty among its clients. The information retrieved from the customers helps shape the company’s strategies and policies to increase their satisfaction. Under the system, customers are empowered to review the company’s services and to enquire on various issues regarding the parcel delivery process that increases their loyalty. Additionally, the company operates in different global countries, and the interaction between the customers and the company may boost the company’s understanding of the diverse customers.
Another objective that the company has achieved due to the use of the MIS is the creation of loyalty among customers all over the world. The presence of a parcel tracking system has highly boosted the customers’ loyalty due to the security of the packages guaranteed by the company. Flexibility in delivery is another important factor that has attracted the customers’ loyalty. Customers can make destination changes when the cargo is in transit through the internet. Such changes are received directly by the central computer, and the necessary action is launched.
Lastly, the MIS in place within the company has facilitated fast decision-making leading to better customer satisfaction. Under the system, all the alternatives available for a situation are evaluated, and only the best alternative is selected. This aspect saves time and minimizes the risks of making the wrong decisions.
Managers are faced with different situations, and they have to make the right decisions to ensure that a firm reaps maximum benefits from the approach taken. In enhancing their decisions, managers use the concepts of MIS to inform their approaches. The modern MIS varies greatly with the conventional one. The traditional MIS revolved around the use of manual paperwork to collect and analyze the information relevant to decision making. However, the modern MIS centers on the use of computers to gather and process data that informs the decisions adopted by the managers. The computerized system is more efficient than the traditional one since it allows the collection of accurate information. Additionally, it fastens the decision-making process through the specific software designed to make data processing faster and efficient.
Ahn, Hyung. “Evaluating customer aid functions of online stores with agent-based models of customer behavior and evolution strategy.” Information Sciences 180.9 (2010): 1555-1570. Print.
Beynon-Davies, Paul. Business information systems, London: Palgrave, 2013. Print.
Carver, Liz, and Murray Turoff. “Human-computer interaction: the human and computer as a team in emergency management information systems.” Communications of the ACM 50.3 (2007): 33-38. Print.
Galliers, Robert, and Dorothy Leidner. Strategic information management: challenges and strategies in managing information systems, London: Routledge, 2014. Print.
Laudon, Jane, and Kenneth Laudon. Activebook, Management Information Systems, Upper Saddle River: Prentice Hall, 2003. Print.
Oz, Effy. Management information systems, Boston: Cengage Learning, 2008. Print.
Willcocks, Leslie. Information management: the evaluation of information systems investments, New York, NY: Springer, 2013.