The purpose of this assignment is to make a detailed assessment of Sainsbury's performance and to evaluate the effect of Integrated Management Information on the improvement of Sainsbury. Below are the three main functional roles which would be covered;
- Provide information across various departments
- Facilitate decision making at the three tiers of management
- Serve as efficient means for managing business processes
When we discuss about the System we know it combines orderly arrangements, Plans and the various ways to perform something. Management Information System can also be described as the combination of System, information and management. In the terms of business we can define Information as the raw data that comes into an integrated and accurate form having been verified and assessment by the time. The existent of Raw Data doesn't have its own value unless a compilation into a system is performed with that Raw Data. This process makes it sustainable for providing information in making decisions.
Management is the process of allocating an organization's inputs by planning, organizing, directing, and controlling for the purpose of producing goods or services desired by customers so that organizational objectives are accomplished (Stair 1996).
Management Information System (MIS) can be defined as the study of information systems in business and management which serves the functions of planning, controlling and decision making at the management level of the organisation providing them with reports and online access to the current performance and historical records (Loudon & Loudon 2006).
MIS is comprised of IT resources, human resources and various procedures which are being utilized in modern business market. At functional level, most of the organizations are using following major kinds of systems;
- Accounting Management Information Systems - gives all the accounting reports
- Financial Management Information System -gives all the financial information
- Manufacturing Management Information Systems -inventory reports etc
- Marketing Management Information Systems -product development, pricing decisions etc.
- Human Resources Management Information Systems -hiring, training, workforce analysis and many more reports to the management.
MIS transforms the transaction level data in to the end reports to the managers at regular intervals of time. These end reports can be regarding sales, purchases, production, cash flow etc. For instance, a carpet cleaner sold in a particular region can be compared from the planned sales to actual sales through the reports provided by MIS. In today's competitive world MIS gives an edge to the organisations to compete with their rivals and is must for a business to be successful.
The ultimate goal of any Management Information System is to achieve optimisation by performing the main functions for the organisation (Jackson D Ford 1987).
This has made every business to acquire MIS for efficiently managing all the processes. To illustrate, in banking sector to conduct checking process without the information systems would take the human staff equivalent to the size of the California's working population (Business).
Retail is one of the sectors which has been benefited through advances in information systems. Key aspects of retail like warehousing, inventory, logistics have been simplified through MIS and resulted in saving huge amount of money. One such organisation in retail sector is Sainsbury plc.
Sainsbury is one of the giant supermarkets in UK. Continuous success of Sainsbury's depends upon consistently increasing their competitive advantage and expanding use of new information systems. Justin king CEO of Sainsbury's is the man behind this mission. Sainsbury's serves around 18 million customers a week. Their large stores offer around 30,000 products and complementary non food products & services. Sainsbury's leading rivals are Tesco and Morrison. Tesco is at the second place where as Sainsbury's at the eleventh place according to the mintel reports (mintel.com). Effective use of MIS has helped Sainsbury to gain more market share than its competitors. Most of the organisations use outsourcing as the important activity to handle their IT systems. . Information Technology includes each and every aspect related to the management of information systems in an organisation. An important reason behind outsourcing Information Technology is most obviously cost saving. This can be proved by the projections made by some organisation in United States that they saved around $21 Billion in between 2003-2008 by outsourcing the IT functions (Schniederjans, 2007). Though Information Technology outsourcing has many advantages attached to it, there is also an element of risk attached with using outsourcing. Everyone within the organisation and with the recipient organisation shares this risk as well. This includes both suppliers as well as customers (Tho, 2005). Almost all kinds of outsourcing contracts provide an opportunity for clients to ask for continuous consulting from the vendors on various topics related to information technology (Shim and Siegel). In early 2000 Sainsbury's low investment in the systems of IT affected them a lot in the response to the market change. This made them to outsource their IT functions to Accenture at a deal of 1.8billion for a period of seven years (newsroom Accenture).
Main functions of integrated MIS
The interaction between the organisation and the information technology is termed to be complex and has mediating factors like organisational culture, environment, structure of the organisation, business processes, management decisions. The information system department maintains hardware, software, networks, data storage with the help of programmers, system analysts, project leaders, information system managers, network specialists and database administrators. They play a vital role in providing the right data to the right people at the right time. The main functions of MIS are said to be processing data, function of prediction, function of plan, function of control and providing assistance to the management level (software articles).
Providing information across various departments involves sharing ideas, information and working together regardless of their physical locations. This is done through the common interface between the systems of the various departments. In production department quality measurements, design specifications, order tracking, maintenance schedule reports are timely viewed by the project leaders and feedback is provided. Information management issues in the manufacturing department are termed to be complex as it involves huge data and massive inventories. In production system, information flows between lathes, inventory systems, controllers and other components making manufacturing information easily accessible to the various parts of the firm. In sales and marketing department- price updates, promotional campaigns, competitor analysis data helps the management to coordinate activities of the sales force in order to increase sales. In finance department , transaction processing systems are used to collect operational data from the financial activities and provide information which helps in performance measurement. General ledger reporting, budgeting, annual reports and project costing information is provided through MIS.
From the point of view of economics, IT changes both the relative costs of capital and the costs of information. Information systems technology can be viewed as a factor of production that can be substituted for traditional capital and labor. As the cost of information technology decreases, it is substituted for labor, which historically has been a rising cost. Hence, information technology should result in a relative decline in the number of middle managers and clerical workers as information technology substitutes for their labor (Laudon, 1990).
As the cost of information technology decreases, it also substitutes for other forms of capital such as buildings and machinery, which remain relatively expensive. Hence, over time we should expect managers to increase their investments in IT because of its declining cost relative to other capital investments.
IT also obviously affects the cost and quality of information and changes the economics of information. Information technology helps firms contract in size because it can reduce transaction coststhe costs incurred when a firm buys on the marketplace what it cannot make itself. According to transaction cost theory, firms and individuals seek to economize on transaction costs, much as they do on production costs. Using markets is expensive (Coase, 1937; Williamson, 1985) because of costs such as locating and communicating with distant suppliers, monitoring contract compliance, buying insurance, obtaining information on products, and so forth. Traditionally, firms have tried to reduce transaction costs through vertical integration, by getting bigger, hiring more employees, and buying their own suppliers and distributors, as both General Motors and Ford used to do.
Information technology, especially the use of networks, can help firms lower the cost of market participation (transaction costs), making it worthwhile for firms to contract with external suppliers instead of using internal sources.