Business Processes and Decisions Flashcards
What is a business process?
Also known as a business system
Series of activities, tasks, or steps designed to produce a product or service
Business process example: Inventory management (its goal, purchasing steps)
Goal is to ensure enough inventory to fulfill demands, but not too much so that goods spoil
Purchasing is an activity in inventory management.
Inventory management system in place to collect data and alert the manager when inventory hits the ‘RE-ORDER’ point. PURCHASE ORDER(PO) is created and sent to supplier. Supplier receives PO and ships the goods along with SHIPPING INVOICE.
What are the components of a business process?
Activities: Use and transform resources/information of one type into resources and information of another. Can be manual, automated, or a combination.
Resources: Items of value. External to the organization (customers, suppliers) or internal (cash, buildings, equipment, etc)
Facilities: Structures used within the business process. Storage for resources (factories, filing cabinets, databases, etc)
Information: Used during activities, determines how to transform the inputs into the outputs.
Ex: Payment (activity) transforms quantity received and shipping invoice (information) into supplier payment (resource).
Information vs Data (4 different meanings of info)
Data: Recorded facts or figure
Information:
- Knowledge derived from data
- Data presented in a meaningful context
- Processed data (by adding, grouping comparing, etc)
- Data that makes a difference
Everyone ‘perceives’ data, and from that perception you ‘conceive’ information.
Characteristics of good info (ATRJbsWic)
Accurate: Info is based on correct and complete data that’s been correctly processed.
Timely: Produced in time for its intended use.
Relevant: To the context and to the subject.
Ex: The list of hourly wage of every employee in the company is irrelevant in the CEO’s context
Details of dog’s necessary nutrients are irrelevant when you are looking to buy a cat
Just barely sufficient: Just enough for the purpose, no additional, extra information.
Worth its cost: Appropriate relationship between the cost of info and its value.
Ex: spending 10 dollars to save 8 dollars isn’t useful
Define Business process management (BPM)
Field of management that promotes the development of effective and efficient processes by continually using the information from the process to improve the process
Methods: Total quality management (TQM), Six sigma, Lean production
What are the characteristic of the five components of IS? What does it mean for an activity to be automated?
Hardware & People: Actors, they can take actions
Software & Procedures: Instructions, for hardware and people
Data: Bridge that connects the computer side to the human side
Automation is when the work formerly done by people has been changed so the hardware follows instruction by the software and completes the activity
Three levels of decisions in an organization (description of levels, and the IS that supports each level)
Operational: Day-to-day activities that require decisions.
“Which invoice should we pay today?”
Supported by transaction processing systems (TPS)
Managerial: Decisions about allocation and utilization of resources.
“How much should we spend for computer hardware and programs next year?
Supported by management information systems (MIS)
Strategic: Decisions about broad organizational issues
“Should we start a new product line?”
Structured vs Unstructured decisions
Structured: Decision in which there is an understood and accepted method for making the decision
Unstructured: Decision in which there is no agreed upon decision making method
Steps in making a decision
- Intelligence gathering: Determine what is to be decided, what the criteria for the decision is, and what data are available
- Alternatives: Lay out various alternative decisions
- Choice: Analyze the different alternatives and select the best one
- Implementation: Implement
- Review: Evaluate results, if necessary, repeat the process and adapt.
