Week 10: Chapter 8 - Organisational Information Systems

Section 8.1 - Before You Go On…

1. What is a Transactional Processing and the role of TP systems. State the key objective of TP/TPSs.
A transaction processing system (TPS) monitors, collects, stores, and processes data generated from all business transactions. It provides input to the organisation’s database. It is also input to the functional information systems, decision support systems, customer relationship management, knowledge management, and e-commerce.

Section 8.2 - Before You Go On…

1. What is a functional area information system? List its major characteristics.
A functional area information system provides information mainly to lower and middle level managers in the functional areas.
The information provided is used planning, organizing, and controlling operations.

2. How does an FAIS support management by exception? How does it support on-demand reports?
Exception reports include merely informationthat falls outside certain threshold standards. In order to support management by exception, management must firstly create performance standards. Next, the company sets up systems to observe performance, compare actual performance to the standards, and identify predefined exceptions.

Ad-hoc reports, also known as on-demand reports, are out-of-the-routine reports requested for information that is needed at different times outside the times when routine reports are performed.

Section 8.3 - Before You Go On…

1. Define ERP and describe its functionalities.
Enterprise resource planning (ERP) systems incorporate the planning, management, and use of all of an organisation’s resources. Their main objectives are to securely integrate the functional areas of the organisation and to enable information to flow impeccably across the functional areas. ERP systems provide the information necessary to control the business procedures of the organisation.

2. List some drawbacks of ERP software.
As advantageous ERP is, it also has some drawbacks. First of all, EPR can be tremendously complex, expensive, and time consuming to enforce. Another drawback is the predefined nature of the business processes of the software, meaning businesses may need to change existing business processes to suit it. Finally, ERP must be bought as a whole software package, even if the organisation only needs a few modules.

Section 8.5 - Before You Go On…

1. Define a supply chain and supply chain management (SCM).
A supply chain is the flow of materials, information, money, and services from raw material suppliers, through factories and warehouses to the end consumers. It also involves he organisation and processes that create and deliver products, information and services to end customers.


The role of supply chain management (SCM) is to plan, organize, and optimize the supply chain’s activities. SCM uses information systems. Its goal is to reduce friction along the supply chain.

2. List the major components of supply chains.
The major components of supply chains are upstream, internal, and downstream. Upstream refers to the sourcing or procurement from external suppliers occurs. The internal component is where packaging, assembly, or manufacturing takes place. Downstream is where distribution takes place, commonly by external distributors.


3. What is the bullwhip effect?
The bullwhip effect refers to erratic shifts in orders up and down the supply chain.


Section 8.6 - Before You Go On…

1. Define EDI and list its major benefits and limitations

Electronic data interchange (EDI) is a communication standard that allows business partners to exchange routine documents, such as purchasing orders, electronically.


EDI can be quite advantageous as it minimizes data entry errors because a computer processes each entry. In addition, the length of the message can be shorter and the messages are secured. EDI also increases productivity, improves customer service, minimizes paper usage and storage, and reduces cycle time.


As beneficial as EDI can be, it also has some drawbacks. EDI can be initially a costly investment, it is inflexible, and it also requires a long start up period.