book 2 chapter-12 manu & non-manufacturing

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Application of MIS in Manufacturing Sector• Manufacturing Sector :

– Major business functions can be distinctly identified as Sales, Marketing, Manufacturing, Finance, Accounting, and Human resources.

– These are nothing but the managerial task within business organization. – Managers basically perform the functions of decision making, planning and

controlling.– Business process requiring coordinated work from many functional areas

Creating a new product. Create and manage plan for an entire business. Fulfilling customers orders.

• Management Information Systems that support the goals of the organization .- Human resources (Personnel) management - Financial (Accounting) management - Production management - Material management - Marketing management

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• The online transaction processing system develops data for DBMS and the application development is based on such database. The model of information processing system is given in below figure.

Model of Information Processing System

Application of MIS in Manufacturing Sector

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• For each application, inputs, reports which are processed by online transaction processing (OLTP) system, are determined.

• The first objective is that the system designer develops the applications with the objective of accounting the transaction based results and providing the reports.

• The second objective is to provide a query system for assessment of the status on record, result or document. The system provides on the spot screen display showing a status, such as stock of an item, balance of an account, position of purchase order and so on.

• The third objective is to provide a system of analysis of processed data for certain business trends or results. The analytical information provides support for decision making in the Decision Support System (DSS) .

• The fourth objective is to provide control information to ensure that the business runs as per the plan, progresses in a set direction and achieves the goal.

• The report generation is decided on the basis of certain business information needs. These needs are statutory compliance (legal agreement), Knowledge update, operation management, decision analysis, control and action.

• The reports are designed for screen display or for print. The contents of the reports are decided as per users of the information. The frequency, duration and coverage of the report is decided as per the user requirements.


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• The information system begins with OLTP System, uses RDBMS for creation of Database, for application development and SQL for querying and report generation.

• A typical information system primarily serves the needs at function levels such as – Personnel Management– Finance Management– Production Management– Material Management– Marketing Management


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1) Personnel management :• Personnel management function is a primary objective of providing suitable

manpower for certain ability, skill and knowledge, as the business organization demands from time to time.

• Its goal is to control personnel cost through continuous increase in manpower (no. of people available for work) productivity by following techniques. Human Resource Development through training and improving the skill. Motivation through leadership and job enrichment. Promotion and rewards through performance appraisal. Structuring the organization.

a) Input Transaction Documentsb) Applicationsc) Reports

a) Input Transaction Documents : Personnel (staff of an organization) application form Bio-data Appointment letter


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Attendance and leave record Appraisal form Wages / salary agreement Record of complaints, grievance (objection), accidents Industry data on wage / salary structure Industry data on manpower, skills

b) Applications : The viewers of the database are personnel managers, head of the

Human Resource development department.

i. Accountingii. Queryiii. Analysisiv. Control

i) Accounting : Following entities are accounted on the PM system. Attendance Manpower


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Leave Salary / wages, statutory deductions Loans and deductions Accidents Skills Bio-data Family Data

ii) Query : Personal records of the employees Salary / wages of employee Designations and number of persons holding these designations Attendance, leave and absent record of all employees Strength of section, department, division Number of persons with a particular skill

iii) Analysis : Analysis of attendance by a group of employees Leave analysis by a group of employees Trend in a leave record Analysis of accidents


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Analysis of salary / wages structure Analysis of overtime

iv) Control : Personal cost versus Industry cost and its projection Projection of manpower needs and evolving recruitment and training

programmes Assessment of accident records against safety measures taken Projection of personnel (staff of an organization) cost against manpower

(no. of people available for work) C) Reports :

The reports of the system will be used by the Personnel Department. Following are the list of reports of different categories.i. Statutory reportsii. Information updatesiii. Operation updatesiv. Decision analysisv. Action reports


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i) Statutory reports: There are some statutory reports which are to be prepared by the PM

department. Attendance record (Muster) Strength of the employee by category – permanent and trainees PF, ESI reports Accidental reports Income Tax Form 16, 24A

ii) Information updates : Daily attendance report Employee strength Joining and transfer of the employee Periodical statements showing personnel cost by salary / wages, overtime

iii) Operation update :


Daily attendance to plan the workload Overtime versus work completed Projected absent and distribution of workload Cost of personnel by job or work completed

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iv) Decision analysis: Analysis of attendance for festival and scheduling of the job accordingly. Overtime analysis by department and employees Analysis of accidents and deciding on safety measures

v) Action reports : Recruitment and additional manpower or subcontracting of jobs Reduction, transfer and reorganization of employees Preparation of training and development programmes with specific needs.


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Application of MIS in Manufacturing Sector 2) Financial management :

• Financial management function is a primary objective of meeting the financial needs of the business, from time to time, by providing working capital and long-term capital to run the business.

• The second objective of financial management is to meet the statutory compliance by declaring the financial results, submit all reports.

• Financial management uses variety of tools and techniques as under. Break Evan Analysis Cost Analysis Cash Flow Projections Ratio Analysis Capital Budgeting Financial Modeling Management Accounting Expense Analysis, Auditing and Control


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a) Input Transaction Documents : Payments ReceiptsThey are documented through journal vouchers, bills, debit notes, credit

notes, receipts and transfer document.

b) Applications : i. Accountingii. Queryiii. Analysisiv. Control

i) Accounting : Following entities are accounted for all the accounted transaction. Sales Purchase Salary / wages Inventory


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Expenses Fixed Deposits Shareholder’s Funds Income Tax Sales Tax Octroi Custom Duty Excise Duty Budgets

ii) Query : The query system throws the debit and credit balance of an account. Main account Subsidiary account Location (Factory, Branch etc.) Document (Bills, Credit note, Debit note, Receipt etc.)

iii) Analysis : Debtors analysis Creditors Analysis Budget Analysis Ratio Analysis Cost Analysis


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iv) Control : Account receivables Valuation of non-moving inventory Shortage of funds

C) Reports : Following are the list of reports of different categories.

i. Statutory reportsii. Information updatesiii. Operation updatesiv. Decision analysisv. Action reports


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i) Statutory reports: There are some statutory reports which are to be prepared by the FM

department. Tax returns Declaration of financial results of every six months Sales tax, Excise duty Declaration of annual results to the Shareholders

ii) Information updates : Monthly trial balance, Balance Sheet and Profit and Loss Account Stock Valuation Account receivable Account payable Cash position



Advance tax, Sales Tax, Octroi, Excise Duty etc. Report on finished goods Statutory reports Obligatory payments such as rents, insurance premium, membership fees, interest and dividend.

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iv) Decision analysis: Break Evan Analysis for cost and price decision. Analysis of current and fixed assets Analysis of current liabilities

v) Action reports : Overdue receivables Payments to creditors Non-moving inventory


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3) Production management :• Production management function is to provide manufacturing services to the

organization.• The production management function is supported by other functions, like

production planning and control, Industrial engineering, maintenance and quality control.


a) Input Transaction Documents : Production programme Production Schedule Job card Job status advise Finished goods advice Quality assurance Material requirement Material requisition (request) Customer Order


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b) Applications : The production management is performed through

production planning and control, bill of material processing, scheduling and

monitoring systems as support systems.


i) Accounting : Quantity of production Material requirement and its usage Rejection quantity at each intermediate stage and the final stage. Use of power, fuel and consumable Machine and facility utilization Labour hours


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ii) Query : Status of the job or order in terms of level of completion Production programme and jobs schedule Load status on machine Status on availability of material Standard information on machine / tools Standard information on skills and capacities of each worker Standard information on products and processes

iii) Analysis : The PM function is required to make a no. of decisions for long- term and short-term period. The decisions are:

Make or buy Make or subcontract Use of alternative material Use of alternative process Evolving optimum product Selection of production facilities Selection of alternative maintenance policies


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iv) Control : These applications are developed to control production programme, production capacity and quality of production.

Unnecessary product rejection for material Continuous significant deviation from standard production rate Increase large number of orders

C) Reports : i) Statutory reports :

There are very few areas in production management which require information for reporting authorities under the category of Statutory reports. There are some industries, which require to keep the account of raw material and finished goods and submit the report to the Government.

ii) Information updates : The information is kept up-to-date enabling the

managers in the production function to plan the production properly by using the standards.

iii) Operation updates : These reports provide information on day to

day events. Production per day, the rejection by process or job, the machine breakdown, the jobs completed and so on is collected and reported as the latest update.


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iv) Decision analysis: The decision analysis applications provide the reports with specific key

decisions in the production function. The DSS are used to enable the management to take decisions. The analysis through DSS helps to make decisions.

v) Action reports : These reports provide information update on the

implementation scenario of decisions. The reports inform whether the decision has resulted into expected performance. The information provides the knowledge whether the implemented decision is proper or not.


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4) Material management :• The objective of Material management is to provide material for production,

maintenance and services at economical prices, in an appropriate quantity and quality.

• The scope of material management function is to obtain the stock and control of inventory (complete list of goods).


a) Input Transaction Documents : Purchase requisition (request) Purchase order Receipt of goods Goods return to supplier Issue for production Return from production Bill for payment


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b) Applications : The material management function is conducted

through management systems.

- Forecasting and planning - Obtain the stock - Purchase ordering - Goods receipt - Issuing material - Bill passing and control - Inspection


i) Accounting : Purchase quantity Issue quantity Stocks Goods returns Value of purchase


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ii) Query : The query may be on an item searching the latest purchase price or it may

be on an item searching a price in a particular purchase order placed on a particular supplier. The query could be a processed of searching information on, say the no. of

stock outs in the last six months of a particular item.

iii) Analysis : The first major decision in the function is ‘price’ of an item. The

prices may vary from suppliers to suppliers. The second major decision has to take , is stocking of items. The third major decision has to take, is on system of controlling the item.

iv) Control : The performance of the material management function is to

evaluated on four accounts, capital inventory, no. of stock outs, cost of purchase and consistency and dependability of suppliers. The control application help in making and implementing these decisions.


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C) Reports :i) Statutory reports:

Stock ledger Valued stock statement Excise duty Octroi

ii) Information updates : Price fluctuation Performance of suppliers Stock outs Information of various material Materials required for next planning period



Daily goods received register Reports on purchase demand Statement on payment due to suppliers but not yet paid Statement on supplies due but not yet received Statement of suppliers received and rejected

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iv) Decision analysis: Stock outs (stock not available) Cost of purchase Vendor (supplier) performance Material performance consistency of suppliers

v) Action reports : The action update comes through a control system which indicates

whether the decision is implemented or not. Many times decision is taken and give the action at a lower level.

It is necessary to know whether action is taken and what is the impact.


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5) Marketing management :• The Marketing management function deal with satisfying the consumer.• The scope of marketing management function starts from identifying the need of

customer, developing product concept, designing the product, positioning the product in the market and selling at appropriate price.


a) Input Transaction Documents Customer order Order acceptance Delivery note Invoice, credit note and debit note


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b) Applications :


i) Accounting : The detailed entities are as follows : Product Sale Dealer Customer Excise Duty Sales Tax Inventory (stock) Sales Value Distributor


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ii) Query : The queries in the marketing management are on customer, price,

product, stock and sale. The query may be on order pending position followed by whether stock

exists for the order or not. If the customer order is to be fulfilled by manufacturing then whether

manufacturing order is issued and if so, then what is its status.

iii) Analysis : The complex decisions are price increase or decrease, deciding on the new

product, packaging, distribution channels, product positioning. These decisions have future effects on the marketing performance.

iv) Control : In marketing management, there are no. of factors, which needs to

be controlled for achieving business goals. These factors are Sales versus Budget, Marketing Cost versus

Budgeted Cost, Product Sale versus Target fixed Sale. This helps to take specific decision and action in the area of

shortcoming or failure.


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C) Reports :i) Statutory reports:

In marketing management, statutory compliance (legal agreement) is mainly related to taxes and duties.

The main reports are sales tax and excise duty returns. ii) Information updates :

Product sales ledger Sales summaries Sales analysis Market analysis Competition analysis



Order book Dispatch report Inventory Invoice Customer complaints Complaints organized

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iv) Decision analysis: Decision analysis reports convey whether the expected results are coming

or not. For example, a decision is taken to launch and advertising operation in two

segments to test the efficiency of the operation. In marketing function, a no. of such decision situation are present,

whether analysis or sales is necessary, to confirm whether the choice of the alternative is correct or not.

v) Action reports :Some of the action update reports are:

Sales Versus Budget Expenses versus Sales Stock versus Budgeted stock level


book 2 chapter-12 manu & non-manufacturing

Technology

personnel management

management information

operation management

application development

business organization

typical information

personnel cost

system designer