By: Eran Ron
The decision to order an information system especially designed for the customer usually arises due to the lack of suitable solutions in shelf programs, or because of specific work procedures and requirements of a certain business. Buying a program written especially for the business is much more expensive than buying a shelf program that is usually designed to suit the usual needs of many businesses. A software company will rarely agree to rewrite the shelf program to fit specific needs.
If you intend to purchase a tailor-made application for your organization, you should know it involves a large amount of money. It is advisable to take into account a number of considerations relevant to defining the information system in order to increase sales and profits.
In any project involving the creation of an information system specific to a certain business, the customer (a manager in a certain level) has an active role in defining the information system (design stage). Usually, managers emphasize the immediate needs that led to the decision to order the system. If there was a need to manage the stock of items the firm holds, then it is reasonable that the requirement from the software supplier will focus on the on-going management of item lists. The customer will require giving users the opportunity to create new items and to check the inventory of a selected item. At the definition stage, many managers usually overlook the potential to receive information relevant to managers (and I do not mean only the stock and inventory manager or logistic or operating manager).
How can a manager benefit from an information system suited for warehouse workers? An efficient manager bases his decisions on all the relevant parameters to the business activities. The stock has great relevance when the information is presented in reports adapted to managerial needs. Of course the manager has no interest in the quantities for a specific item, and he has no intention to start adding stock items himself. But it is important to remember that the value of the stock and inventory cycle affect profitability.
In our example, I would recommend to define an information system that includes producing manager reports as follows:
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Stock cost report at a given time.
This data is highly relevant for a financial manager as stock is considered a current asset, and when there is an urgent need for cash, there will be an effort to sell the stock as fast as possible.
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| 2. |
Inventory cycle report.
This report is relevant for the operation manager, the marketing manager and the CEO. The inventory cycle is a financial ratio stating how many times in a given period the stock in the warehouse is replaced with new stock (as a result of selling) and is calculated by dividing the
cost
of sales by the average value of the stock. With this report managers can know the capability of the firm to sell the stock it has, and so decide what range of products will be offered to the customers.
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We saw a simple example how an information system defined to manage lists in the warehouse can produce reports, which are very useful to managers in different positions inside the firm. With the aid of these reports, decisions will be reached that will contribute to improve the sales cycle and the profitability.
I will also remind you to make sure to incorporate two kinds of reports to the information system: concentration and summation reports for managers, and detailed reports for lower level employees. The detailed reports will help the workers in their daily work and save the time to manually locate information that is needed, in absence of a computerized system. The centralized reports will serve as aids to reach decisions at the managerial level.
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