Question 1

Find a description in a computer magazine, business magazine or at your workplace

of an information system used by an organization/company. Look for information
about the company on the web to gain further insight into the company and then
answer the following questions:

1a) Prepare a brief description (in 1-2 pages; single spacing; Font: Times New
Roman) of the company’s business(es).

Wal-Mart Stores, Inc. (or Walmart as written in its new logo) is an American public
corporation that runs a chain of large, discount department stores. It is the world's largest
public corporation by revenue, according to the 2008 Fortune Global 500. Founded by
Sam Walton in 1962, it was incorporated on October 31, 1969, and listed on the New
York Stock Exchange in 1972. It is the largest private employer in the world and the
fourth largest utility or commercial employer, trailing the British National Health Service,
and the Indian Railways. Wal-Mart is the largest grocery retailer in the United States ,
with an estimated 20% of the retail grocery and consumables business. It also owns and
operates the North American company, Sam's Club. Each week, about 100 million
customers, nearly one-third of the U.S. population, visit Wal-Mart's U.S. stores

At the heart of Wal-Mart, there lies a strong centralized information system that serve as
the backbone to the entire retail operations locally and globally. It is one of the core
operational element that enables Wal-Mart to fly high, and higher all year long. Its IS
system is now part of the company’s core strategic advantage.

Wal-Mart is not new in ICT and information system to support its retail business. It has
started getting involved in the information system as early as its existence by using the
POS dumb terminals and cash register. After using the Bar Code technologies for its POS
TPS (Point Of Sale, Transaction Processing Systems), Wal-Mart later turned to RFID
(Radio Frequency Identification) for sales, inventory and product management,
replacing its Bar code.

What is RFID

Radio-frequency identification (RFID) is an automatic identification method, relying on

storing and remotely retrieving data using devices called RFID tags or transponders. The
technology requires some extent of cooperation of an RFID reader and an RFID tag. An
RFID tag is an object that can be applied to or incorporated into a product, animal, or
person for the purpose of identification and tracking using radio waves. Some tags can be
read from several meters away and beyond the line of sight of the reader.
Most RFID tags contain at least two parts. One is an integrated circuit for storing and
processing information, modulating and demodulating a radio-frequency (RF) signal, and
other specialized functions. The second is an antenna for receiving and transmitting the
signal.

Future Chipless RFID allows for discrete identification of tags without an integrated
circuit, thereby allowing tags to be printed directly onto assets at a lower cost than
traditional tags. Currently (2008) none of the chipless concepts has become operational.

Today, RFID is used in enterprise supply chain management to improve the efficiency of
inventory tracking and management. However, growth and adoption in the enterprise
supply chain market is limited because current commercial technology does not link the
indoor tracking to the overall end-to-end supply chain visibility. Coupled with fair cost-
sharing mechanisms, rational motives and justified returns from RFID technology
investments are the key ingredients to achieve long-term and sustainable RFID
technology adoption.

RFID Effectiveness at Wal-Mart

Wal-Mart Stores Inc. says its customers are finding the items they want in stock on
shelves more often in stores that are using radio frequency identification technology with
embedded electronic product codes, compared with those that are not, according to initial
findings from a University of Arkansas study conducted during the last several months.

RFID Tag by Wal-Mart

Researchers found a 16% reduction in out-of-stock merchandise at Wal-Mart stores

equipped with RFID labels using EPC codes. The study also shows that out-of-stock
items with RFID were replenished three times faster than items using standard bar-code
technology. Wal-Mart also experienced a "meaningful reduction" in manual orders
resulting in a reduction of excess inventory, according to the university report.

The study also showed that RFID-enabled stores were 63% more effective in replenishing
out-of-stock products than control stores not equipped with the technology.
"An RFID tagged item made it to the shelf three times quicker than a non-tagged item,"
says Simon Langford, strategy manager for RFID at Wal-Mart. "These items were
identified as being in the back room three times quicker than those without RFID tags."
Linda Dillman, executive vice president and CIO for Wal-Mart, told

InformationWeek last month that the study would provide conclusive evidence RFID
technology increases the frequency with which it can put products in customers' hands.

The study is the first to compare the impact of RFID with embedded EPC on
merchandise availability in operating stores. For 29 weeks researchers analyzed out-of-
stock merchandise at 12 pilot stores, including Wal-Mart Supercenters , Discount Stores,
and Neighborhood Markets, equipped with RFID and 12 stores without the technology.

While Wal-Mart commissioned the study, the University of Arkansas conducted it

independently. Specific items were selected at the beginning of the study and the items
remained constant throughout the process to ensure data consistency. To establish a
baseline prior to the study and to measure the impact of RFID, out-of-stock items were
scanned every day throughout for 29 weeks at the 24 stores.

The 16% reduction in merchandise stock outs was determined by physically scanning
product stock-outs on the shelf every day. Details and findings of the study will be made
available in the near future via a series of white papers released by the University of
Arkansas .

Beyond improvements for in-stock merchandise, Wal-Mart also sees benefits from RFID
in overall inventory reduction throughout the supply chain, which is important to drive
down costs. “With little effort we have been able to make inroads into this area," says
Rollin Ford, executive vice president for logistics in Wal-Mart. "Manual orders placed by
stores were reduced by approximately 10%."

With prices falling as much as 70% for RFID tag inlays that are inserted into shipping
labels, Wal-Mart fully expects suppliers to start tagging additional merchandise in 2006.
It also expects that by mid 2006, the retailer will move from the first generation of RFID
tag – Class 0, Class 0+ and Class 1 to Gen 2 tags. And encouraged by the development,
ratification, and improved read rates of Gen 2 technology, Wal-Mart is now in the final
stages of testing this global standard.

Wal-Mart this year began installing equipment to more than triple the number of stores
where RFID technology has been installed. By the end of October, Wal-Mart will have
more than 500 stores and clubs and five distribution centers live with RFID. The next 200
suppliers will join the existing approximately 130 in January 2006, shipping EPC-tagged
cases and pallets.
1b) Identify and describe the people, hardware, software, data, and network
resources and the information products of this information system. (25 marks)

Wal-Mart RFID is in general, can be perceived as a major component in realizing the

company’s Point-Of-Sale information system. RFID will make the job for POS much
more easier since all the workflow are standardized, and the information are centralized
with real-time recording. Below is an RFID architecture as proposed by Sun to support
the entire POS.

People

Almost all people involved in the Wal-Mart POS information system. That includes the
suppliers / manufacturers, the staff, the management and the users or customers. The
suppliers are required to have their own Wal-Mart approved RFID units with them and all
their products should be tagged with RFID stickers. The floor staff will have to use the
RFID units with them while doing the tagging and charging and even while doing queries
over products. The storekeeper and the inventory staff will record bought items through
the RFID before entrance to the storing facilities. Similarly, the information from the
POS will be channeled to the management through the centralized database.

Hardware

The diagram below describes a basic RFID POS architecture and suggests a group of
hardware that may exist to support RFID POS architecture. Among the hardware required
are RFID tags, the transponders, the readers and a local server and an enterprise
integrations to integrate various software format.

Software

The major software required for the RFID POS is nothing but the specialised RFID itself
that should reside in the application server. This is the place where information from the
readers can be managed, formatted and customized.

Data

The major source of the data comes from the RFID readers which read the information
from directly from the tags and inlays. It works similar to the concept of the barcode.
 Real-life RFID deployments employ a wide variety of physically distributed RFID
readers, access gateways, management interfaces, and databases. The middleware
receives events from the RFID readers when tags are scanned. These events are passed
through a number of filters, which process the events in an application-specific manner.
When an event has passed through all filters, it is dispatched to the components that have
registered an interest in such events. Often, one of these components will store the event
in a database, for further processing.

Network Resources

RFID POS information systems may not require a direct networking for a local store.
The only networking required may be from the RFID readers to the application server
and from the server to the integration servers. The real network requirement should be
considered when linking one store to another store, whether through direct connetion,
internet, or satellite. Basic networking configuration is shown below;
Information Products

Information products coming from the POS are in the form of RFID data, database,
reports and summaries (from the applications).

1c) Identify and describe the input, processing, output, storage, and control activities
that occurred in the information system. (25 marks)

Input

All input data are acquired by reading the tags by the RFID readers and transponders.
Next the data will be sent as input from the RFID readers to the RFID server. The
advantage is that an RFID reader does not have to be aligned with the tags. All they have
to do is to pass the tags across the RFID antenna (or reader). The data from the reader to
the server may be done through wireless or using the normal cables (USB, UTP etc).

RFID readers are generally connected to the middleware using modular drivers, much
like Windows uses device drivers to communicate with a graphics card. This allows
different readers to be used with the middleware, without having to modify the
middleware.
Output

The output process is primarily from the RFID reader to the RFID server. There is no
primary display at the RFID reader but the data can be seen on the RFID applications
server monitor.

Storage

There are two places where data are stored. First the data are indeed reside in the tags for
each products. Then the RFID readers may keep the data in them. Another storage is from
the RFID readers to the application servers. Next storage may be available from the
integration servers.

Control

Control of the whole POS process is in fact lies in the hand of the RFID POS users. This
is so, since the readers are used directly by the users. Similarly the tags are created under
the supervision of the inventory supervisors or the managers at the collection center of
Wal-Mart

Another control for the entire POS of Wal-Mart may be done by those in-charge of the
RFID servers where he / she can monitor the use of the readers, manage the data being
colleced, resolve issues and control the data flow from the servers to other places. Middle
management controls and involvement are rare .
Question 2

2i) Make an outline that identifies how information systems support (1) business
operations, (2) business decision making, (3) strategic advantage, (4) an ebusiness
enterprise, an (5) electronic commerce at ABC Chemical. (20 marks)

Business Operations

Business operations is the real activity of the entire business. This includes business
transactions, sales, orders, monitoring, inventory recording and so on. Therefore, this is
the part where business acquires the information from. At the same time, business
operations are mostly supervised by lower-level management and carried out by the
employees of ABC Chemical.

In order to do their jobs, the supervisors and the employees alike need fresh and realtime
data from the real operations being conducted. They need to capture the immediate
information from the outside, fetch the information from the inside, put them in the
process and also responsible for the operational-level decision-making activities. This
may involve immediate access to the database and the sensors.
From the scenario, information system that support ABC Chemical business operations
are;

1. Sales & Order processings – sales and finance data and documents
2. Inventory processings – from the product database
3. Online Transaction Processings – from the online sales and order
4. Sensor reading and monitoring – from the sensors, monitors and sensors.

This can be supported by TPS, OLTPS, Office Automation and the database systems that
support the technical plans and implementations of the business operations.

Business Decision-Making

Business decision making are carried out by middle-level managers and executives up to
the top hierarchy. This is a tactical level process where middle managers are required to
come up with tactical decisions.

1. Crisis & Recovery Decisions

crisis and recovery management is required if something goes wrong to the production
process due to machine failures, interruptions, external forces and so on that can
jeopardize production. Engineers need current data reading and past history / records of
the plant. They need multiple and cross references from other machineries before they
can decide what (or where) went wrong and how to find the best solution for the
recovery.

2. Credit & Financial Decisions

Credit and financial decisions are carried out by the financial managers. Credit decisions
are required in order to determine a customer’s credit capacity, applications and
qualifications. Similarly, financial decisions are needed to determine cash flow
performance, assets, financial status, currency exchange rates.

3. Inventory Decisions

Inventory decisions involve determining the most optimum inventory level for the refined
chemical and products of ABC chemical. For a chemical plant like ABC, this information
and decisions is vital since the product is a very sensitive to store, to produce and to
distribute. Excessive chemical inventory introduces excessive risks. Therefore, significant
amount of information from various data source are important in order to decide the
required and the most optimum level. This decisions may also require other expert
opinion from production managers, marketeers and salesperson, and the customers.

4. Marketing Decisions

Marketing decisions are required in order to determine current market trend, global
market conditions, customer base demand, new competitions and other vital marketing
decisions. Marketing decision-markers need cross reference and multiple references from
various sources including from the external ones such us industrial reports, government
policies, competitions, global demands and so on.

All these decisions can be supported by Decision Support Systems, Data Mining and
Executive Informations Systems where the decisions are in form of semi-structured and
unstructured.

Strategic Advantage

Strategic Information System (SIS) is a type of Information System that is aligned with
business strategy and structure. The alignment increases the capability to respond faster
to environmental changes and thus creates a competitive advantage. An early example
was the favorable position afforded kenyaand uganda (What?) Airlines by their
reservation systems. For many years these two systems ensured that the two carriers'
flights appeared on the first screens observed by travel agents, thus increasing their
bookings relative to competitors. A major source of controversy surrounding SIS is their
sustainability.
Strategic Information System (SIS) is a system to manage information and assist in
strategic decision making. A strategic information system has been defined as, "The
information system to support or change enterprise's strategy." by Charles Wiseman
(Strategy and Computers 1985) through the application of IT to business processes.
Davenport ’s Strategic information system is different from other systems as: -

• they change the way the firm competes. by changing the goals, operations,
products, services, or enviromental relationships of theorganistions to help them
gain an over edge over competers.
• they have an external (outward looking) focus.
• they are associated with higher project risk.
• they are innovative (and not easily copied).

In the ABC Chemical Case, the strategic objectives of the company is to set up a global
marketing network that can connect and increase its customer base. That means, ABC is
ready to expand and is positioning itself as a global chemistry player.

The strategic plan developed by ABC would require an information sytem that should be
able to support the strategic dcisions by the top-level excutives. This is the situation
where Executive Information System (EIS) is much needed in order to position ABC
Chemical strategically in order gain strategic advantage.

E-Business Enterprise

Electronic Business, commonly referred to as "eBusiness" or "e-Business", may be

defined as the utilisation of information and communication technologies (ICT) in
support of all the activities of business. Commerce constitutes the exchange of products
and services between businesses, groups and individuals and hence can be seen as one of
the essential activities of any business.

In ABC Chemicals, E-business involves business processes spanning the entire value
chain: electronic purchasing and supply chain management, processing orders
electronically, handling customer service, and cooperating with business partners. Special
technical standards for e-business facilitate the exchange of data between companies. E-
business software solutions allow the integration of intra and inter firm business
processes. E-business can be conducted using the Web, the Internet, intranets, extranets,
or some combination of these.

Electronic Commerce

In practice, ABC Chemical’s e-business is more than just e-commerce. While e-business
refers to more strategic focus with an emphasis on the functions that occur using
electronic capabilities, e-commerce is a subset of an overall e-business strategy. E-
commerce seeks to add revenue streams using the World Wide Web or the Internet to
build and enhance relationships with clients and partners and to improve efficiency using
the Empty Vessel strategy. Often, e-commerce involves the application of knowledge
management systems.

The Sales and Order, and also the inventory management of ABC Chemicals is among
the E-Commerce functionalities, focusing on sales. This functionality is the core business
revenue operation of ABC Chemical through B2C (to single customers) and B2B
(through corporate customers).
2ii) ABC Chemical has many different types of information systems. Identify as
many as you can in the preceding scenario. Explain the reasons for your choices. (20
marks)

Potential Information Systems for ABC Chemical.

Accounting Information System (AIS)

The suggested accounting transaction system should combine and package various
financial and monetary transactions of ABC Chemicals. This is viable especially by using
integrated accounting applications commercially available today or can also be developed
in-house. For example, invoices, account receivables, vouchers, payment received,
account payables, general ledger can all be combined under the same applications to
promote uniformity and standard practices.

Input The input devices commonly associated with this suggested applications include:
standard personal computers or workstations running applications; scanning devices for
standardized data entry; electronic communication devices for electronic data interchange
(EDI) and e-commerce. In addition, many financial systems come "Web-enabled" to
allow devices to connect to the World Wide Web.

Process Basic processing is achieved through computer systems ranging from individual
personal computers to large-scale enterprise servers. However, conceptually, the
underlying processing model is still the "double-entry" accounting system initially
introduced in the fifteenth century.

Output Output devices used include computer displays, impact and nonimpact printers,
and electronic communication devices for EDI and e-commerce. The output content may
encompass almost any type of financial reports from budgets and tax reports to
multinational financial statements.

Financial applications make up the heart of an AIS in practice. Modules commonly

implemented include: general ledger, payables, procurement/purchasing, receivables,
billing, inventory, assets, projects, and budgeting.

Financial reporting starts at the operational levels of the organization, where the
transaction processing systems capture important business events such as normal
production, purchasing, and selling activities. These events (transactions) are classified
and summarized for internal decision making and for external financial reporting. In the
case of ABC Chemical, two reports can be automatically generated at any time from the
systems, that is external report to the managers and internal report to the employees.

Process analysis is a thorough review of the organization's business processes.

Organizational processes are identified and segmented into a series of events that either
add or change data. These processes can then be modified or reengineered to improve the
organization's operations in terms of lowering cost, improving service, improving quality,
or improving management information. This method is appropriate when automation or
reengineering is the system's primary objective.

Reporting is the driving force behind an AIS development. If the system analysis and
design are successful, the reporting process provides the information that helps drive
management decision making. Accounting systems make use of a variety of scheduled
and on-demand reports. The reports can be tabular, showing data in a table or tables;
graphic, using images to convey information in a picture format; or matrices, to show
complex relationships in multiple dimensions.

Reports are of three basic types: A filter report that separates select data from a database,
such as a monthly check register; a responsibility report to meet the needs of a specific
user, such as a weekly sales report for a regional sales manager; a comparative report to
show period differences, percentage breakdowns and variances between actual and
budgeted expenditures. An example would be the financial statement analytics showing
the expenses from the current year and prior year as a percentage of sales.

Transaction Processing Systems (TPS)

From a technical perspective, a Transaction Processing System (or Transaction

Processing Monitor) monitors transaction programs, a special kind of programs. The
essence of a transaction program is that it manages data that must be left in a consistent
state. E.g. if an electronic payment is made, the amount must be either both withdrawn
from one account and added to the other, or none at all. In case of a failure preventing
transaction completion, the partially executed transaction must be 'rolled back' by the
TPS. While this type of integrity must be provided also for batch transaction processing,
it is particularly important for online processing: if e.g. an airline seat reservation system
is accessed by multiple operators, after an empty seat inquiry, the seat reservation data
must be locked until the reservation is made, otherwise another user may get the
impression a seat is still free while it is actually being booked at the time. Without proper
transaction monitoring, double bookings may occur. Other transaction monitor functions
include deadlock detection and resolution (deadlocks may be inevitable in certain cases
of cross-dependence on data), and transaction logging (in 'journals') for 'forward
recovery' in case of massive failures.

There reasons why ABC Chemical requires a good TPS:

i. Rapid Response

Fast performance with a rapid response time is critical. Businesses cannot afford to have
customers waiting for a TPS to respond, the turnaround time from the input of the
transaction to the production for the output must be a few seconds or less.

ii. Reliability

Many organizations rely heavily on their TPS; a breakdown will disrupt operations or
even stop the business. For a TPS to be effective its failure rate must be very low. If a
TPS does fail, then quick and accurate recovery must be possible. This makes well–
designed backup and recovery procedures essential.

iii. Inflexibility
A TPS wants every transaction to be processed in the same way regardless of the user, the
customer or the time for day. If a TPS were flexible, there would be too many
opportunities for non-standard operations, for example, a commercial airline needs to
consistently accept airline reservations from a range of travel agents, accepting different
transactions data from different travel agents would be a problem.

iv. Controlled processing

The processing in a TPS must support an organization's operations. For example if an

organization allocates roles and responsibility

Similarly, since ABC Chemical is setting up connection with its major corporate
customers, EDI should also be developed as part of the TPS. EDI can be formally defined
as 'The transfer of structured data, by agreed message standards, from one computer
system to another without human intervention. Most other definitions used are variations
on this theme. Even in this era of technologies such as XML web services, the Internet
and the World Wide Web, EDI is still the data format used by the vast majority of
electronic commerce transactions in the world.

Inventory Control Information System

Another suggestion is for ABC Chemical to setup their own Inventory Control
application since they are dealing with ever-growing customer’s demands, queries and
much complicated inventory workflows as they go global. This is obvious especially
when considering complex order tracking activities as the number of customer order
grows that involve international customers worldwide.

Basically, Inventory control can facilitate order tracking in a very speedy manner and
therefore can give a quick response to the customers. This highly responsive application
can also increase customer’satisfaction and at the same time can help them in making
faster purchasing and ordering decisions. Similarly, the customers can also make multiple
queries and cross-references for more advance purchasing and ordering decisions.

At the same time, ABC Chemical can also have up-to-the-minute information of the
current level inventory. This is important because maintaining an optimum level of
inventory is crucial in justifying certain order quantities from the customers without
going through bulky records that may take hours to satisfy just one single query.

Similarly, documents like Order Form and Purchase Order can be centralized and
standardized across ABC Chemical since it exists only in standard electronic form in the
database. This will guarantee less mistake, less paperworks and improved workflows
across organizations.
Decision Support System (DSS)

Decision Support System is another potential IS for ABC Chemical. Decision Support
Systems (DSS) are a specific class of computerized information system that supports
business and organizational decision-making activities. A properly-designed DSS is an
interactive software-based system intended to help decision makers compile useful
information from raw data, documents, personal knowledge, and/or business models to
identify and solve problems and make decisions.

ABC Chemical can take significant advantage of DSS in these cases:

• an inventory of all of ABC Chemical current information assets (including legacy

and relational data sources, cubes, data warehouses, and data marts),
• comparative sales figures between one week and the next,
• projected revenue figures based on new product sales assumptions;
• the consequences of different decision alternatives, given past experience in a
context that is described.
• Comparative sensor data of the refinement machineries and other equipment in
order to help the engineers identify and anticipate problems.
• An inventory DSS that is in realtime so that the level of chemical products in
store, production levels and demand levels can be optimized.
REFERENCES

(no author) CBMS 4203 (2008) Management Information System. Kuala Lumpur :
Open University Malaysia .

Dillman, Linda., (2004, February 4) Talking RFID with Walmart’s CIO. Business
Weekly. (online) http://www.businessweek.com/technology/content/feb2004 (2008, Sept
20)

Laurie Sullivan (October 14, 2005). Wal-Mart RFID Trial Shows 16% Reduction In
Product Stock-Outs. InformationWeek (online).
http://www.informationweek.com/news/mobility/RFID/showArticle.jhtml?articleID=172
301246 (2008, Oct 5)

Thomas Wailgum Wal-Mart Is Dead Serious About RFID. CIO. (online).

http://www.cio.com/article/173702/Wal_Mart_Is_Dead_Serious_About_RFID (2008, Oct
8)

http://www.technovelgy.com/ct/Technology-Article.asp?ArtNum=1 (2008, Oct 5)