Information Technology Reference
In-Depth Information
account. When the customer pays the invoice, the payment information is also used to
update the customer's account. The necessary accounting transactions are sent to the
general ledger system to keep track of amounts owed and amounts paid. Similarly, as the
purchasing systems generate purchase orders and those items are received, information
is sent to the accounts payable system to manage the amounts owed by the company.
Data about amounts owed and paid by customers to the company and from the company
to vendors and others are sent to the general ledger system that records and reports all
financial transactions for the company.
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Purchasing systems.
The traditional transaction processing systems that support the
purchasing business function include inventory control, purchase order processing,
receiving, and accounts payable. Employees place purchase order requests in response to
shortages identified in inventory control reports. Purchase order information flows to the
receiving system and accounts payable systems. A record of receipt is created upon receipt
of the items ordered. When the invoice arrives from the supplier, it is matched to the
original order and the receiving report, and a check is generated if all data is complete
and consistent.
In the past, organizations knitted together a hodgepodge of systems to accomplish the trans-
action processing activities shown in Figure 9.3. Some of the systems might have been
applications developed using in-house resources, some may have been developed by outside
contractors, and others may have been off-the-shelf software packages. Much customization
and modification of this diversity of software was necessary for all the applications to work
together efficiently. In some cases, it was necessary to print data from one system and man-
ually reenter it into other systems. Of course, this increased the amount of effort required
and increased the likelihood of processing delays and errors.
The approach taken today by many organizations is to implement an integrated set of
transaction processing systems from a single or limited number of software vendors that
handles most or all of the transaction processing activities shown in Figure 9.3. The data
flows automatically from one application to another with no delay or need to reenter data.
Table 9.1 summarizes some of the ways that companies can use transaction processing
systems to achieve competitive advantage.
Table 9.1
Competitive Advantage
Example
Customer loyalty
increased
Customer interaction system to monitor and track each customer
interaction with the company
Examples of Transaction
Processing Systems for
Competitive Advantage
Superior service
provided to customers
Tracking systems that customers can access to determine
shipping status
Better relationship with
suppliers
Internet marketplace to allow the company to purchase products
from suppliers at discounted prices
Superior information
gathering
Order configuration system to ensure that products ordered will
meet customer's objectives
Costs dramatically
reduced
Warehouse management system employing RFID technology to
reduce labor hours and improve inventory accuracy
Inventory levels reduced
Collaborative planning, forecasting, and replenishment to ensure
the right amount of inventory is in stores
Depending on the specific nature and goals of the organization, any of these objectives
might be more important than others. By meeting these objectives, TPSs can support cor-
porate goals such as reducing costs; increasing productivity, quality, and customer satisfac-
tion; and running more efficient and effective operations. For example, overnight delivery
companies such as FedEx expect their TPSs to increase customer service. These systems can
locate a client's package at any time—from initial pickup to final delivery. This improved
customer information allows companies to produce timely information and be more re-
sponsive to customer needs and queries.
