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MIS - Chapter 02 - Information Technologies - Concepts and Management

MIS - Chapter 02 - Information Technologies - Concepts and Management

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PART I
IT in the Organization
1.Information Technology in the Digital Economy2.Information Technologies: Concepts andManagement3.Strategic Information Systems for Competitive Advantage
47CHAPTER
2
Information Technologies:Concepts and Management
Building an E-Business atFedEx Corporation
2.1
Information Systems:Concepts and Definitions
2.2
Classification and Evolution ofInformation Systems
2.3
Transaction Processing versusFunctional InformationSystems
2.4
How IT Supports VariousTypes of Organizational Activities
2.5
How IT Supports SupplyChain and CRM Operations
2.6
Information Systems,Infrastructure, and Architecture
2.7
Web-Based Systems
2.8
New Computing Environments
2.9
Managing Information ResourcesMinicases: (1) Maybelline / (2) JCPenney Appendix 2.1Build-To-Order Production
LEARNING OBJECTIVES
 After studying this chapter, you will be able to:
Describe various information systems and theirevolution, and categorize specific systems youobserve.
Describe and contrast transaction processing andfunctional information systems.
Identify the major internal support systems andrelate them to managerial functions.
Describe the support IT provides along the sup-ply chain, including CRM.
Discuss information infrastructure and archi-tecture.
Compare client/server architecture, mainframe- based legacy systems, and P2P architecture andcomment on their differences.
Describe the major types of Web-based informa-tion systems and understand their functionalities.
Describe new computing environments.
Describe how information resources are managedand what are the roles of the ISD and end users.
 
48
BUILDING AN E-BUSINESS ATFEDEX CORPORATION
FedEx Corporation was founded in 1973 by entrepreneur Fred Smith. Today,with a fully integrated physical and virtual infrastructure, FedEx’s businessmodel supports 24–48 hour delivery to anywhere in the world. FedEx operatesone of the world’s busiest data-processing centers, handling over 100 million in-formation requests per day from more than 3,000 databases and more than500,000 archive files. It operates one of the largest real-time, online client/servernetworks in the world. The core competencies of FedEx are now in expresstransportation and in e-solutions.
THE PROBLEM/OPPORTUNITY 
Initially, FedEx grew out of pressures from mounting inflation and global com-petition. These pressures gave rise to greater demands on businesses to expeditedeliveries at a low cost and to improve customer services. FedEx didn’t have a business problem per se but, rather, has endeavored to stay ahead of the com-petition by looking ahead at every stage for opportunities to meet customers’needs for fast, reliable, and affordable overnight deliveries. Lately, the Internethas provided an inexpensive and accessible platform upon which FedEx has seenfurther opportunities to expand its business scope, both geographically and interms of service offerings. FedEx is attempting to fulfill two of its major goalssimultaneously: 100 percent customer service and 0 percent downtime.
THE IT SOLUTION/PROJECT
A prime software application used by FedEx is e-Shipping Tools, a Web-basedshipping application that allows customers to check the status of shipmentsthrough the company’s Web page. FedEx is also providing integrated solutions toaddress the entire selling and supply chain needs of its customers. Its e-CommerceSolutions provides a full suite of services that allow businesses to integrate FedEx’stransportation and information systems seamlessly into their own operations.These solutions have taken FedEx well beyond a shipping company.FedEx markets several e-commerce hardware/software solutions: FedExPowerShipMC (a multicarrier hardware/software system), FedEx Ship ManagerServer (a hardware/software system providing high-speed transactions and su-perior reliability, allowing an average of eight transactions per second), FedExShipAPI
(an Internet-based application that allows customization, eliminatingredundant programming), and FedEx Net-Return
®
(a Web-based item-returnmanagement system). This infrastructure is now known as FedEx Direct Link. Itenables business-to-business electronic commerce through combinations of globalvirtual private network (VPN) connectivity, Internet connectivity, leased-lineconnectivity, and VAN (value-added network) connectivity.Figure 2.1 provides an example of one of FedEx’s e-commerce solutions. Itshows how FedEx customers can tap into a network of systems through theInternet. When a customer places an online order, the order is sent to a FedExWeb server. Information about the order and the customer is then sent to themerchant’s PC, and a message is sent to the customer to confirm receipt of theorder. After the order is received and acknowledged, the FedEx Web server sends
 
BUILDING AN E-BUSINESS AT FEDEX CORPORATION
49
a message to the merchant’s bank to obtain credit approval. At the same time, theorder is sent via electronic data interchange (EDI) to a FedEx mainframe that ac-tivates the
warehouse management system
. The order is processed (goods are pickedand packed), the warehouse inventory system is updated, and the shipping processis activated. Information regarding the processing of the order is accessible at thethree remote electronic data centers (EDCs) located in the United States, theEurope/Mediterranean (EMEA) region, and the Asia Pacific (APAC) region. Duringthe entire process the customer, the merchant, and FedEx employees may track atany time the status of the order and its fulfillment via the Web.
THE RESULTS
The new e-commerce-based FedEx business model creates value for its cus-tomers in a number of ways: It facilitates better communication and collabora-tion between the various parties along the selling and supply chains. It promotesefficiency gains by reducing costs and speeding up the order cycle. It encouragescustomers not only to use FedEx as a shipper but also to outsource to FedEx alltheir logistics activities. It also provides FedEx a competitive edge and increasedrevenue and profits. Thus, FedEx has changed from an old-economy shippingcompany to an e-business logistics enterprise.
Sources:
Based on a SIM 2000 award-winning paper written by William L. Conley, Ali F. Farhoomand,and Pauline S.P. Ng,
 simnet.org/library/doc/2ndplace.doc.
Courtesy of William Conley. Updated withinformation from
 fedex.com,
accessed February 2003.
Web server with Intershop3 catalogCatalog and order informationreside on the serverCustomer can track order statusfrom this siteMerchant receives all orderand customer information fromthis Web serverIndividualorder tracking ofFedEx shipmentsby customerFedExNet EDIMailboxEDC providesback to Intershoporder statusairbill number, etc.Customer Order Process(process order based oncredit approval, etc.)Customerplaces ordersvia Web catalogCheck orderstatus via WebMerchantE-mail order confirmation sent tomerchant when order is receivedE-mail or FAX order confirmation sentto customer when order placedCatalog creation/ maintenanceIntershop BackOfficeCustomer PCMerchant PCWarehouse ManagementProcess(process order based oninventory, etc.)FedEx Shipping Process(replies back to system withship data, airbill number,recipient country, charges,etc.)Credit cardapproval viamerchant selectedbanking system
3756a6b6c6214
FedEx
 
TrackAPI™
FedExWarehouseManagementSystem (EDC)
RemoteEDClocationUS EDCRemoteEDClocationEMEA EDCRemoteEDClocationAPAC EDC
Internet Network
FIGURE 2.1
 An exampleof a FedEx e-commercesolution.
Source:
Based onaSIM 2000 award-winningpaper written by William L.Conley, Ali F. Farhoomand, andPauline S.P. Ng, at simnet.org/ library/doc/2ndplace.doc.Courtesy of William Conley.)

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