Information

Management
IS/IT Assignment
Information Management – IS/IT BBM 500

BALAMURUGAN CHINNIAH
K0961097
11/5/2010
Executive Summary

This assignment describes how a company is benefitted through Information System. The
company that is been chosen to explain the information system and technology is
Sainsbury’s. As a supermarket their major concern is Supply chain Management. Hence at
operational level Supply Chain Management is selected in specific for evaluation of
Information System and Technology through De Lone and Mc Lean Model of Information
Success. The Findings and Recommendations are based on the evaluation done.

K0961097 BBM 500 Page 2 of 13

Introduction

The word Information System describes how an organisation or individual use the
Information Technology to attain their goals. It acts as forming surface between management,
information and computer technology used in an organisation. It is basically the combination
of different elements that are employed in collecting, delivering, and communicating the
information with in an organisation (Kroenke, David M. 1993). In today’s competitive
environment each an every individual or organisation relies on the Information System (IS)
for their survival in various aspects such as managing the supply chain, operations,
competitors. Hence it is clear that Management Information System (MIS) plays a major role
in the survival of the organisation.

This assignment focuses on the following,

 Exploring, how the MIS is used in different levels of an organisation.

 Critically evaluating the technology used in a particular sector of a firm.

 Finally to suggest with appropriate recommendation, this enhances the business

process in mere future.

The organisation that is been chosen to discuss the MIS is Sainsbury’s. The company was
founded in 1869, which is one among the top three supermarket chain in the UK. It operates
872 stores comprising of 537 supermarkets and 335 convenience stores. They offer around
30,000 products and have more than 150,000 employees (Anon, 2010)

Information System

There are four major levels in an organisation, they are strategic level, management level,
knowledge level and operational level (Barua, A., Kriebel, C., & Mukhopadhyay, T, 1995).
Figure1 illustrates the levels of Information System (IS) which serves the different
management levels in an organisation.

Strategic Level IS: This system mostly serves the senior level management team of
Sainsbury’s in-order to make strategic decisions and have a control on the firm both
internally and externally (Abcouwer A.W, 2004). This management level makes decision
based on the market trends and their survival among the competitors with the help of the
information available
K0961097 BBM 500 Page 3 of 13
Management Level IS: This mostly serves the middle level management team of
Sainsbury’s, where the decisions are made based on monitoring, controlling and reporting the
internal activities of the firm (Baloh, P. 2004).

Figure 1: IS Levels which serves the Organisation

Knowledge Level IS: this category of Information system serves the knowledge and data
workers of Sainsbury’s. It gives them information based on the frame work such as new
products and their bar codes, developing the infrastructure of the supermarket and expanding
the store and logistics capacity.

Operational Level IS: The managers in the operational level are benefited by this IS level.
This helps them to monitor basic process and transactions such as invoices, cash flow,
product forecast, shipping order, product order, cost price, storage capacity, storage process
and receipts.

K0961097 BBM 500 Page 4 of 13

The entire network of Sainsbury’s is given in Figure2. The main database of Sainsbury’s is
connected to the Marketing DB, Sales DB, and Administration DB. The company’s network
is maintained externally, but the company had control over its De-Militarised Zone (DMZ).
This zone contains information related to its operations such as customer payments, supply
chain management and internal/external communications. The DMZ acts as a gateway for all
the external communication. This network includes more that 100 servers.

Figure 2: Sainsbury's network - Source Designed by Author

Sainsbury’s online operations and supply chain management are highly dependent on the IT
structure available to them. They used EDI VAN (Value added Network) and Web EDI for
internal communication and supplier communication (Anon, 2009). The most important
feature of EDI transaction is, no manual/human interruption is required. It was the first
electronic document which replaced papers in business (Anon, EDI Basics). EDI was
designed for Business to Business data transactions.

Information System in Supply Chain Process of Sainsbury’s

K0961097 BBM 500 Page 5 of 13

 Being one among top three chains of supermarkets in the UK, Sainsbury’s found it
hard to maintain the supply chain and stock availability in their stores. The process follow in
supply chain management of Sainsbury’s is given in Figure3.

Supply chain management runs in phase with the effective consumer response. This
implies that when demand increases the products must be placed in time for the availability to
the customers. The suppliers deliver their finished products to the depot, when the order is
placed to them by the company. These delivered goods are then received and unloaded in the
storage. Then the unloaded products are shelved according to the company’s requirement
such as product type, quality and quantity. The shelved products are despatched to the
corresponding stores as per the demand/requirement. The sales team scans the products when
the product is sold out. This scanned report is forwarded to the store forecast team, which
determines the store replenishment in a particular locality. Hence the demand is generated
and forwarded to the ordering team which places the orders to the suppliers. This is a never
ending process, which plays a vital role in the business of supermarket.

Figure 3: Supply Chain management Of Sainsbury's - Source IGD Research

We are going to look into the information system used in supply chain management.
Sainsbury’s uses EDI (Electronic Data Interchange) for all kinds of transaction, more than
one format of data and versions are seen in their transactions. They are TRADACOMS
K0961097 BBM 500 Page 6 of 13
(Trading data Communication Standards) and EANCOMS (EAN Communication Standards)
formats with different versions (Anon, 2009). The following figure... shows the different data
formats and versions used

Types of Data In Different Operational Area: The product forecasting team uses the
TRADACOMS version 2, Ordering team and Shipment team uses another type of
TRADACOMS version 9, Invoice team uses both TRADACOMS version 8 and 9, Cost
Pricing team uses both TRADACOMS version 8 and EANCOMS version D96A. The use of
different types of data leads to the following data accuracy problems with in the organisation.
Some of the problems faced in the supply chain are product replenishment calculation error,
inventory misplacement in stores and dispatch centres, ordering errors.

Figure 4: Types of Data In Different Functional Areas - Source Designed By

Author

De Lone and Mc Lean Model of Information Success

K0961097 BBM 500 Page 7 of 13

 According to De Lone and Mc Lean model, quality has two different dimensions, they are
“information quality” and “system quality”. When each of these qualities are measured
separately, they will affect the “use” and “user satisfaction”. “Use” and “user satisfaction” are
closely inter-related to each other. Result contributing to high interest in “use” which is
coming before “user satisfaction”, leads positive experience of “user satisfaction”. This “user
satisfaction” in turn leads to certain “Impacts”. If in the case that the Information system or
service is to be continued, the “Impacts” are likely high/positive from the owner’s or
sponsor’s perspective. This model was no more used in measuring the quality, because of the
changes in the trends of the company.

Figure 5: De Lone and Mc Lean Model IS Success 10 years ago - Source De Lone
& Mc Lean Model

The updated model includes another quality which is “Service Quality” and the “Impacts”
were replaced by “Net Benefits”. Arrows were included to demonstrate the success picture in
process context, however neither positive nor negative signs were used in a casual sense. This
shows that high quality system leads to more “use” and “user satisfaction”, which in turn
favours the “net benefits”. This means that the success picture is positive. In other way high
usage of poor quality system leads to more dissatisfaction and negative benefits. Figure ... is
the updated De Lone and Mc Lean model diagrammatic representation (De Lone and Mc
Lean, 2003).

K0961097 BBM 500 Page 8 of 13

Figure 6: Updated De Lone and Mc Lean Model IS Success - Source De Lone &
Mc Lean Model

Measuring Supply Chain Management of Sainsbury’s through De Lone and Mc Lean

Model

Information Quality

Supply Chain Management of Sainsbury’s is measured with the help of the above mentioned
updated model. All the transactions in this department are done through EDI (Electronic Data
Interchange) which is a safe and secure over the VAN and Web. This shows that they
maintain a secure business to business data transmission. However, they data used in the
transaction are of various formats and versions. This lead to the manual interruption, which
was mandatory to solve the data mismatch. This implies that the poor information quality is
contributing towards the negative “net benefits”.

System Quality

The system uses EDI in Value Added Network (VAN) and Web, the VAN is a network that
is provided and maintained externally. The network providers charge high for the usage and

K0961097 BBM 500 Page 9 of 13

data storage. The system quality contributed towards “use” and “user satisfaction”, which
lead to positive “net benefits” with higher cost.

Service Quality

As mentioned earlier some of the problems faced in the supply chain were product
replenishment calculation error, inventory misplacement in stores and dispatch centres,
ordering errors, due to data inaccuracy. The users were interested and satisfied by using the
system, however the success picture of “net benefits’ is negative in process context with the
bad service quality.

Recommendations

Being a supermarket, Sainsbury’s consistently looks forward to solutions to improve supply

chain management, trade partners, customer satisfaction and their employee’s system usage.
They can use the different types of data in all their transactions and synchronise them using a
GDSN (Global Data Synchronisation Network). This does not require any manual
interruption, as said in EDI. One such which provides various operations is Applicability
Statement 2 (AS2) (Anon, Functions of AS2).

Figure 7: Various Functions of AS2 - Online Source

K0961097 BBM 500 Page 10 of 13

The AS2 provides various functions such as product tracking, data cleansing and reconcile,
report generation and secured data transfer through http. Sainsbury’s director of supply chain
operations Tim Goalen said that “To support our continued growth, we were looking to
enhance our collaboration with suppliers without a significant increase in cost, while
continuing to introduce greater intelligence into our supply chain” (IBM Press Release,
2009).This can be achieved by using AS2 which charges periodically the usage of the
network, than the other network providers who charge with respect to the data used.

Benefits

 Suppliers can comply with AS2 without any expenses, change in their infrastructure,
technical skills.

 Accuracy of data through translation, tracking of the products.

 Easy access to the employees without any technical assistance, which enhances the
“user satisfaction” and contributes to “net benefits” in process context.

K0961097 BBM 500 Page 11 of 13

References

1. Abcouwer A.W. (2004). Who is managing the information? About the work of the
information manager and his CIO. PrimaVera, working paper 2004-14. PrimaVera
Working Papers Series. Amsterdam: Universiteit van Amsterdam.
2. Anon (2010) Sainsbury’s History. England [Online]. Available at < http://www.j-
sainsbury.co.uk/index.asp?pageid=188&caseid=archive> [Accessed on 29 October
2010].

3. Anon (2009), Sainsbury’s Suppliers Guide [Online]. Available at <

http://www2.sainsburys.co.uk/sid/Documents/Supplier_handbook.pdf>
[Accessed on 29 October 2010].

4. Anon, EDI Basics [Online]. Available at <http://www.edibasics.co.uk/index.html>

[Accessed on 29 October 2010].

5. Anon, Functions of AS2 Available at <

http://www.premiertransportation.com/about/technology.htm> [Accessed
on 29 October 2010].

6. Baloh, P. (2004). Returning the ‘I’ in the ‘IT’ education of MScIS/MBA

professionals. Journal of Issues in Informing Science and Information Technology, 1,
915-929.

7. Barua, A., Kriebel, C., & Mukhopadhyay, T. (1995). Information technology and
business value: An analytic and empirical investigation. Information Systems
Research, 6 (1), 3-23.

8. De Lone, W.H, and Mc Lean, E.R. (2003) The De Lone and Mc Lean Model of
Information Systems Success: A Ten-Year update. Journal of MIS. 19. 4. 9-30.

IBM Press Release (2009), Sainsbury's to Transform Supply Chain with IBM

K0961097 BBM 500 Page 12 of 13

 [Online]. Available at <http://www-03.ibm.com/press/us/en/pressrelease/27186.wss>
[Accessed on 29 October 2010].

9. Kroenke, David M. (1993), ‘Business Information Systems – An Introduction’, 5th

edition, Mitchell McGraw-Hill, ISBN 0-07-035871-0, p.p 401 – 423.

K0961097 BBM 500 Page 13 of 13