Management information systems (MIS) are integrated systems that provide management with information to make decisions and to run their organizations effectively and efficiently. The functions of any MIS includes data capturing, data storage, data processing, data and information distribution, prediction forecasting, planning and control (Kotler, 2009). The paper will compare the management systems of Wal-Mart and McDonalds and discuss how they use them for competitive advantage. It will also discuss the consequences of the use of IT and recognize the potential security breaches and computer crimes associated with the same.
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Wal-Mart started operations in 1962 with 15 stores which grew to 276 in 10years. By 1989 it had 1402 stores and currently has 10,185 stores in 27 countries with 2.2 million employees serving 176 million customers a year. Wal-Mart’s success lies in its focus on customer needs, reducing costs through efficient supply chain management to give its customers the best price. Wal-Mart uses various systems for its ERP (Enterprise Resource Planning), SCM (Supply Chain Management), CRM (Customer Relationship Management), and KMS (Knowledge Management System). The company uses EDI (Electronic Data Interchange), VOF (Voice based Order Filling), CPFR (Collaborative Planning Forecasting and Replenishment), and RFID (Radio Frequency Identification) which has given it competitive advantage in offering its customers the best price and availability of goods whenever they want them.
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In 1970, Wal-Mart was the first organization to centralize its distribution system known as the Hub and Spoke as part of its supply management system. The system enables Wal-Mart to purchase goods in huge quantities which gives them a cost advantage which they pass down to their customers offering them the best price. Wal-Mart moved to EDI which connects all their suppliers. The system tracks all sales, merchandise inventories and allows stores to manage their stock thus reducing unproductive inventory. Stores can ensure that customers get what they want most in any Wal-Mart store. Wal-Mart also set up its own communication system to work with EDI that improved operations (Laudon, & Guercio, 2014).
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In 1998, Wal-Mart introduced the VOF for their employees. The advantage of the VOF was quick replenishment of stock, quick movement of goods within the stores which improved logistics and made it quick to locate goods to replenish. Later on Wal-Mart introduced a retail link that connected with the EDI through an extranet that is accessible to all suppliers. Suppliers are able to monitor product performance against competition in al Wal-Mart stores. Wal-Mart has the most sophisticated computer system that manages all its operations. The system incorporated the use of MPP (Massively Parallel Process) to track movement of goods and stock levels (Laudon, & Guercio, 2014). In addition the company included an internet enabled SCM system with additional functions that include collaborative planning forecasting and replenishment. The systems work in real time which reduces inventory costs and enhances product availability across the supply chain (Frieden & Roche, 2006).
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In 2002, Wal-Mart switched its 14,000 suppliers from VAN EDI to a web enabled EBI which saved the company license fees paid to private VAN vendors. In 2003, Wal-Mart introduced RFID to its 100 top suppliers. RFID replaced bar code technology, reduced SMC costs, enhanced efficiency, and reduced stock outs (Laudon, & Guercio, 2014). The use of IT for Wal-Mart has given it competitive advantage over its competitors. Wal-Mart is the number one retail giant in the world, number one in Canada and Mexico. Its closest competitor is Target in the US and Carrefour in Europe. The company is a global success of its MIS that ensures that customers get quality and the best price (Lucey, 2005).
McDonalds is a leading global fast food retailer with 30,000 restaurants in over 121 countries, serving 47 million customers every day. McDonalds offers the best quality fast food, service, and value to its customers. The middle and upper level managers depend on its MIS to support decision making. The MIS is based on technology, information and people. One of the company’s main goals is to improve IT and IS.
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McDonalds has the following systems; POS System, TPS (Transaction Processing System), MYS (Made for You System), and the Hyperactive Bob System. These systems have given it competitive advantage and ensured that customers get meals that are fresh, tasty and hot in any of its restaurants. The POS system ensures that customers get their orders with minimum error. The company can monitor sales and losses of its restaurants.
The MYS is a communication portal between the counter and kitchen. The cashier inputs the order into the system which the kitchen gets on their screen in real time. The meal is always prepared after the order The POS is incorporated with the MYS to ensure efficiency. The inputs to the POS is immediately relayed to each work station, the payment due is displayed to ensure fast an accurate orders.
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McDonalds has also introduced the Hyperactive Bob System based on artificial intelligence or robots that manage the kitchens. Each restaurant has cameras at the entrances and parking lots to see how many people are coming into the restaurant. This assist the kitchens in planning on the amount of meats required needed to meet the orders. In addition McDonalds also has a TIOS (Touch Interface Ordering System) which allows customers to place orders and pay electronically without the cashier. This system has minimized labor costs and increased customer orders (Frieden & Roche, 2006). The restaurants also have WIFI that gathers information about customers’ habits. All the above systems have given a competitive advantage to McDonalds and have increased productivity, increased quality levels, improved kitchen operations to ensure that customers are served with meals that are fresh, tasty, and hot. The MIS systems have reduced costs and maintained existing customers and attracted new ones (Laudon, & Guercio, 2014).
Consequences of the Use of IT and Potential Security Breaches and Computer Crimes
Despite the advantages of using MIS to increase efficiency and support management decision making, the use of IT has its own challenges on security breaches and computer crimes (McLeod & Schell, 2007). The number of global security incidents in organizations is growing faster the global number of smart phone users. Cyber crime rates have increased by 48% in the last year. Hackers have become very sophisticated and are coming up with new ways to infiltrate computer systems. This can compromise the financial situation of any company and endanger its future (Straub, Goodman, & Baskerville, 2008).
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Consequences of the use of IT include wiping at all data leaving the company with no information to use for its operations. Data can be manipulated providing false information leading to inaccurate decisions by management. Employee and supplier information can also be compromised with personal details including security numbers and payment details (Zhang & Galletta, 2006).
Security breaches are brought about by disgruntled employees, careless and un informed employees, the policy of BYOB (Bring Your Own Device), the use of cloud applications, the lack of cyber security policies or security standards, and lack of recovery plans in case of an attack. Other reasons include confusing compliance with cyber security, failure to update software and use of encryptions, and lack of information or training of employees on security issues (Straub, Goodman, & Baskerville, 2008).
Companies need to protect themselves, their customers and suppliers from security threats. Companies should have a cyber security policy in place. They should monitor, control, and manage privileged credentials to prevent exploitation from employees. They need to implement protocols and infrastructure that can track logs, and record activity, create alerts for quick response to potential threats. Employees should be trained on cyber security best practices and taught how to use string passwords which should be changed every 30 – 60 days. The company needs to use a password management system and encryption where necessary. Companies should also implement mobile security solutions to deal with the BYOB policies. Cloud applications can be protected through the use of string encryptions to protect sensitive information. In addition, they should use patch management programs to ensure that devices and software are updated at all time (Zhang & Galletta, 2006).
The discussion on the MIS systems for Wal-mart and McDonalds shows the importance of MIS in providing information for management decisions which leads to efficiency and effectiveness in internal operations. MIS clearly gives the organizations a competitive advantage over their competitors. Continuous upgrading of MIS systems and the recognition of potential security breaches and computer crimes has assisted both organizations to increase productivity and become global leaders in their industry.