As discussed in Business Intelligence and Knowledge Management Systems, the goals of individual managers may conflict with overall organizational objectives. For instance, some of the managers and supervisors shown in the organization chart (Figure 13.2) might very well be “marching to different drummers.” As one specific example, the purchasing manager may well want to buy in large quantities to take advantage of quantity discounts and to reduce ordering costs. Receiving, inspecting, and storing large quantities of inventory, however, likely presents problems for the receiving department supervisor and the warehouse manager.
In addition to goal conflicts between managers, ambiguity often exists in defining goals and defining success in meeting goals. For instance, one of the purchasing goals might be to select a vendor who will provide the best quality at the lowest price bythe promised delivery date. But what does this goal mean precisely? Does it mean that a particular vendor must satisfy all three conditions of best quality, lowest price, and timely delivery? Realistically, one vendor probably will not satisfy all three conditions.
Recall from Business Intelligence and Knowledge Management Systems that prioritizing goals is often necessary to choose the bestsolution given the various conflicts and constraints placed on the process. This necessity implies that trade-offs must be made in prioritizing among goals that conflict. For example, if a company operates in an industry that is extremely sensitive to satisfying customer needs, it may be willing to incur excessive cost to ensure that it is procuring the best quality goods and obtaining them when needed.
TECHNOLOGY INSIGHT 12.1
Enterprise System Support for Horizontal Information Flows
The information flows presented in Figure 13.3 are very similar to what we would expect if the organization were using an enterprise system. However, many of the tasks outlined for that figure would occur quite differently because of the messaging capabilities embedded in contemporary enterprise systems. Let us take a quick look at each of the information flows for Figure 13.3.
- When the inventory control department enters the purchase requisition, the requisition is automatically entered into the database for processing by the purchasing department.
- Similarly, as purchase requisitions are entered into the system by various other departments, the requisitions are automatically entered into the database to await processing by the purchasing department.
- Purchase orders are transmitted to vendors. Usually, these purchase orders are transmitted via EDI transmission either automatically by the enterprise system or upon a release (i.e., an authorization) keyed in by the purchasing department.
- When the purchase order is released, the release is recorded in the database and instantly available for the initiating department’s review, should a department want to check on the status of a purchase order.
- The recording of the purchase order release also makes the necessary portions of the purchase order information available to the receiving department for review when the vendor delivers the goods or services.
- Recording the purchase order release also places the data on the authorized purchase order list for review by the accounts payable department.
- Goods and services are received from vendor.
- When the receiving department enters information upon receipt of the goods and services, the purchase order is automatically flagged for receipt and, therefore, for processing by accounts payable department.
- This entry to the system (in step 8) also notifies the purchasing department that the goods and services have been received. These data become part of the vendor’s history.
- Invoice is received from vendor—this normally arrives as an EDI transmission from the vendor.
- Approval of voucher is recorded to the database, flagging the purchase for payment by the cashier. This approval may be automatically performed by embedded rules in the enterprise system.
- Accounts payable information is automatically flagged for inclusion in the general ledger and inventory costing information.
- Cashier sends check to vendor. Again, this step may be an authorized electronic funds transfer (EFT), either by the cashier or automatically per embedded rules in the enterprise system.
- Payment is entered into the database and immediately made available for viewing by the accounts payable department.
- The entry of the cash disbursement authorization flags the database and creates the source of the update in the general ledger.