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Same output with less input

7 九月, 2015 - 12:26

One of the main objectives of any organization is to attempt to control costs and reduce the investment necessary to produce its output – in other words, most organizations are constantly trying to become more efficient by way of cost reductions. Information systems can help in this regard when they help lower costs, for example through a reduction in excess inventory, or by eliminating mistakes in operations.

Consider a grocery store as an example. If the store is able to better communicate with its suppliers, thus placing more recurrent orders for smaller quantities, it can minimize the costs of holding inventory (less input), yet be able to maintain the same level of service to its customers (same output). The store manager can also install a system that maintains inventory information. The data entered into the system are the items that are sold in the store and the quantity of these items. Every time an item is sold or ordered, the manager adjusts the quantity of the item in the inventory system. Without this system, the manager has to periodically go around the shop and the storage room to check if any items need to be restocked. After this system is installed, the manager can just look at the record to identify which items are almost sold out and need to be restocked. This also reduces the input (manager’s time) to achieve the same output (restock all items).