After reading this article you will learn about Management Information Systems (MIS):- 1. Definition of Management Information Systems 2. Concept of Management Information Systems 3. MIS Relationships in Operation 4. Integrated Management Information System.
Definition of Management Information Systems:
1. The Chartered Institute of Management Accountants of London, U.K. defines ‘Management Information System’ as one “in which defined data are collected, processed and communicated to assist those responsible for use of resources.”
2. According to Robert V. Head, ‘Management Information System’ is defined as “one that supports managerial decision-making by supplying relevant information when required.” Thus, it implies that the MIS only supports but does not to any significant extent replace the decision-maker.
Concept of Management Information Systems:
Management Information System (MIS) brings out action-oriented facts from figures for all levels of executives in a business. MIS is super-imposed on an organisational structure with a view to providing a distinct network to the Management hierarchy.
The concept of MIS follows a sequence of functional operations as itemized below:
In a schematic diagram, the MIS concept is:
The presentation of ‘management information system’ in any organisation necessitates three major considerations:
(i) Design considerations as to programmes.
(ii) Operational considerations as to the actual system.
(iii) Requirements considerations as to the outputs for effective decision supports. The MIS acts as a support system contributing to the effectiveness of the organisational structure.
MIS Relationships in Operation:
Integrated Management Information System:
Any manufacturing organisation is composed of several sub-systems, such as: Production,’ Personnel, Quality Control, Marketing, Projects, Finance and Accounts, etc. All these sub-systems, when brought together, form an integrated system.
Each of these sub-systems again have their own well-defined objectives to be achieved through a series of assigned activities with a view to attaining the overall objectives of the total organisation.
The management information (MIS) that provides information to all these sub-systems (that is, all levels of management) and integrates the company’s objectives is termed as an Integrated MIS.
Following the above concept, in an integrated MIS, the activities forming the common inputs of two or more sub-systems are identified, and a system programme is designed in such a way that this common input will update or process the sub-systems for whish these activities are related.
This concept can be better explained by considering any common ‘input’. For example, let us consider Bill of Materials or Material Requisition as a ‘common input’.
As and when a Bill of Materials or Material Requisition Ship is issued by the Production (subsystem), it is the usual procedure to send copies to:
(1) Materials (subsystem) section,
(2) Purchase (sub-system) section, and
(3) Cost Accounts (sub-system) section.
Here, the materials section issues wholly or partly the materials depending on stock (or inventory) position, makes entries in the relevant Bin Card and Stock Ledger and strikes out an inventory quantity balance.
Similarly, the purchase section comes to know of the inventory status, initiates procurement actions, if necessary, taking into account the factors of Economic ordering quantity (EOQ), Re-order level (ROL), etc.
So also the Cost Accounts Section comes to know of the Materials consumption/usage, identifies it with the process centre or product group or service centre, as the case may be, and analyses the consumption patterns or variances, etc.
For integrated MIS, it is, therefore, essential to identify the following:
(a) Common inputs (documents)
(b) Sub-systems (functional units)
(c) Files involved (activities which are related)
(d) Final outputs desired (reports or statements or information formats) before designing of the System Programming that would link up the files of various sub-systems. The success of integrated MIS depends on these linkages which are necessarily to be achieved throughout the MIS as a whole.