Types of Management information system

Types of Management information system

Management information systems play a very important role in business intelligence. Business intelligence is defined as taking decisions using data and drive information and then making decisions based on that information. Management Information System is composed of three words; Management, information, and system. Almost every successful company uses a management information system to make better data-driven decisions.

In this blog post, we will discuss different types of management information systems and their uses as while industrial applications. The following are the 5 different types of management information systems.

What is the information system?

The information system works base on the upside-down triangle. You can see the complete information system in the picture given below;

As you can see, the button, we have a transaction processing system, which is the most important for any business, then, in the management information system then we have a decision support system and at the top tier, we have executive information system. The data processing is from the button to top while the order or the decision flows from the top to the button.

Types of Management Information System:

Following are the eight types of management information system

1. Transaction Process System

The Transaction process system is a type of management information system where we discussed the collection process, the process itself, and the store transaction that occur in any single day. The information stored in the transaction process system is for years and It helps a company keep track of the expenses or costs and then calculating the net profit.

The Transaction processing system also helps companies to keep track of the canceled orders or reorders or if there is a transaction being canceled, it helps to refund the money to the customer, vendor, or any other target person. These process systems are made to handle large amounts of information. In the Management Information system, we can do this through using specialized software for data storage known as a Databases, one commonly used database is called MySQL, which is used to input and process a large amount of information.

Some examples; Payrolls used in any company, Stock Market, order processing system.

2. Decision Support System:

The Decision support system is another type of the management information system where we discuss the role of the data to make better decisions, the alternative term used for the decision support system is called Business Intelligence. Think about Decision support system as you want to buy a ticket to another US State, now every airline will charge different amount at the same day and at the same time, with the help of the data, you can easily buy a low-rate ticket and you don’t have to waste time for waiting. This very same process is used in the business intelligence or decision support system. You, as a company CEO or manager, take decisions because of the previous data.

You can generate future projections using statistical analysis to make better decisions for the company future. You can collect information from your customers through ways of different sources like through survey, conducting research, finding the user behaviors, and other related studies or finding studies conducted by the companies working in your sector.

An Expert system is a type of decision support system, most people think an Expert system is a type of management information system but this isn’t true. In the case of the expert system which is a sub-type of the Decision support system, a group of penal or experts, based on their previous experience take decisions. These decisions are not sometimes correct. The data-driven decisions are more accurate compared to expert decisions.

3. Executive information system:

In an executive information system, the data is reported to the top managers or the executives of the company and then using the data they take decisions. The data presented to the top executives is simple graphical form, as it is often said “A picture worth thousand words” the data can easily be interpreted so that any non-technical executive can also understand and give his opinion about the said matter. These systems provide the data in a simple and easy way.

These systems are custom made as every company has a different focal point, as there are very high expectations from such a system.

4. Sales and Marketing systems:

In sales and marketing systems we find the numbers of sales in a specific time period in a specific place of interest. The same way, the information about the cost incurred of marketing a product or service in a specific region and comparing the sales with the marketing costs. If you are spending X amount of money in marketing your product then how much Y number of sales we are getting from that region? The calculations can predict future outcomes. Sales and marketing systems include:

A. Product development

B. Forecasting of sales

C. Marketing Cost Vs number of sales

D. Management of distribution channels.

E. Pricing and promotion

F. To find ways to make marketing more effective.

5. Inventory control system:

For any product-based business, inventory is the most important thing. Inventory isn’t just about the product manufactured but it also deals with the storage of the raw materials. There are more types of inventory to properly manage it, the process of management called ABC analysis, where we find out the product that has more costs and arrange it accordingly.

In some manufacturing setups, storing inventory is a costly business. You have to allocate a big space to the inventory, to manage such a system, we can find the allocation as well as the total number of products we are manufacturing in a single day and the number of outgoing products. The Inventory control system also tracks the record of the movement of products in an inventory.

6. Human resource system:

It is one of the types of management information systems where we take the human allocation to specific functions or processes in an industry or company. The flow of the information can be controlled through office automation and enterprise collaboration information system. In the office automation system, the manager can communicate with employees as well as employees can communicate with one another, the information flow is fast in the case of office automation.

7. Enterprise resource planning:

This is one of the finest examples of the use of the management information system in any organization. The resource allocation is the most hectic part and it often requires a manager to move from one department to another, or in some cases, the ordering/reordering point is missed and now the whole machines are waiting for the main components to be shipped from other company or country. One such example is Tesla car, the company is making Electric cars and some of the parts they use are shipped from China, what if Tesla missed the date of reordering a part? It may take 2 to 4 weeks in order to get the product shipped from China to the US. This might be bad for the operation of Tesla. This is why Enterprise resource management plays it part.

I hope this helps.