Tuesday, December 10, 2019
Accounting Information System Globe Value Chain
Question: Describe about the Accounting Information System for Globe Value Chain. Answer: Role of Accounting Information System (AIS) Accounting Information System, commonly known as AIS, is a system or structure used by the manages of the organizations to collect, store, manage, retrieve and process the necessary data and information of that organization so that they can be used by the managers, accountants, stakeholders and others who needs them (Soudani, 2012). The AIS plays an important role in the value chain of an manufacturing organization as the ultimate goal of any organization is to provide value to its customers through different products and services. In order to get profit from a business, the created value of the organization must be greater than the cost of production. There are mainly five activities in the value chain of any manufacturing organization. They are inbound logistics, manufacturing operations, outbound logistics, marketing and sales and service. Figure 1: Value Chain Activities (Source: Simatupang, Piboonrungroj Williams, 2014) There are four support activities which help the primary activities to perform effectively and efficiently. They are Infrastructure, Technology, Human Resources and Purchasing (Antrs Chor, 2013). The AIS has a very important role to play in the total value chain process. There are various ways by which the AIS add value to the value chain process of a manufacturing organization. The first activity of AIS is to provide accurate as well as timely information to the primary activities of the value chain process. This information includes the information of the purchase of the raw materials, various sales information, carriage and freight information and many others. On the other hand, the AIS system adds value to the value chain by improving the quality of the service. Various necessary information provided by the AIS helps the organizational managers to spot the loopholes in the production process and take action accordingly. One of the most important aspect of AIS is that it helps to reduce the cost of production and this process contributes to the maximum profitability of the organization. There are other ways by which AIS adds value to the value chain of a manufacturing organization like it improves the efficiency of the total manufacturing process of the organization; it improves the decision making quality of the organization by providing necessary data and information; it helps to increase the knowledge sharing ability of the organizational people and many others. Overall it can be said that, a well designed AIS system helps to increase the profitability of the organization by introducing effectiveness and efficiency in the total value chain process (Hall, 2012). AIS Assistance in the Decision Making Process Decision making process is one of the important aspects of any contemporary manufacturing business organization as the success and failure of any business depends upon the effective decisions taken by the managers. Thus, from the above statement it can be understood that it is desired that the decisions taken by the managers are effective and correct (Collier, 2015). There are various factors which have an impact on the decision making process of an organization. One of the factors is the AIS. As discussed above, the primary function of the AIS is to supply the necessary data and information to the value chain of a manufacturing organization. The AIS system of an organization collect, process so that they become meaningful to the organizational managers. Various kind of information is needed for the decision making process like the sales and purchase information, sales information, cash and bank information, payment related information and many others. The AIS system collects process es and stores all this information in an integrated way so that they can be used by the manager at the time of decision making process (Lipi, Rama Agaraj, 2015) The information provided by the AIS system is reliable, relevant, complete, understandable, and verifiable and is provided to the managers at the correct time of decision making process. The decision making process includes the identification of the problem; then selection of the methodology to solve the problem; the collection of necessary relevant data and information; and then take actions to solve the problem. Thus, it can be seen that without providing the necessary relevant data and information about that particular problem, it is not possible to solve the problem. Hence, from the above discussion, it can be concluded that AIS assists the decision making process of contemporary manufacturing companies by providing the necessary relevant data and information in an integrated way (Sari Purwanegara, 2016). Value Chain to Use for Competitive Advantage Value chain is the process or activity by which an organization adds value to its products or services. As per the Figure 1 in the above discussion, there are mainly five aspects or activities of the value chain of a manufacturing company. Each activity is connected to the other activities and each activity needs some specific data and information to be completed. This necessary data and information is provided by the AIS system of that organization. The AIS system collect the necessary data and information, process them in order to make them integrated and then deliver them to the organizational managers through a single particular system (Rainer et al., 2013). Based on this processed and integrated information, the managers take effective and efficient decisions for the success of the organization. In this way, the value chain is used to produce or manufacture high quality goods or products to fulfill the increasing demand of the customers and to make the business profitable. In do ing so, the organization actually adds value to the customers by providing better services than its competitors. In the business world of twenty-first century, a company needs to have something different and unique to stay in the business competition. AIS provide that competitive edge to the value chain of the organization by providing necessary data and information. This is the way by which the value chain of an organization can be used with the help of AIS to gain the long term competitive edge in the market (Dorantes et al., 2013). References Antrs, P., Chor, D. (2013). Organizing the global value chain.Econometrica,81(6), 2127-2204. Collier, P. M. 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The usefulness of an accounting information system for effective organizational performance.International Journal of Economics and Finance,4(5), 136. Simatupang, T. M., Piboonrungroj, P., Williams, S. J. (2014). The Emergence of Value Chain Thinking.Proceedings of T-LOG.