Describe about the Accounting Information System for Advancing Technology.
Accounting Information System
In the present era, technology is continuously advancing in order to improve the efficacy of human work and to generate a better outcome in minimum cost. Accounting Information System (AIS) is one of such efforts. It is a subset of Management information system developed for specifically to deal with accounting data to assist managerial authorities in making viable decisions. The present study is focused on the description of the role of AIS in manufacturing industry specifically in value chain activities.
Role of AIS in the value chain of manufacturing entity
Organisation engaged in manufacturing activities operate with the principal objective to provide qualitative products to their customers in order to add value to their utility. They make sure that products are free from defects and different and better from the competing firms. For this purpose, managerial parties required timely information that must be reliable in nature (Christ and Burritt, 2015). In this aspect, AIS assist manufacturing entities as it provides storage and retrieval of business information in a proper manner at each value chain activity. With this approach, managers are able to make a better decision to attain operational efficiency at each level and to deliver a better outcome. Primary functions of AIS in the value chain of manufacturing concern is enumerated as below:
- Better data processing related to production activities
- Availability of viable information to assist managerial parties in making decision for business
- Development of effective internal control to secure crucial information to reduce the risk of breach of confidentiality.
Figure 1: Value chain analysis
(Source: Reuter, Brambring and Hempel, 2016)
Above figure shows that value chain is concern toward various activities which are required to be managed in an appropriate manner to lead business towards success. In this aspect, AIS adds value in operational activities by making improvement in the quality of products and making a reduction in operating costs (Zamora, 2016). It collects, process, store, and report information to the appropriate authority. AIS is considered to be information providing the vehicle. This tool is focused on improving efficiency and decision-making capabilities of the business. In addition to this, a well-designed AIS also improves supply chain of a manufacturing concern.
Use of AIS in decision-making in a contemporary manufacturing organisation
The previous task of the study shows that AIS plays a significant role in the efficient completion of value chain activities to assist manufacturing concern to operate in an effective manner. Study of Reuter, Brambring and Hempel (2016), shows that manufacturing companies are required to make various decisions that short-term as well as long-term impact on business. For this aspect, AIS can be used in the following manner in decision-making in a contemporary manufacturing organisation:
At the various point of time, manufacturing entities are required to make a decision between make or buy option. For this purpose, they have an obligation to evaluate both the proposals in a detailed manner by considering its impact on the long-term profitability of business. AIS compare these plans by making use of suitable tools by reviewing the cost of production and procurement. AIS provide viable information to managerial parties so they can make proper decisions.
Planning for allocation of resources
Manufacturing entities are required to make optimum use of available resources to generate a best possible outcome. For this purpose, they have an obligation to allocate resources among various activities in an appropriate manner (Christopher, 2016). In this aspect, AIS assist in preparing better plans by providing information about available plans in order to guide managerial authorities for investment decisions. In addition to this, managerial are able to identify risk in proposed project to make proactive strategies to minimise the impact of risk.
Generation of funds
Operational activities in manufacturing business require an enormous amount of financial resources to assist them in maintaining better solvency and liquidity position. For this purpose, they are expected to generate funds from a suitable source in order to minimise the financial cost of business (Kaplan and Atkinson, 2015). For this purpose, AIS provides various options from which funds will be produced along with its interest and transaction by which viable source can be selected for business.
In addition to above decisions, AIS assist manufacturing entities in forming better product mix to attain an advanced level of customer satisfaction as well as profitability. For this purpose, AIS collects internal and external data to assist business in making improvement through which they will be able to achieve their objectives of activities in a better manner.
Utilisation of value chain for competitive advantage in a manufacturing organisation
The concept of value chain analysis is influenced by the theory of Porter. In accordance with their theory, value chain activities are directly linked to the competitive advantage of business entities as it improves the efficiency of business (Stadtler, 2015). Manufacturing entities are required to provide unique identification to their products to strengthen their market position. In this aspect, value chain analysis can be used in the following manner to achieve competitive advantage
This advantage aims to attain lower cost in comparison to competitors to provide price benefit to consumers. Further, the consumer will prefer purchasing from the business if they are able to provide similar quality products in lower price and consequently it will make an increase in market share of the firm.
This advantage influence firm to differentiate their products and services from competitors by considering the Variety-based strategic position, Access-based strategic position and Need-based strategic position (Pearlson, Saunders and Galletta, 2016). With this approach, at each activity product or service gains value and creates a win-win situation for firm and consumers. In addition to this, business attains better position in market.
Present study depicts that significance of AIS is continuously increasing in manufacturing entities as it provides reliable information. A well-designed AIS assist in better decision-making capabilities and improves the efficiency of business. Value chain activities assist business in attaining competitive advantage as it reduces cost and provides unique identification to products of the firm.
Books and Journals
Christ, K. L. & Burritt, R. L., (2015). Material flow cost accounting: a review & agenda for future research. Journal of Cleaner Production. 108, 1378-1389.
Christopher, M., (2016). Logistics & supply chain management. Pearson Higher Ed.
Kaplan, R. S. & Atkinson, A. A., (2015). Advanced management accounting. PHI Learning.
Pearlson, K.E., Saunders, C.S. & Galletta, D.F., (2016). Managing & Using Information Systems, Binder Ready Version: A Strategic Approach. John Wiley & Sons.
Reuter, C., Brambring, F. & Hempel, T., (2016). The approach to information provision for high-resolution production control. Journal of Business & Management Review, 2016.
Stadtler, H., (2015). Supply chain management: An overview. In Supply chain management & advanced planning (pp. 3-28). Springer Berlin Heidelberg.
Zamora, E.A., (2016). Value Chain Analysis: A Brief Review. Asian Journal of Innovation & Policy, 5(2).