Information technology means the computer hardware and software used to handle analyse and communicate business data.  The main software packages used are databases and spreadsheets.

Stock Control and IT

Modern stock control systems make use of bar coded information that is then scanned in to computers.  This ensures that the computer know exactly which products have entered and left the stock room.  In a retail outlet an EPOS system (see later) is used to record exactly what has been sold, allowing up to date stock records to be kept.  This data can assist in the decision of how much to order and when to order.  It is possible to set up an electronic data interchange (EDI), this is a permanent electronic link with the suppliers that can automatically re-order stocks.

All of the information will be held in a database.  This will make it easy for the firm to carry out an aged stock analysis.  The computer provides a printout of the stock in order of age.  This makes it easy for the manager to make decisions about future prices and stock purchases, e.g., price reductions on any products that have been in stock for too long (sale) and reducing the orders for types of stock that have been lying around for too long (size or colour).

Credit Control and IT

Credit control can be difficult for a business as every request for payment can lead to an argument, however firms must not be seen as a soft touch otherwise they will fall into cash flow problems.  Good database analysis can help reduce the problems of bad debtors.

An aged debtor analysis will put customers in order of the age of debt outstanding.  It can also provide information such as the amount of the debt and previous payment times.  This means that it will not only be used as a source of information, but as a decision making tool as well.  Instead of sending threatening letters to all debtors and risk losing goodwill, it will be possible to focus upon persistent late payers.

How would you deal with the situation above?

Marketing and IT

Databases can provide firms with up to date mailing lists that can be used for direct marketing campaigns.  Letters can be personalised and send out in groups to people with similar characteristics.  Tesco compile mailing lists from their clubcard applications.  Records of what individuals purchase can then be compiled on a database (using the EPOS system) and marketing campaign can the be specifically targeted at groups with certain spending patterns.  For example if Tesco were to hold a wine tasting evening they would only mail those who have a record of purchasing wine on the database.  This will reduce the cost of sending out letters to those who do not buy wine.

Personnel Management and IT

Databases can be used to keep staff records.  These records can then be used in payroll management, where basic pay, tax, national insurance, pension contributions and bonuses are calculated.  A more sophisticated programme could link this to job costing and budgeting, from which bonuses could be calculated.

Performance indicators such as labour turnover, absenteeism, productivity, quality defects and lateness can all be linked into the network, allowing the personnel manager to identify any trends.

Finance and IT

Information will be held on a spreadsheet.  This can be manipulated to automatically produce profit/loss accounts, balance sheets, ratios, cash flow forecasts and budgets.  This will save a great deal of time for the company leading to substantial cost savings.