Integration of Management Information Systems to Support

Real Time Management Decisions and Compliance of standards.

Chapter-1: Introduction

CHAPTER -1: INTRODUCTION

“The purpose of a business is to gain and keep customers” - Fred Smith (Gomes, 1996).

The above quote means that any firm running its business must be concerned about how it
runs its operations to gain, maintain old customers and attract new customers. The firm
must ensure that its internal operations always help to improve upon its service quality.
Some of its internal operations may include managing data, keeping track of sales and
attending to customer needs.

The application of Information Technology (IT) to firms such as restaurant has

helped improve upon their services. The hotel industry also makes extensive use of IT. With
IT, hotels are able to keep data on their customers. That is, the number of days the
customer spent at the hotel, food ordered and laundry services provided. As a result, it is
easy to keep data on customers‟ orders at the restaurants in the hotels, bookings for
conference rooms, business meetings, parties, weddings and other social functions.

Supermarkets also make use of IT in recording their daily sales. A bar code scanner
makes it easier to record items bought daily and to check inventories as well. Most of such
supermarkets also use the electronic article surveillance at each exit door and this helps in
detecting which items have been stolen from the store. The electronic article surveillance is
a technique that is used to prevent shoplifting. The supermarkets place special tags on each
item, if someone steals an item the alarm goes off because the tag has not been deactivated.
Most supermarkets in the Bangladesh use this system and are able to detect if items not
paid for are taken out of the store by a customer. Supermarkets have moved from the
normal calculator to the use of computers where they can store data more quickly and also
take out the drudge of keying in items manually.

1.1 Research Problem

There are number of restaurants in Dhaka city that apply Information Technology (IT) in
their operations. Most of the restaurants such use Point of Sale (POS) systems in recording
their orders and calculating sales made in a day. The system also generates receipts for the
restaurants. A customer’s order is taken after he goes through the menu. The problem
however is that, the order is handwritten and sent to the wait staff who enters the orders
onto the POS system. The orders are handwritten because they do not have any tool they
can use to record their orders. The wait staff prints a receipt which is sent to the kitchen.
Although these restaurants use IT, they still manually write down the orders before
entering them into the POS system. Due to the fact that orders are manually done, it
becomes difficult to track data collected. There is also the issue of restaurants not recording
and tracking their inventory. This affects their operations because anytime a customer
comes to the restaurant and a particular ingredient needed to make a dish is not available
the customer must make another order.

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 Integration of Management Information Systems to Support
Real Time Management Decisions and Compliance of standards.
Chapter-1: Introduction

An interview with some of the managers of some restaurants in Dhaka city in revealed that
recording of orders is done manually and items in inventory are not recorded at all. There
is a store keeper who ensures that there are enough items in inventory. At the end of each
day, the orders are recorded in a book, and this she said, is very tedious.

Storing Orders Collected in a Day

60
54.5%

50 45.5%

40
key

30

20 POS

10
Order
0 book
Order Book POS

Figure- 1.1: Bar chart showing how restaurants store orders

The questionnaires the wait staff answered showed that there are some restaurants still
manually writing down orders as well as inventory items. About 54.5% of the wait staff
said the restaurants they work in, manually record orders in a book while 45.5% said they
use a Point of Sale (POS) system as shown in Figure 1.

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 Integration of Management Information Systems to Support
Real Time Management Decisions and Compliance of standards.
Chapter-1: Introduction

Wait staff response on how the

restaurants track their supplies

Receipts Software
14% Inventory
system
Do not know 18%
9%
Do not track
supplies
4%

Book
55%

Figure -1.2: Pie chart showing responses wait staff on how the
restaurants track supplies in inventory

Responses from the wait staff on how the restaurants keep data on inventory revealed that,
55% of the wait staff stated they record their inventory manually in a book and 18% use
software based inventory system as shown in Figure 2. Other responses revealed that 14%
keep track of some supplies with the help of receipts, 9% did not know if the restaurant
used an inventory system or not and 4% said they do not keep track of their supplies at all.

1.2 Rationale of Study

The use of Information Technology (IT) helps firms in making their services much better
and makes work easier. The application of IT could be in the form of using the internet to
advertise a firm’s services, managing data with technology, online ordering and
communicating with customers through the internet among other services.

A firm’s use of IT to manage its data has the potential to improve its service quality as well
as its decision making processes. For instance, a restaurant which maintains a database of
all orders that its customers make, may be better informed about the meals that customers
order most. This will help the restaurant’s management keep track of its supplies and
inventory, and know what extra items management needs to procure.

A firm must be concerned about how it manages its operations because poor management
has an effect on its revenue. This affects the service quality, decreases a firm’s revenue and
the firm’s cost increases.

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 Integration of Management Information Systems to Support
Real Time Management Decisions and Compliance of standards.
Chapter-1: Introduction

1.3 Conceptual Framework

The conceptual framework of this study is the IT Alignment Model of service quality. Service
quality, as defined by Lewis and Booms (1983), is a measure of how well the service delivered
matches customer expectations. Parasuraman, Berry and Zeithaml (1991) described
service quality as a “comparison between desired service and perceived service, not what
the service provider would offer” (Parasuraman et al, 1985).

The IT Alignment Model is a model created by Berkley and Gupta in 1994 and is about
using Information Systems (IS) applications to improve service quality determinants which
affect the services of a firm. The model focuses on seven of the service quality determinants
which are reliability, responsiveness, competence, access, communications, security,
understanding and knowing the customer (Vrat, Seth & Deshmukh, 2004).

Berkley and Gupta (1994) advise that firms must link the right IT application they choose
for their operations as well as focusing on service quality determinants that helps a firm
gain competitive advantage over its competitors. Therefore aligning the information
systems application chosen with the service quality determinants helps the firm improve
upon its service quality which is very essential in every service industry.

High Level of
Information
Technology

Bad Service Good Service

Quality Quality

Low Level of
Information
Technology

Figure-1. 3: Service Quality & Information Technology

Figure 3 shows the relationship between the level of IT application and service quality.
The figure designed by the researcher shows four different quadrants that shows the
relationship between service quality and Information Technology. This was used to
categorize the selected restaurants for the study. Findings helped determine what level
of IT application yields optimal service quality. The data gathered will help to derive a
function of the level of IT application with respect to service quality.

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 Integration of Management Information Systems to Support
Real Time Management Decisions and Compliance of standards.
Chapter-1: Introduction

1.4 Objective of the Study

The main objective of this study is Integration of Management Information Systems to
Support Real Time Management Decisions and Compliance of Standards of Food Chain Asia
Limited. The study found out the possible ways MIS could be used to improve the
management decision process of restaurant operations. The second objective was to design
an application that will help in improving service quality of the restaurants under Food
Chain Asia Limited.

1.5 Research Question

It is important to know and understand how restaurants apply MIS to their daily
operations, how it helps improve upon their service quality and how they can improve
upon their existing use of MIS. The research question for this study is:

1. How does Food Chain Asia Limited use MIS in their daily operations to make
real time decisions?
2. How do restaurants under Food Chain Asia Limited use MIS in their daily
operations to improve upon their service quality?

1.6 Research Proposition

The study focuses on the application of MIS to restaurants‟ operations. The study applies
the IT Alignment Model to restaurants and therefore expects to find that:

“The application of Management Information Systems will lead to positive perceptions of

Management to compliance standards and service quality.”

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