The Role of Information Systems and ERP in H&M: A Detailed Analysis

This report provides a comprehensive analysis of H&M's information systems and Enterprise Resource Planning (ERP) systems. It begins with an introduction to information technology and its application within H&M, a Swedish multinational clothing retailer. The report aims to identify the influence of information and ERP systems within H&M to control and manage information. It explores different categories of information systems, including Transaction Processing Systems (TPS), Office Support Systems (OSS), Management Information Systems (MIS), Decision Support Systems (DSS), and Executive Information Systems (EIS), detailing their functionalities and applications within H&M. The report then delves into ERP systems, explaining their role in integrating various business processes and providing benefits such as improved insight, reduced operational costs, enhanced collaboration, increased efficiency, and reduced risks. The analysis includes the types of ERP systems used by H&M and how they leverage these systems for market trend analysis, customer preference identification, and supply chain management. Finally, the report highlights the real-life benefits of ERP systems in businesses, such as reliable information gathering, effective inventory management, integrated channels, and enhanced customer management, emphasizing the importance of ERP in the retail sector and other industries.

Managing
Information and
Technology
Table of Contents

Introduction, aims and objectives:..............................................................................................1
Categories of information system:..............................................................................................2
ERP Systems...............................................................................................................................3
Benefits of ERP system in real-life business: ............................................................................5
Conclusion & Recommendations................................................................................................6
REFERENCES................................................................................................................................7

Introduction, aims and objectives:
Information technology refers to usage of computers for storing, retrieving, transmitting
and manipulation of information with respect to enterprise (Bodnar and Hopwood, 2012). It
involves maintenance, development and utilisation of hardware, networks and software for
carrying out distribution and processing of data. H&M is a Swedish multinational clothing retail
organisation which provides clothing for different sectors of society. It was founded in 1947 by
Erling Persson and is headquartered Stockholm, Sweden. It render its services worldwide with
around 4500 stores in about 62 countries. It is second largest retailer of clothing with their strong
online presence which is made available in approximately 33 countries. Their concept is to
provide customers with fashion and quality at affordable prices. Information system is defined as
unified collection of components for collection, storage and processing of data by which
knowledge, information and digital products can be obtained. It is a socio-technical, formal and
organisational system. With respect to socio-technical perspective, it comprises of tasks, people,
structure and technologies. Management of H&M have opted for this as it provides them with
easiness by which they (H&M) can carry out their functionalities trenchant and carry out
interaction with suppliers, customers and competitors (Choi, Chow and Liu, 2013).
Aim of this assignment is to identify influence of information and ERP system within
H&M to control and manage information through wide streams. First objective is to determine
different types of information systems. Another objective is to analyse role of ERP system in
controlling and managing wide information streams.
Enterprise resource planning (ERP) refers to modular software system which is used by
organisations to manage and combine different major parts of business. It is method for utilizing
software, hardware and people to enhance profitability and productivity of business. It
differentiate between different aspects of operations like marketing and sales, manufacturing and
development & planning by providing individual user interface, database and application. It
assists firms to improvise their skilfulness (with respect to marketing, sales, accounting and
inventory), minimise operational cost, promotion of collaboration and make predictions by
which security can be improvised (Cullen and et. al, 2013). ERP software will assist ZARA to
gather information with respect to latest market trends and patterns by which information can be
gained from different business units.
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Categories of information system:
Information system refers to scrutiny of complementary networks which consists of
hardware and software which are used by individuals and organisation by which they can collect,
filter, process, create and distribute data. It is classified into different categories which include:
TPS (Transaction processing system) is designed to carry out repetitive transactions accurately
and expeditiously (Fernie, and Sparks, 2018). They are executed by front line employees.
Moreover, it also provide information related with heterogeneous operations which are carried
out in organisation. In H&M, TPS furnish information related with other systems by which they
can perform organisational operations. This system is used by operational personnel at
supervisory levels.
OSS (Office support system) refers to a system which is planned to aid employees to
accomplish their everyday tasks and intensify communications. It refers to group of devices in
which business is responsible for supplying services by creating network. In H&M, these
activities are divided into clerical and managerial activities. They are accomplished by using
office automation system which comprises of printing, mailing, scheduling meetings and
calendar keeping (Garg and Chauhan, 2015). OSS creates strong impact on transactions which
are carried out within H&M and has strong impact on their functionalities at all levels. This
consist of storage of information, data exchange and management of data.
MIS (Management information system) refers to system which transforms data from
internal and external sources of information which are shared with managers at various levels in
suitable way. This information will assist organisation to formulate trenchant plans and
decisions. In H&M decisions are made on basis of internal flow of information. They are used by
lower and middle managerial levels. Processing of MIS comprises of summarizing, merging,
sorting and after this detailed reports are formulated. By this management of H&M can
determine their performance on basis of previous as well as current outcomes.
DSS (Decision support system) is a system which is conscious in terms of tactical and
strategic decision-making. Performance of organisation is integrated with user interface to query
system, analytical models, rules of business in decision table and tools for forecasting &
planning (Garg and Garg, 2013). It is basically summary of information which is obtained from
management information system, data processing system and data which is obtained from
external sources. Within H&M, DSS assist ill structured and semi structured decisions through
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which future can be predicted, analytical capacity and modelling analysis. DSS is used at senior
managerial levels.
EIS (Executive information system) refers to a system which combines data related with
external events such as tax laws or competitors. They gather compact information from internal
MIS and DSS. By this management of H&M can identify their organisational operations as well
as long term goals which will assist them to develop specific course of actions (Garg and Garg,
2014). In EIS processing of H&M comprises of simulation, drilling and summarisation of
functionalities and outcomes gathered from summary reports, forecasts and charts or graphs.
There EIS is very flexible, support unstructured and effectiveness oriented decisions. They are
used by top management only. These are information systems which are used by H&M to gain
competitive edge within market.
ERP Systems
It is business process management software which allows organisation to have integrated
system of application for managing business and automatise back office functions which are
linked with services, human resources and technology (ERP (enterprise resource planning),
2019). It assimilate different facets of operations which encompasses sales and marketing,
manufacturing, development, product planning within single user interface, applications and
database. Basically, it is a business management software by which interpretations can be made
with respect to operations in real time environment so that smooth functioning within working
premises is attained. It assists to integrate core processes of business which includes supply
chain, finance, manufacturing, raw material procurement, marketing, sales and planning. ERP
renders employees of H&M with approved access to individual shared database which can be
used again and again whenever any specific information is required. This will assist them to
obviate chances of errors, data redundancy (replication) can be reduced, have suspension and
manipulation degree with respect to process of automation within organisation. Synchronous
reports can be generated in context to business metrics which will provide information to
individuals whenever it is needed and in what form it is needed is presented to them (Hübner,
Wollenburg and Holzapfel, 2016).
There are various kinds of ERP systems, they are on-premises or traditional software
whose database is present on-site servers and hardware. It is preserved and managed by IT staff
of H&M. Cloud acts as service provider to organisation and they can be hosted on servers of
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vendor. Data and software is managed centrally within remote Datacenter by ERP vendors. This
information can be accessed by customers through web browsers. Hybrid refers to combination
of on-premises as well as cloud ERP (Kadam and Onkar, 2015). By opting for this H&M can
have increased benefits as they have options for storage on cloud as well as they will possess on-
site ERP resources.
H&M has opted for usage of on-premises ERP. Within H&M, goal of information system
is to identify trends which prevails within market at present scenario. Designers have opted to
use ERP systems by which they can analyse that by selling of which products they can increase
their sales as well as profitability. This information can also include number of sales which been
incurred within a day and how much profit is earned through that. By this designers will be able
to identify colours and fabric which can be used to modify existing clothes or designing of new
clothes (Laudon and Laudon, 2016) . By this time required to design conceptions will be reduced
which is needed for arrival of products. Furthermore with usage of ERP systems, H&M can
identify preferences of customers by collecting information from store managers. H&M have
their own distribution system and centralized database. By this, they are able to keep some part
of their production in-house by which they can gain competitive edge within market. This will
assist them (H&M) to maintain designing of their clothes, warehouses, distribution of products
and logistics by themselves. ERP module of H&M comprises of production, sales, quality
control, marketing, inventory management finance and business intelligence. Focus of these
domains is on respective modules.
H&M has opted for enterprise resource planning due to various reasons like it gives
improvised insight into business (by this real time information reports can be generated),
operational cost will be reduced (H&M will use definite and more streamlined processes in
business), collaboration can be complemented (data is shared from users via purchase orders,
requisitions and contracts), efficiency is improvised (via enhancing experience of customers
among business functions which are managed within business processes) and risks are reduced
( management of H&M experiences enhancement in their financial controls and improvised data
integrity). This is attained by usage of ERP software within working structure of H&M (Ngai
and et. al, 2012).
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Benefits of ERP system in real-life business:
ERP has became major part of organisation either its retail sector, food sector or any
other industry irrespective of their size. With rapid growth and competitive environment ERP
solutions have became vital for organisation so that they can keep up to requirements of
customers. Essential benefits of ERP are provided below:
Reliable information with respect to business is gathered from various sources such as
inventory, sales, purchase and other processes (Oh, Teo and Sambamurthy, 2012). Accurate, real
time and relevant information will assist management of H&M to design decision with respect to
requirements of business at particular instance of time. Database can be accessed (simple
process) which will assist H&M to remain competitive within market so that modifications in
demand do not occur. When inventory management is effective then it will assist H&M to have
enough stocks so that demands of potential customers can be met and also excesses are
eliminated from warehouse. This challenge is handled by H&M in effective manner as they are
able to maintain information of their products present within inventory and also ensures that
what else is required through which demands of customer can be met.
When multiple channels are integrated it denotes that various channels works as a single
unit to accomplish requirements of customer. It is necessary for retailers to ensure that
simultaneous functioning of operations is carried effectively and smoothly. H&M's ERP system
integrates various channels into individual platform by which heterogeneous departments can
exchange information among each other in real time (Shin and Eksioglu, 2015). When any kind
of update is required then notification pop up by themselves, so it is not necessary that each
department should be informed independently. Amplified management of customers is important
for organisation as they forms vital part. ERP system of H&M furnish their customers with
management tools through which retailers can meet challenge of retaining them. H&M contains
information of purchase history of their customers. This information can be assessed by
management of H&M through which they can analyse buying trends of customers, which will
aid them (H&M) to provide their potential customers with personalized shopping experience. By
utilisation of payment recording and automate sales organisation can attain improvised results.
POS systems must be used by H&M so that every transaction can be recorded in terms of sales
which have been carried out, this will reduce human errors which can occur when transactions
are carried out manually. H&M can adopt this so that they can get effective results.
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Conclusion & Recommendations
It is concluded that information system has crucial role for carrying out their functions. It
refers to integration or combination of networks which can be used for accumulation, filtering
and dispersion of data in different departments of organisation (Bodnar and Hopwood, 2012).
H&M is using information system for analysing various patterns and trends in retail sector. ERP
system is used by H&M to make sure that security of their information is maintained and
knowledge which is gained can be used to make appropriate decisions.. This will eliminate
excess of operational and marketing cost. Different ERP systems are being used by H&M which
renders them broad scope of performance to them.
It is recommended that POS (Point of scale) must be used by H&M. It will assist them to
streamline retail environment. It provides them with inventory management and financial
overview in case of real-time reporting. It will aid them (H&M) to hold over integrity of data
which means that data can accessed on other system by ensuring that its reliability is maintained.
Moreover, it is made sure that information is secured and data is appropriate (Choi, Chow and
Liu, 2013). Apart from this H&M can merge ERP system and POS for identifying stocks,
revenues and its sales. By this they will be able to forecast what is required in future before they
run out of stock.
From above it can be concluded that information system plays vital role in retail industry.
It is defined as accumulation of various equipments which are involved in transmission of
information. Data-intensive applications are supported by using software and hardware. ERP
(Enterprise resource planning) refers to automation and combination core businesses of
organisation by which effectiveness can be attained. By this management operations of
organisation can be maintained effectively.
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REFERENCES
Books and Journals
Bodnar, G. H. and Hopwood, W. S., 2012.Accounting information systems. Upper Saddle River:
Pearson.
Choi, T. M., Chow, P. S. and Liu, S. C., 2013. Implementation of fashion ERP systems in China:
Case study of a fashion brand, review and future challenges. International Journal of
Production Economics. 146(1). pp.70-81.
Cullen, J. and et. al, 2013. Reverse logistics in the UK retail sector: A case study of the role of
management accounting in driving organisational change. Management Accounting
Research. 24(3). pp.212-227.
Fernie, J. and Sparks, L. eds., 2018. Logistics and retail management: emerging issues and new
challenges in the retail supply chain. Kogan page publishers.
Garg, P. and Chauhan, A., 2015. Factors affecting the ERP implementation in Indian retail
sector: A structural equation modelling approach. Benchmarking: an International
Journal. 22(7). pp.1315-1340.
Garg, P. and Garg, A., 2013. An empirical study on critical failure factors for enterprise resource
planning implementation in Indian retail sector. Business Process Management Journal.
19(3). pp.496-514.
Garg, P. and Garg, A., 2014. Factors influencing ERP implementation in retail sector: an
empirical study from India. Journal of Enterprise Information Management. 27(4).
pp.424-448.
Hübner, A., Wollenburg, J. and Holzapfel, A., 2016. Retail logistics in the transition from multi-
channel to omni-channel. International Journal of Physical Distribution & Logistics
Management. 46(6/7). pp.562-583.
Kadam, K. S. and Onkar, V. C., 2015. A review paper on student information supervision
system. International Journal of Research In Science & Engineering. 1. pp.66-72.
Laudon, K. C. and Laudon, J. P., 2016. Management information system. Pearson Education
India.
Ngai, E. W. T. and et. al, 2012. Implementing an RFID-based manufacturing process
management system: Lessons learned and success factors. Journal of Engineering and
Technology Management. 29(1). pp.112-130.
Oh, L. B., Teo, H. H. and Sambamurthy, V., 2012. The effects of retail channel integration
through the use of information technologies on firm performance. Journal of Operations
Management. 30(5). pp.368-381.
Shin, S. and Eksioglu, B., 2015. An empirical study of RFID productivity in the US retail supply
chain. International Journal of Production Economics. 163. pp.89-96.
Online:
ERP (enterprise resource planning). 2019. [Online]. Available through:
<https://searcherp.techtarget.com/definition/ERP-enterprise-resource-planning>.
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