As we’ve indicated, one of the earliest uses of computers in business was in the area of finance or more specifically accounting. Payroll calculation, billing and inventory accounting lent themselves easily to computerization. Instead of having batteries of clerks posting entries, the machines handle these large routine chores with speed and accuracy.
Automation of such repetitive operations is still one of the big jobs assigned to computers. However, management has learned to go beyond this and to use the basic data in ways that can benefit the operations of the company. For example, computers have resulted in a speedier flow of information about inventories. Companies, consequently, are able to pare their inventories, and thus reduce their investment in these areas.
Computers have also enabled firms to speed up the billing cycle, thereby cutting down on the outstanding receivables. Equally significant, computers help pinpoint early delinquent accounts and overextended credit. The stored financial data has also enabled managers to obtain information concerning markets, customer preferences.geographical coverage, and the like. These, in turn, have been used to analyze operations with a view toward bringing into closer harmony the sales, manufacturing, and finance activities.
Thus, the thrust of new computer technology has been directed not solely toward automating procedures, although the computer’s benefits in this direction can hardly be minimized. To an impressive degree, Comput.
ers have given management a whole new set of tools with which to establish operating criteria for meeting profitability goals.
We can see the computer in operation in a large de department store, where each day clerks use special cash registers to record details of every transaction. At night, the tapes are gathered and the information they contain is fed into the computer. By the following day, reports are available about sizes, quantity, style and even color of the merchandise sold, so that buyers can reorder as needed and bring inventories up-to-date. Moreover, overnight accounts payable and accounts receivable are credited with the appropriate transaction.
In some manufacturing organizations, the central computer controls the delivery of products from outlying plants to various distribution points. The computer establishes production plans for the various facilities, based on information fed into it regarding orders, shipments and inventory. The computer may also monitor the production process. Some installations are so geared that orders received (often from large customers hooked right into the system) is automatically processed, with the computer determining the buyer’s credit status, checking the availability of inventories, and issuing the necessary shipping documents, invoices, and bills of lading.
One particular benefit of computer operation is the amount of minute information that can be provided for a plant manager relative to what’s happening on the assembly line. Thus, the activity is brought more directly under the supervisor’s control. At the same time, the supervisor is given a broader view of the area within his responsibility.
One danger is that a computer may provide too much information. Then it becomes a matter of being more judicious in utilizing the available data as well as the computer itself.