Basic Processing Strategies

NETWORK BASICS

1) Businesses link their personnel and equipment to enable people to work quicker and more efficiently. Computer networks allow organizations flexibility – to accomplish work wherever and whenever it is most beneficial. To take full advantage of networks and distributed processing, you should understand basic processing strategies, communications software, and communications protocols.

Basic Processing Strategies

2) When an organization needs to use two or more computer systems, one of three basic processing strategies may be followed: centralized, decentralized, or distributed. With centralized processing, all processing occurs in a single location or facility. This approach offers the highest degree of control, since all data processing is done on a single centrally managed computer. 7-Eleven is a $9 billion convenience store chain that has implemented a centralized processing strategy to manage its 5,800 stores. It uses a proprietary Retail Information System (RIS) that runs on a single mainframe computer operated by Electronic Data Systems (EDS) and a centralized processing network to enable it to keep all its stores operating efficiently and to share information among all its suppliers. The RIS provides store managers with daily, weekly, and monthly sales tallies, which they use to create their orders. Store managers enter orders into workstations or handheld computers by 10 A.M. daily. By 11 A.M., orders have been transmitted to a central database, consolidated, and dispatched to 7-Eleven’s suppliers. The consolidation takes place four times a day, once for each time zone in which 7-Eleven operates. The centralized processing network also connects the stores to McLane Company, 7-Eleven’s primary wholesale distributor, and to the commissaries and bakeries that provide fresh food products so that all can view the same sales and shipment information. “There’s quite a bit of information sharing,” says Ruel Athey, vice president of customer service at McLane Information Systems. “We work closely with 7-Eleven and the suppliers to come up with the most efficient distribution process we can.”

3) With decentralized processing, processing devices are placed at various remote locations. The individual computer systems are isolated and do not communicate with each other. Decentralized systems are suitable for companies that have independent operating divisions. Some drugstore chains, for example, operate each location as a completely separate entity; each store has its own computer system that works independently of the computers at other stores.

4) With distributed processing, computers are placed at remote locations but connected to other via a network. One benefit of distributed processing is that processing activity can be allocated to the location(s) where it can most efficiently occur. For example, the New York headquarters may have the largest computer system, but the Atlanta office might have hundreds of employees to input the data. The system’s output may be most needed in Chicago, the location of the warehouse. With distributed processing, each of these offices can organize and manipulate the data to meet its specific needs, as well as share its work product with the rest of the organization. The distribution of the processing across the organizational system ensures that the right information is delivered to the right individuals, maximizing the capabilities of the overall information system by balancing the effectiveness and efficiency of each individual computer system.

5) Cooper Tire and Rubber Co.’s tire division plans to move more of its manufacturing offshore, with a goal of having its own manufacturing facility just outside Shanghai by 2007. Meanwhile, Cooper’s tire division is implementing a two-year business plan that calls for establishing a global distributed processing network to connect the computers and decision makers at all its plants. At the same time, it is transitioning from a rudimentary paper and spreadsheet demand-forecasting process to automated on-demand forecasting. Cooper is implementing several applications from i2 Technologies, Inc., that will address the complex demand, inventory, and resource planning issues of a global manufacturer. These investments will help Cooper manage its expanding tire imports and make demand-sourcing decisions within its distribution centers.

6) The September 11, 2001, terrorist attacks sparked many companies to distribute their workers, operations, and systems much more widely, a reversal of the recent trend toward centralization. The goal is to minimize the consequences of a catastrophic event at one location while ensuring uninterrupted systems availability.