Evolution of Management Sciences

Evolution of Management Sciences

Introduction
Management science (MS), is the discipline of using scientific research-based principles, strategies, and other analytical methods, such as mathematical modeling to improve any organization's ability to enact rational, meaningful business management decisions.
The field is also known as Operations Research (OR) in the United States, or operational research in the United Kingdom. These three terms are often used interchangeably to describe the same field.
We have studied the management strategy of a US company based in California with its branch office in Islamabad, Pakistan. We will see how the impact of globalization and management helped this company increasing the profits and lowering the cost of overheads.
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Overview
Management science is concerned with a number of different areas of study
1) Developing and applying models and concepts that may prove useful in helping to illuminate management issues and solve managerial problems. The models used can often be represented mathematically, but sometimes computer-based, visual or verbal representations are used as well or instead
2) Designing and developing new and better models of organizational excellence. A leading influence in this area is the work of Dr. Mark Draper which combines insights from the fields of knowledge management, cognitive psychology, leadership training, learning theory, and modern behavioral psychology.
Dr. Jim Collins's work at Stanford presents the important scientific facts about how to turn a good organization into a great one. Dr Draper's work focuses more on how to create new powerful and effective organizations.
Management science research can be done on three levels
The fundamental level lies in three mathematical disciplines: Probability, Optimization, and Dynamical systems theory.
The modeling level is about building models, analyzing them mathematically, gathering and analyzing data, implementing models on computers, solving them, playing with them - all this is part of Management Science research on the modeling level.
The application level, just as any other engineering discipline, has strong aspirations to make a practical impact and be a driver for change in the real world.
The management scientist's mandate is to use rational, systematic, science-based techniques to inform and improve decisions of all kinds. Of course, the techniques of management science are not restricted to business applications but may be applied to military, medical, public administration, charitable groups, political groups or community groups.
History
Its origins can be traced to operations research, which made its debut during World War II when the Allied forces recruited scientists of various disciplines to assist with military operations. In these early applications, the scientists utilized simple mathematical models to make efficient use of limited technologies and resources. The application of these models within the corporate sector became known as Management science.
Theory
Some of the fields that are englobed within Management Science include:
• Data mining
• Decision analysis
• Engineering
• Forecasting
• Logistics
• Probability and statistics
• Project management
• Supply chain management
as well as many others.
Applications and Uses
Applications of management science are abundant in industry as airlines, manufacturing companies, service organizations, military branches, and in government. The range of problems and issues to which management science has contributed insights and solutions is vast. It includes:
· scheduling airlines, both planes and crew,
deciding the appropriate place to site new facilities such as a warehouse or factory
managing the flow of water from reservoirs,
identifying possible future development paths for parts of the telecommunications industry
establishing the information needs and appropriate systems to supply them within the health service, and
identifying and understanding the strategies adopted by companies for their information systems
Management science is also concerned with so-called”soft-operational analysis”, which concerns methods for strategic planning, strategic decision support, and Problem Structuring Methods (PSM). At this level of abstraction, mathematical modeling and simulation will not suffice. Therefore, during the past 30 years, a number of non-quantified modeling methods have been developed. These include morphological analysis and various forms of influence diagrams.
Uses of Management Science
Applications of Management Science are abundant in industry and government. Airlines and overnight mail systems use mathematical models to create efficient, dependable flight schedules. Manufacturing companies use quantitative techniques in virtually all strategic and operational areas such as choosing a new plant location, controlling production, or implementing statistical quality control. Service organizations such as banks, hospitals and investment firms all rely on Management Science to ensure their operations combine customer satisfaction with a high degree of efficiency. The military branches of the government depend on computer-based quantitative models for logistical planning and mobilization.
Company Introduction
We have chosen OVEX Technologies, one of the largest BPO’s in Pakistan and studied different best practices and change management aspects to see what difference knowledge bought into it.
Employing over 900 employees and with seven state-of-the-art facilities in Pakistan's three major cities, Ovex is the largest third party offshore BPO and Information Technology Solutions provider and the second largest exporter of IT services in Pakistan, serving both domestic and international clients. Owned substantially by En Pointe Technologies, Inc. (NASDAQ: ENPT), Ovex boasts a highly prestigious list of clients.Leveraging partnerships with industry leading global technology vendors like Cisco, IBM, EMC and Microsoft, Ovex Technologies, an ISO 9001:2000 certified company, provides a comprehensive set of services to support the design, installation, operation, management, and continuous improvement of IT infrastructures.The Outsourcing Solutions portfolio offers services related to IT/Service Desk Outsourcing, Contact Centers, and BPO. Various companies rely on Ovex as a trusted strategic partner to address areas such as Customer service, Telemarketing, Inbound Sales, and Data Entry or functions such as Back Office Support, Accounting, HR and Software Development.
Ovex provides a comprehensive set of services to support the design, installation, operation, management, and continuous improvement of IT infrastructures. IT Solutions portfolio consists of:
1. IT Solutions
IT Infrastructure
Software Solutions
2. Outsourcing Solution
Ovex Technologies offers outsourcing services and solutions of varied scope, using a range of methods. These includes professional staffing for individual projects, complete responsibility for IT management within the organization, and management of complete business processes using the Business Process Outsourcing method.
Outsourcing Solutions includes:
•IT/Service-Desk-Outsourcing• Contact Centers• BPO
We are going to focus on Outsourcing, which emerged in early 1990’s as a result of globalization and its impact on organization and company’s race towards cost cutting and increasing the revenue.
What is outsourcing? What benefits a company can get out of it? Why it is important in today’s economic world?
Outsourcing is subcontracting a process, such as product design or manufacturing, to a third-party company. The decision to outsource is often made in the interest of lowering cost or making better use of time and energy costs, redirecting or conserving energy directed at the competencies of a particular business, or to make more efficient use of land, labor, capital, (information) technology and resources[citation needed]. Outsourcing became part of the business lexicon during the 1980s. It is essentially a division of labour
Elaboration
Outsourcing involves the transfer of the management and/or day-to-day execution of an entire business function to an external service provider. The client organization and the supplier enter into a contractual agreement that defines the transferred services. Under the agreement the supplier acquires the means of production in the form of a transfer of people, assets and other resources from the client. The client agrees to procure the services from the supplier for the term of the contract. Business segments typically outsourced include information technology, human resources, facilities, real estate management, and accounting. Many companies also outsource customer support and call center functions like telemarketing, CAD drafting, customer service, market research, manufacturing, designing, web development, content writing, ghostwriting and engineering. Off shoring is the type of outsourcing in which the buyer organization belongs to another country.
Outsourcing and off shoring are used interchangeably in public discourse despite important technical differences. Outsourcing involves contracting with a supplier, which may or may not involve some degree of offshoring. Offshoring is the transfer of an organizational function to another country, regardless of whether the work is outsourced or stays within the same corporation/company.
With increasing globalization of outsourcing companies and with evolution of management sciences on a broader view ,the distinction between outsourcing and offshoring will become less clear over time. This is evident in the increasing presence of Indian and Pakistani outsourcing companies in the United States and United Kingdom. The globalization of outsourcing operating models has resulted in new terms such as near shoring, no shoring, and right shoring that reflect the changing mix of locations. This is seen in the opening of offices and operations centers by Pakistani companies in the U.S. and UK. A major job that is being outsourced is accounting. They are able to complete tax returns across seas for people in America
Multisourcing refers to large outsourcing agreements (predominantly IT).Multisourcing is a framework to enable different parts of the client business to be sourced from different suppliers. This requires a governance model that communicates strategy, clearly defines responsibility and has end-to-end integration.
As discussed earlier that Ovex is owned by En Pointe Inc. USA which is a company mainly into IT hardware and Software reselling. En Pointe Inc. has thirteen offices in USA and more than 1000 employees creating sales and generating revenue of 200 million USD every year. Only from the California state the head office in California receives 350 orders per day from different government and commercial clients.
The whole process starts from marketing the different products from big manufacturers like HP, Dell, Cisco, Zebra Printers, Lexmark, Linksys, Adobe, Sun and Symantec. Order fulfillment, purchasing, packing & shipping and finally the invoicing is a big task. Physical buying and shipment in all over US is very big task in terms of time and money.
Marketing > Sales > Purchase Order > Processing > Buying > Shipping > Delivery End > Invoicing
The life cycle of En Pointe’s strategy is shown above. The over heads of employee, physical offices, warehousing cost, purchasers, shipping with en Pointe labels, invoicing was making the task very difficult. Order fulfillment itself is a big task in terms of entering the correct product as per purchase orders. The company was paying almost 100 million USD in terms of all costs of rents, wages, offices and warehouses. After all the study the management decided to use IT solution for its life cycle but how? Different experts from different fields of IT, purchasing, order fulfillment and finance were hired to develop a system which can cut down the cost and increase the company’s revenue. For this purpose there arises a need of Enterprise resource planning (ERP).
ERP is a company-wide computer software system used to manage and coordinate all the resources, information, and functions of a business from shared data stores. An ERP system has a service-oriented architecture with modular hardware and software units or "services" that communicate on a local area network. The modular design allows a business to add or reconfigure modules (perhaps from different vendors) while preserving data integrity in one shared database that may be centralized or distributed.
Ideally, the company was looking for an ERP system which can deliver a single database that contains all data for the software modules, which would include:
Manufacturing
Engineering, bills of material, scheduling, capacity, workflow management, quality control, cost management, manufacturing process, manufacturing projects, manufacturing flow
Supply chain management
Order to cash, inventory, order entry, purchasing, product configurator, supply chain planning, supplier scheduling, inspection of goods, claim processing, commission calculation
Financials
General ledger, cash management, accounts payable, accounts receivable, fixed assets
Project management
Costing, billing, time and expense, performance units, activity management
Human resources
Human resources, payroll, training, time and attendance, rostering, benefits
Customer relationship management
Sales and marketing, commissions, service, customer contact and call center support
Data warehouse and various self-service interfaces for customers, suppliers, and employeesAccess control - user privilege as per authority levels for process executionCustomization - to meet the extension, addition, change in process flow
Best practices are incorporated into most ERP vendor's software packages. When implementing an ERP system, organizations can choose between customizing the software or modifying their business processes to the "best practice" function delivered in the "out-of-the-box" version of the software.
Implementation
After the decision to implement the ERP system, En Pointe has a wide scope of applications and processes throughout their functional units; producing ERP software systems that are typically complex and usually impose significant changes on staff work practices. Implementing ERP software is typically too complex for "in-house" skill, so it is desirable and highly advised to hire outside consultants who are professionally trained to implement these systems. This is typically the most cost effective way. There are three types of services that may be employed for - Consulting, Customization, Support. So this SAP Company which hired for all the three functions and SAP R/3 Module was selected as the En Pointe’s ERP Solution.
After the implementation phase the biggest task was Data migration and its one of the most important activities in determining the success of an ERP implementation. Since many decisions must be made before migration, a significant amount of planning must occur. Unfortunately, data migration is the last activity before the production phase of an ERP implementation, and therefore receives minimal attention due to time constraints.
The following were steps of a data migration strategy that helped with the success:
Identifying the data to be migrated
Determining the timing of data migration
Generating the data templates
Freezing the tools for data migration
Deciding on migration related setups
Deciding on data archiving
The implementation took about eight (8) months.

Targets
After implementation of ERP system what were the main targets which En Pointe received were
Having a Database of all the Hardware and Software parts
Creating a Database and updating it time to time for effective usage
Having the current level of inventory any time round the clock
Connecting the Manufacturers and Vendors with ERP
Using EDI ( enterprise data integration) helped Enpointe to Connect with Manufacturers and Vendors online
Online booking of the material ordered by the customer
Online tracking of the order shipped by the shipper/vendor
Cost saving of hiring 100 purchasers present on locations
Cost saving on warehousing
Cost saving in terms of time and delivery excellence
Conclusion
By implementing the ERP solution SAP, which was also outsourced project along with the operational project of En Pointe, it cost company 18.9 Million USD; this includes consultant’s fee, trainings and testing.
After this company was able to cut down the jobs of 500 employees and hiring 200 employees in Pakistan at Ovex, which gave them cost savings in salaries which was a huge saving.
Due to low salary structure in Pakistan and by usage of IT the cost savings in terms of salaries were 5 million USD a month.
Moreover, using the IT knowledge management and using the EDI linking between the company and the manufactures/vendors saved time in buying as no physical presence was requirement and it was taken care by ERP solution (online buying from manufacture/vendor).
The Vendor was also paying the delivery charges and these were included in the price of the product. Logistics saved 19 million USD on average for the company during one fiscal year which also includes the extra cost of warehousing and cost of running the warehouse operations and wages.
ERP solution gave round the clock service over the internet to link between customer-reseller-vendor and which improves company’s creditability in the market.
An estimated there are 35 thousand resellers registered online in America and all the company’s are providing the same products than the only difference which can attract the customer is service.
If we summarize this all case study we see that management sciences basics were used at its peak to make the change management attitude in the management to take a big decision for a big return. Best practices were used in implementing the ERP and Risk of money was taken as well. This all needs perfection, commitment and hard working from all the stake holders involved in this whole activity.