MIS is understood as Management Information Systems by many. However, it is also misunderstood by many, when it comes to what its true meaning is. I have come to think on these lines after seeing varied types of reports in different organizations, being termed as MIS Reports. In an organization, 150 MIS Reports were claimed to be in use. Out of them 140 were mere Accounting Schedules like Interest Paid, Interest Received and so on.
Accepting that they depend upon the nature of a company's business and the management information needs, I like to classify MIS Reports into two categories. They are:
1. MIS for Top Management, and
2. MIS for Operating Management.
The first category is meant for driving performance of the organization. The second is for helping Operating Managers in improving Efficiency, Effectiveness and Controls.
MIS for Top Management could start with an Annual Plan, compiled with adequate details. Since visibility could be better for shorter periods like a quarter, we could draw a Quarterly Plan, from the Annual Plan, just before the commencement of a Quarter, taking into consideration availability Customer Orders, and Resources, set stretch targets for Revenue, Cost and Profit margins, share it with the concerned, get their buy-in, and conduct a performance review at the end of the Quarter, with the help of relevant MIS Reports.
MIS for Operating Management would focus on efficiency factors like "yields" in a particular area of operation. Efficiencies are built around input / output relationships. In the case of Manufacturing operations, important items of cost would be Raw Material, Energy, and in some cases Manpower. Efficiency Indicators for Raw Material could be Raw Material cost as a % of Revenue, Cost Per tonne of output or yield per tonne of input and so on. In the case of Energy costs, it could be Energy Consumed per tonne of output, and where Energy is by employing Diesel Power Generators, it could be cost per unit of power, or yield of units per litre of diesel.Productivity Enhancement Indicators like Machine Utilization also figure in MIS Reports.
Similarly in the case of Software and other Services, important items of Cost could be Manpower, Communication and Travel. Gross Margin, which is Sales minus important Variable Costs like Manpower and Communication is an important item of MIS for such companies.
All these efficiency factors are based on their “controllable” nature and their final impact on the bottom line or working capital. Non-moving Inventory and Age-wise Analysis of Receivable are the commonly known MIS Reports. We could also assess effectiveness of certain initiatives taken like, whether a process introduced is serving the purpose it is meant to serve. Controls and Compliances ate also addressed through MIS Reports for the Operating Management. Conventionally, MIS reports have been generated as a pack or set of reports and are shared with the concerned Managers. Current trend is that these reports could be online, or need based and could also take the shape of escalations in workflow automation, generally supported in an ERP environment.
If I have to add one more important feature of MIS Reports, I would say that they should look into the future more, than analyzing the past. For example I would not recommend scrapping an inventory item because it has not been moving for some time, but will review its future possible use, before deciding to scrap it.
Conceding that MIS is need based, classification into the two categories MIS for Top Management for driving performance and MIS for Operating Management for Efficiency improvements could help organizations gain clarity on where to focus and to get the best out of this management tool.
For more articles from me and to know about my book “Translating Operations into Money”, please visit www.operationstomoney.com
Thank you for your attention.
Tulasi S Sastri
FCA, CISA
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