Modernisation programme to increase productivity - Essay Example

November 11, 2008 Hon. ___________________ Managing Director Linkspan Shipping Company United Kingdom Dear ___________________ Re: Modernisation Programme to Increase Productivity To effectively pull off organisational change that creates positive outcomes is not just an administrative challenge; it is also a cognitive challenge. As it is, managers and organization leaders, just like people in general, find it complicated to think about dynamic experiences like feedback loops and time delays and easier to focus on instantaneous end products and detectable changes. The result is a focus on the short-term and local not the longer-term and global consequences from change, an issue that organisational inducements magnify. Hence, local enhancements in cost reduction or efficiency are presumed to do good to the firm as whole, while little attention is given to essentially guarantee results for the company (Goodman and Rousseau 2004, p. 7). The shipping industry is a segment of growing significance in world trade as it is the only method that is employed for the transfer of bulky deliveries that tenders the most economical and most gainful haulage compared to rail, road and air. A huge amount of the European Union's trade with other nations and a large percentage of the intra-community trade are accomplished with sea transport and a sizeable quantity of all international U.S. shipments move by water transportation. The widespread procedure of ocean shipping transportation strengthens the considerable role of shipping firms within the supply chain structure environment since there is a correlation between the effectiveness and efficacy of these shipping organisations with that of the supply chain. However, because of shipping companies' significance and prominence in world trade, it they experience considerable issues and challenges in the course of their business operations. Currently, Linkspan Shipping is going through trading difficulties and because of these operational complexities, it aims to trim down outlays. A modernisation programme is called for that will lessen crewing personnel on board each of its ships. With this objective, the company intends to execute novel on-board technology that is expected to increase productivity and enhance working conditions for crew personnel. The process will entail the implementation of 1) integrated bridge systems, autopilot, etc; 2) flexible work models with the prospect of developing individual skills that include both engineering and deck hand duties, and; 3) a programme of ship renovation, entailing new cranes, revising other loading and unloading equipment and improve safety on board. To efficiently craft its programme design, effectively carry out the implementation and plan for its evaluation, strategies and recommendations are explicitly and concisely discussed below: 1) As an initial step, Linkspan must employ Enterprise Resource Planning towards managing the changes that will be implemented within the company. Basically, ERP provides a single information structure for organisation-wide coordination and integration of major business processes. With this approach, information that was formerly disjointed in several systems can flow effortlessly throughout the organisation thereby allowing such data to be shared by business processes either in technical updating, accounting, human resources, hauling operations or in other areas (Laudon and Laudon 2006, pp. 56-57). Basically, in implementing ERP, Linkspan will have four inherent justifications for wanting to avail this innovative scheme -- technology, business process, competitive and strategic. Technology justifications refer to technology dilemmas a firm is facing with its old computer systems, while business process rationales aim at improving Linkspan's' performance. Its competitive rational will be the need for the shipping company to stay competitive in business and the strategic reasons are those strategies which the firm intends to execute through ERP where its existing software does not support. Business process and strategic rationales can be employed to guide Linkspan's design of the ERP system or to assess the success of such ERP. Further, it allows value creation through several ways -- integrating the activities of the shipping organisation; using 'best practices' inherent within the software; enabling organisational standardisation; eliminating information asymmetries; providing on-line and real-time information; allowing simultaneous access to the same data for planning and control; and facilitating intra and inter-organisation communication and collaboration (Gupta 2000, pp. 114-118; Marcus and Tanis 2000, pp. 173-207; Marinos, O'Keefe and Zahir 2001, pp. 195-204). One risk inherent in the implementation of ERP which Linkspan has to face is the intrinsic complexity of ERP executions. ERP systems are intricate and implementing one can be a tough, time-consuming and expensive project for any firm.The technology is securely integrated and necessitates strong commitment from all divisions and requires a change in the way a company does business. As it is, most managers are not willing to spend the time, effort, and money to work through the complexities innate to configuring an ERP system to company-specific processes, hence, it is wise to employ process templates to do a short-cut and accelerate implementation. Also, Linkspan must plan the ERP project go-live date during its slow periods, roll out the modules in phases and not attempt to execute other applications all at the same time.The shipping firm must ensure that process templates employed in the implementation echo its best business processes. Another is inadequate training. This refers not just education of the technical staff but of the user community who are supposed to actually work with the system. As it is, ERP will change the way Linkspan will do business, so, instead of training everyone in the company on how to do business differently, they are trained on new computer software. The company must find the right person to conduct the training, meaning, rather than basic, software-specific training, a more broad-based understanding of the flow of information through the system is needed. Third risk is the issue on consultants. It's important to determine prior to change programme initiation the expertise currently available within the company. This will help define the role of the consultant. The project lead should interview the staff proposed for the programme, ensure that the contract stipulates that those same people will work on it and in some cases remuneration may be based upon the successful completion of the programme. Finally, there are the process risks and process barriers. These are the risks wherein a business will suffer huge financial losses and damage to its reputation as a consequence of significant changes in the way the company does things. These includeperformance dips (efficiency drops as employees learn new jobs and technology), project fights (when problems occur, top management drops the project), process fumbles (the new implementation is more than the company can handle, timelines slips and performance problems crop up), process failures (after go-live, the new process simply does not work). In this case, no amount of training can take the place of hands-on, real-time interaction with a new system. To further counter these difficulties, Linkspan must minimize the length and depth of the dip through adequate training of the user community. Likewise, top management must remain fully committed to the programme. Process fumbles and failures can be avoided by putting a good project team together, headed by an experienced project lead, as well as a detailed, well thought out implementation plan and lastly, the shipping company must develop good performance metrics. 2) Employment of Business Systems Engineering that will facilitate the task of understanding and certifying with the application of process modeling as it merges the skills of innovation, analysis, synthesis, and implementation. Such methodical slant espoused by BSE will assist Linkspan not only to accomplish its objectives but also take full advantage of the value of its customers. However, before putting anything into action, the following precepts must be reflected upon and must be strictly put into practice: Tenet 1: Correlate process improvement to the firm's specific business approach Tenet 2: Engage the right people in the most appropriate manner Tenet 3: Provide task forces a comprehensible yet concise plan and the required accountability to achieve the intended objectives Tenet 4: Effective Re-engineering must not be confused with continuous reorganisation Tenet 5: Be aware of how the process changes have an effect on people Tenet 6: Always concentrate and target on effective implementation Tenet 7: Effective monitoring systems must be in place and must be ensured 3) To carry out and realize the need for ship renovation (which means entailing new cranes, revising other loading and unloading equipment and improve safety on board), prudent financing is necessary. Demolition, mortgages, selling of options owned, selling of owned vessels and attracting new investors are some of the ways that can be employed in order to pursue this objective. 4) Likewise, Linkspan must assess the value of its intangible assets. It has been said that measuring the value of a firm's intangible assets is the 'holy grail' of accounting. Essentially, skills of workers, innovative IT systems and organisational cultures are, for many companies, far more significant than their tangible assets and that is because unlike financial and physical positive features, intangible assets are difficult for competitors to imitate or replicate which means that these features can be excellent sources of substantial competitive advantage (Kaplan and Norton 2004, pp. 52-63). 5) So as to make possible the materialisation of flexible work models with the prospect of developing individual skills, a collective agreement should correspond with the shipping company's strategic goals. This is based on the HRM principle that the right motivation of employees is crucial in order to attain the goals of the company and generate competitive advantages. HRM instruments that Linkspan can utilise to achieve this are: performance monitoring, remuneration policy, and labour agreements ' la carte'. 6) A performance analysis is generally necessary the company's managers want to improve a part or the whole of the organisation (look for needs) or to fix a problem that someone has brought forth. Both are generally fixed in the same manner. Recommended are four performance improvement needs -- Business, Job Performance, Training, and Individual (Phillips 2002). 7) When performing the analysis, it is best to take a long term approach to make sure that the performance improvement effort corresponds and blends in with the shipping firm's vision, mission, and values. This connects each need with a metric to ensure that it actually does what it is supposed to do. This is best accomplished by linking performance analysis needs (Dunlavey 2007): Business Needs are linked to Results or Impact Job Performance Needs are linked to Behavior Training Needs are linked to learning Individual Needs are linked to Reaction 8) Employ benchmarking; process benchmarking, which was initiated in the 1980s, is a logical and efficient approach of identifying an area of improvement and then comparing the procedures employed by 'best practice' organisations to one's own system and making appropriate modifications. Initiated by Xerox, benchmarking provides a means to improve competitiveness and introduce stretch goals to an organisation. Basically, benchmarking has been characterised as "the process of comparing and measuring an organisation's operations or its internal processes against those of a best-in-class performer from inside or outside its industry" (Goetsch and Davis 1997, p. 434) and four components have been identified, they are -- (a) planning, (b) research, (c) analysis, and (d) adaptation of findings. The benchmarking process as depicted by Goetsch and Davis (1997) has essentially the same steps, which also includes at the same time (a) conducting an analysis of one's own process, (b) identifying both strengths and areas for improvement, (c) researching the best-in-class organization for that process, and then (d) implementing changes in one's system to make improvements. 9) Use balanced scorecard; developed by Robert Kaplan and David Norton (1996) from the Harvard Business School, the Balanced Scorecard (BSC) is a process that employs a balanced set of objectives and measurements to assess business performance and to communicate when corrective actions are needed. Because the BSC is driven by the organisation's strategy, it aids in communicating the business mission, goals, and objectives to all employees and other stakeholders. Rather than focusing on one indicator of success, normally a financial one, Kaplan and Norton (1996) inferred that evaluation methods are necessary in a variety of areas, such as customer focus, employee satisfaction and internal efficiency. Kaplan and Norton (1996) also use the correlation of flying an airplane. According to them, pilots employ a variety of instruments and readings to navigate and successfully fly an airplane; they do not use just one indicator such as altitude. In the same way, business organisations, like Linkspan, must employ an assortment of measures to determine their success, rather than relying exclusively on financial performance. 10) Strictly put into practice transparency; in order for investors to comprehend and appreciate fully the genuine risks of their investments (earlier it was mentioned that the shipping firm can utilise several methods of acquiring additional capital for its ship renovation), there has to be a standardised, controlled way to evaluate and compare at the very least, one organisation's potential liabilities versus another's. Today, most business ventures, for instance, are demanding for federal action on carbon regulation because they want to be able to act on a level playing field with their competitors and without fear of being penalized for early actions (Lubber 2007, p. 3). Thank you for considering these proposals. I am looking forward to answering questions and clarifications from you on the early action plan and other implementation measures. Sincerely, Mr. XXX Business Adviser Bibliography Dunlavey, P. 2007, "Performance Tuning with Instruction-level Cost Derived from Call Stack Sampling," ACM SIGPLAN Notices, vol. 42, no. 8, pp. 4-8. Goetsch, D. L. and Davis, S. B. 1997, Introduction to Total Quality: Quality Management for Production, Processing and Services. 2nd ed., Simon & Schuster, Upper Saddle River Goodman, P. and Rousseau, D.M. 2004, "Organizational Change that Produces Results: The Linkage Approach," Academy of Management Executive, vol. 18, no. 3, p. 7 Gupta, A. 2000, "Enterprise Resource Planning: The Emerging Organizational Value Systems," Industrial Management and Data Systems, vol.100, no. 3, pp.114-18. Kaplan, R.S. and Norton, D.P. 2004, "Measuring the Strategic Readiness of Intangible Assets," Harvard Business Review, vol. 82, no. 2, pp. 52-63 Kaplan, R. S. and Norton, D. 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