E-Business and Value Chains: Baxters Food Groups - Case Study Example

E-Business and Value Chains - Baxters Food Groups - ID Number & Total Number of Words: 2,036 Executive Summary The market demand for canned food products can be volatile. To maintain the quality and freshness of Baxters raw ingredients, the company had to implement and strictly observe a zero-inventory-ordering policy, staggering delivery, and just-in-time (JIT) delivery. Despite the volatile market demand for canned food products in 2011, Baxters was able to increase its pre-tax profits by 6%. In line with this, this report examines how the company was able to benefit from its decision to shift from BPCS/ERP to Oracle E-Business Suite. At the end of this report, maximizing the use of synchronous and asynchronous ICT tools is strongly recommended. Table of Contents Executive Summary ............................................................................. 2 Table of Contents ................................................................................. 3 1.0 Introduction ................................................................................ 4 2.0 How Its Supply Chain Management Practices Changed with the Development of the Internet …………......................….. 5 3.0 New Opportunities Brought by E-Business Strategy and the Use of ICT Tools to Create Additional Customer Value ………. 6 4.0 Strength and Weaknesses of the Organizations Current Use of ICT Tools …………………………………………............… 9 5.0 Conclusion and Recommendations …………………………….. 11 References ……………………………………………………………....... 14 Introduction Formerly known as W.A. Baxters & Sons Limited, Baxters Food Group Limited was established back in 1868 as a local food manufacturing company in Scotland that specializes in the manufacturing of microwaveable gourmet soup bowls, chilli bowls, pickles and other food preservatives such as jams, marmalades, and jellies, chutneys and sauces (Baxters, 2012a; Bloomberg Businessweek, 2012). Today, the company manufactures its food products throughout Australia, Canada, and Poland (Baxters, 2012b). After analyzing the business success of this company, this report will first discuss how its supply chain management practices changed with the development of the Internet followed by discussing new opportunities brought by e-business strategy and the use of ICT tools to create additional customer value. After analyzing the strength and weaknesses of Baxters’ use of ICT tools, suggested e-business strategy improvements and alternative ICT tools will be provided to increase the company’s customer value and help differentiate the organisation from its competitors. How Its Supply Chain Management Practices Changed with the Development of the Internet Supply chain management is all about integrating the management of transferring goods from the supplier down to the customers at the lowest cost possible (Jespersen and Skjott-Larsen, 2005, p. 11). In most cases, supply chain includes logistics, the actual transportation of canned food items, operation research, purchasing or e-procurement, supply or warehouse management, marketing, etc. To ensure a smooth flow of business process, Baxters is using its company website not only to promote its existing product line but also to communicate with interested suppliers and customers (i.e. wholesaler, retailer, etc.) (Baxters, 2012c). As a common knowledge, significant changes in the environmental temperature and humidity is more than enough to trigger the growth of bacteria and other microorganisms on processed food (Food Safety, 2012; Levinson, 2007). Since processed food products that are infected with microorganisms are dangerous to the health of the consumers, the company is obliged to strictly practice and implement a zero-inventory-ordering policy, staggering delivery, and just-in-time (JIT) delivery (Sargut and Qi, 2012; Lai and Cheng, 2009; Huang, Chew and Goh, 2005). Through the use of the Internet technology, Baxters can receive order requirements not only through the company website but also using different ICT tools such as e-mail and mobile phone (Baxters, 2012c). As a local food manufacturing company in Scotland, the delivery performance of Baxters is highly dependent on its ability to establish a lean production system. Since there is volatility in the demand for canned food products, Baxters would normally manufacture food items based on the order they received from the customers. The word “lean” is often used to describe a systematic way of identifying and avoiding unnecessary waste of time and valuable resources by continuously improving the company’s efficiency in responding to the consumers’ demand (Saxena, 2009). Furthermore, Wong, Wong and Ali (2009) mentioned that a lean manufacturing system focuses on developing efficient “scheduling, inventory, material handling, and work in processes” among others. The company is able to practice both lean production and distribution system since the use of the Internet makes it possible for the company to order their raw materials online and receive customer orders through the company website, e-mail, smart phones, mobile phones, and/or iPad on a 24/7 basis. New Opportunities Brought by E-Business Strategy and the Use of ICT Tools to Create Additional Customer Value Among the factors that could lead to the development of Baxters’ production and delivery constraints include issues related to the inefficient management of incoming and outgoing of raw materials. Due to weak integration of information with regards to Baxters’ purchasing department, receiving department, order entry, and the production department, etc., the company may end up experiencing controllable operational down-time errors. In the long-run, the inability of Baxters to deliver its canned food products to potential buyers decreases its customer value. Supply chain management supports the company’s business processes which include managing the sources of raw materials, planning, production, and delivery. Customer relationship management is all about solving issues that helps strengthen the company’s relationship with its customers. E-commerce focuses on the marketing aspect of the business. To serve the supply chain management, customer relationship management, and e-commerce needs of Baxters’ suppliers and customers throughout Australia, Canada, and Poland, Shifting from the use of BPCS/ERP to Oracle E-Business Suite opens new business opportunities for the company (Carroll, 2012). Although BPCS/ERP was useful in managing Baxters’ business operations from purchasing, receiving and payables to order entry, production, shipping, and billing processes, the use of this particular ERP system triggered some unnecessary downtime in the company’s e-business processes. From an information system’s perspective, this particular ERP is automated. However, “BPCS/ERP is not capable of allowing the company manage paper documents (i.e. purchase orders, order acknowledgement, purchase requisitions, etc.) that are generated by or received from the ERP system” (You Tube, 2011a). Aside from the lack of central place to manage and control paper documents that were generated or received by the ERP system, the archive data from the active files which are commonly stored in the live database slows down the response time between customers and the customer service representatives, the customers and accounting staff who are managing the accounts receivables, etc. (Locksmith Archiving, 2012). Eventually, the use of BPCS/ERP reduces the company’s customer value. Gerald Carroll – the Group IT Manager of Baxters Food Group between June 2005 to March 2008 supervised the upgrade and replacement of its IT infrastructure from BPCS/ERP LX to Oracle E-Business Suite. To open new business opportunities for Baxters, Carroll (2012) explained that replacing BPCS/ERP LX with Oracle E-Business Suite is the best solution to ensure that the company’s IT infrastructure is suitable for Baxters’ future business expansion plan. To create additional customer value, the use of Oracle E-Business Suite is more advantageous because it does not slow down the response time between customers and the company. Since Oracle’s supply chain management R12 enables Baxters to manage its supply chain processes based on real-time demand information, Baxters’ customer service representatives can provide its customers with accurate data regarding the availability of its canned food items together with its selling prices (Oracle, 2012e). Strength and Weaknesses of the Organizations Current Use of ICT Tools According to Levinson (2007), Baxters’ ability to deliver the ordered canned food products on-time is highly dependent on the availability of raw materials, efficiency of human resources, quality control measurements, and the reliability of the machines. Therefore, the successful of Baxters as a food manufacturing company is highly dependent not only its ability to effectively remove all factors that could lead to the development of production and delivery constraints (i.e. operational bottlenecks, machine breakdown, inadequate raw materials, etc.) but also its ability to develop food products that is in conformity with the food standards as expected by its target consumers. In some cases, the company’s ability to expand its existing distribution network through the use of e-commerce also contributes to Baxters’ success. Oracle offers a lifetime support programme (Oracle, 2012b). Therefore, Baxters need not worry about learning when to upgrade the company’s EBS based on the company’s future business needs. As compared to BPCS/ERP, the Oracle E-Business Suite can help Baxters create more customer value since the system offers more customer-focused applications on top of its completely integrated business intelligence portfolio (Oracle, 2012a). By giving Baxters the opportunity to design its E-Business Suite based on what the company needs to improve the flow of its business operations, Oracle was able to create a more user-friendly interface for the use of Baxters employees. One of the strengths associated with the use of Oracle E-Business Suite is that this particular information architecture can help Baxters improve not only its e-procurement processes but also improve the efficiency of its product lifecycle management, supply chain management, production management, customer relationship management, enterprise resource planning (ERP), and asset lifecycle management (Oracle, 2012a). For this reason, the company’s decision to invest on the Oracle E-Business Suite can increase the company’s competitive advantage as compared to its close competitors. For example, other EBS providers require their customer to “make compromises between functionality and integration” (Oracle, 2012c). Unlike the other EBS providers, Oracle advanced procurement is capable of integrating the e-business applications which can effectively reduce the overall supply chain management costs (i.e. unnecessary print-out of documents, etc.). By reducing unnecessary paper works, Baxters can reduce the risks of human errors such as missing invoices or purchasing requisitions which can slow down the company’s production and payment processes. In most of the e-business practices, having a “scattered data, broken processes and siloed networks” can delay the process of workflows (You Tube, 2012b). In response to global market demands, it is important for Baxters to be able to align its product value chains to achieve their business goals. Using the Oracle’s agile product lifecycle management solution, Baxters can easily transform and align its production scheduling based on its most current market demand and available supply of raw materials (Oracle, 2012d). With regards to supply chain management, Oracle E-Business Suite offers a supply chain management application which is capable of integrating and automating important supply chain processes starting from its design down to planning and procurement to production line (Oracle, 2012e). Since Oracle’s supply chain management application is automatically integrated into one system, the company can easily forecast future risks of volatile market condition and the usual market requirements. Using this information, Baxters’ purchasing department can easily forecast its future raw materials requirement. This makes the use of Oracle E-Business Suite able to contribute to the success of Baxters’ lean production and delivery system. Another strength of the Oracle E-Business Suite is that end-users such as Baxters’ employees, suppliers and customers can access these facilities using a browser interface which is accessible either through a corporate intranet or an Internet. Except for its supplier enablement option (Jones, 2011, p. 10), there are no other known weaknesses except for the fact that the actual investment requirement this particular software application is very expensive as compared to other EBS providers. Baxters is using the Internet to communicate with its prospective suppliers and customers. Using the company’s website, e-mail, smart phones, mobile phones, and/or iPad, the company is able to stay in touch with their target suppliers and customers on a 24/7 basis. However, there are weaknesses with the use of these ICT tools. First of all, the use of the company’s website and e-mail can cause delays in addressing its customers’ needs. On the other hand, the use of overseas telecommunication line can be expensive on the part of the customers. Conclusion and Recommendations Aside from Oracle’s lifetime IT support and ability to reduce Baxters’ operational down-time (i.e. response time between customers and the customer service representatives, the customers and accounting staff who are managing the accounts receivables, etc), the Oracle E-Business Suite is more flexible and supportive in response to specific ICT needs of Baxters (Oracle, 2012b). The demand for canned food products is volatile. With the use of the Internet and ICT tools, Baxters was able to manufacture its product line based on the actual real-time demand. To increase customer value, it is necessary on the part of Baxters to provide them with a reliable customer service. The use of traditional communication tools such as e-mail and mobile phones has its own advantages and disadvantages. Instead of heavily relying on the use of e-mail, mobile phones, and communication form on its official website, this report highly recommends that Baxters should explore the use of other synchronous ICT tools such as Google talk, MSN, Yahoo Messenger, Skype and video messaging to improve the company’s e-business communication strategies. By doing so, the company can be easily contacted by its global suppliers and prospective customers. To improve the e-marketing strategy of Baxters, it is highly recommendable that the company should take advantage of other asynchronous ICT tools such as blogs, wikis, newsgroups, podcasts, you tube, audio graphics, online forums, and RSS feeds. Through RSS feeds, the company can easily distribute the link of its most recent web content to thousands of other websites. Doing so will not only make the company save a millions of pounds on advertisements but also makes it easier for Baxters to reach its prospective buyers around the world. *** End *** References Baxters 2012a. Official Websites: Our Products. [Online] Available at: http://www.baxters.com/our-products [Accessed 5 May 2012]. Baxters 2012b. Official Website: The Present Day. [Online] Available at: http://www.baxters.com/about-baxters/today/ [Accessed 5 May 2012]. Baxters 2012c. Contact Us. [Online] Available at: http://www.baxters.com/company/contact-us [Accessed 5 May 2012]. Bloomberg Businessweek 2012. Snapshot: Company Overview of Baxters Food Group Limited. [Online] Available at: http://investing.businessweek.com/research/stocks/private/snapshot.asp?privcapId=12916303 [Accessed 5 May 2012]. Carroll, G. (2012). Personal Profile. [Online] Available at: http://uk.linkedin.com/in/gerrycarroll [Accessed 5 May 2012]. Food Safety 2012. 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