The Business Model-Change as RCE Perceives It - Case Study Example

RCE: Consulting Report Table of Contents Business in Focus ….. ….. ….. ….. ….. ….. ….. ….. ….. ….. ….. 2 The Viability of the Solution ….. ..... …. …. ….. ….. ….. …... ….. 2 Outlets ….. ..... …. …. ….. ….. ….. …... ….. ….. ..... …. …. ….. . 2 Inventory ….. ..... …. …. ….. ….. ….. …... ….. ….. ..... …. ….. 3 Logistics ….. ..... …. …. ….. ….. ….. …... ….. ….. ..... …. …. ….. 3 The Business Model-Change as RCE perceives it ….. ..... …. …. ….. 4 Project Evaluation….. ..... …. …. ….. ….. ..... …. …. ….. ….. ..... …. 5 Project Implementation ….. ..... …. …. …..….. ..... …. …. ….. ….. …. 6 Confidence in RCE ….. ..... …. …. …..….. ..... …. …. …..….. ..... …. 7 References ….. ….. …. …. ….. …... …. …… …. ….. ….. 9 Business In Focus A family owned business running mainly on traditional methods of accounting and limited technology, owing its huge success to its traditional methods and a large workforce dedication plus loyal human resource, now sees that technology can be used as a means of further expansion of its operations and streamlining the current methods which have become financially burdensome and technologically backward. The proposal presented by RCE defines the objectives needed to achieve optimum performance, should technology be introduced in the conservative store setting. The Viability of the Solution According to the proposal the areas that need work are outlets, inventory and logistics Outlets Currently physically 20 in number, most are frequented by loyal customers who pick and choose their own stuff. Most outlets have old and loyal staff which by now are familiar with the loyal customers and have an essentially excellent rapport with them. Using this equation a web portal can be created where the same loyal customers can enter details of their shopping and the same staff can pick it out for them and pack it up to save time. This will not only save time for both and affect inventory and logistics positively, but also increase sales. In a research (Park, 1998) it was concluded that hi-tech baby boomers and older/physically challenged people were more prone to shop online. Another research (Hiser, 1999) confirmed that consumers other than those having dual incomes were a viable market segment. On a general basis buying groceries online was not dependent on the number of people in the house or incomes or gender. On the other hand buying behavior is more likely to be linked to the penetration of Internet and its usability among the shoppers (Ward, 2000). In today’s age where there is an application for every website the company would be making more sales if people in the community are given the option of selecting their groceries on the go. Inventory Instead of traditional inventory management system, using the warehouse as the Master Organization and transferring all stocks from there on when stocks are out anywhere, RCE proposes to use a flexible and manageable system. Maintain a fixed stock at all stores for all or some inventories, while keeping all suppliers connected with the Master Organization. This helps put the customer in focus and also helps increase sales as projected to 1%. On an organizational level, if Bradford chooses to bring in revenue through a web portal, a managed inventory at all stores will speed up the process of picking and bagging the orders. For staff to be effective in managing the store of inventory on-site at each business unit(store), effective trainings can be given and management can be done with simple bar-code readers. Staff that has been stocking the locations and managing stocks offline can be introduced to an all electronic system, that will be linked to the EPoS and the accounting system to ensure the smooth re-order levels and efficient sales. On a financial level the business units (stores) need not be centralized and all data can be treated separately and any inter-store transfers can be treated as internal transfers. Traditional inventory systems lost sight of the impact technology could have had on their inventory management as a whole. While most organizations are not concerned with the ‘per se’ factor of inventories, the benefits inventories and its effective management can bring is undoubted (Jaber, 2009). Logistics Logistics plays a pivotal role in inventory management. It also costs a lot. Currently Bradford has a lot of empty van time. RCE proposes a single trip consisting of efficient time usage which increases the loaded time to upto 25% which automatically implies efficient fuel consumption, lower free time. Logistic model is dependent on the inventory model proposed by RCE. Re-order from Master Organization, delivery at store, pick up from suppliers, delivery at all stores and any inter-store delivery and then any leftovers or a free truck back to the Master Organization. The model also implies that all stores will not require inventories every day and that there will not be inter-store transfers every day. On the plus side, the trucks will be carrying goods and can be called for any emergencies that arise. Thus the truck time on roads will be saved. The Business Model- Change as RCE perceives it Currently Bradford operates as individual units. RCE perceives to integrate all the modules that have so far been individually operated. In 1969 Peter Drucker wrote that the world was entering into an “Age of Discontinuity”. Hypercompetition is what Vail (1989) called it. With major changes taking place Bradford needs to innovate, speed up, cut costs to meet the ever competitive environment. As Welch (1990) put it, it is not impossible but difficult to meet with the competition with a traditional bureaucratic form of organization and costs a lot too. The best advantage Bradford has is a loyal customer base that has been in touch with a loyal staff. The staff can be used to gauge the consumer actions and reactions to any innovation on any level. The same relationship can be used to promote technological use in the most effective manner. RCE proposes to integrate the systems they propose with the EPoS and the accounting system, along with the Suppliers databases so the systems can work seamlessly. The integration is necessarily to facilitate the head of EPoS and Accounting in their working as RCE will be able to generate items for EPoS and Accounts. The integration will not be a complete package plan sitting in all departments. Instead it will retain the old practices of the accounts and EPoS and introduce the integrated RCE to enhance productivity of the staff. RCE will create a change in work pattern for the staff. Motivation to work in a newer environment and a new job role will create a new buzz and is healthy. As Bradford has a largely women-based workforce which has been with Bradford for 20 years, according to Maslow’s theory (Maslow, 1954) and the David McClelland theory for need to achieve more from the jobs (McClelland, 1985), a slightly different job role and a challenge attached to the learning experience will motivate the employees to work towards it, rather than against it. The news of RCE can be intimidating as well as generally technology means jobs laid off. This requires input from the management and useful dissemination of information on all channels, specially the grapevine. Formal trainings, announcements and promotions might enhance job satisfaction and employee participation in the move towards technology. RCE is based on competency in retail. Managing retail with minimal infrastructural change and maximum output, which brings us to the idea of convenience with an integrated model in logistics, enhanced selling through online platforms and simplification of all manual tasks. Inventory still stands as a determining factor for smooth functioning of all operations. Thus managing it very carefully will deliver cost-effective results to Bradford. Project Evaluation As set out in the proposal, RCE has a set of deliverables and a 19 weeks timeline for the delivery of the project. Phase I sets out the online shopping and inventory system and Phase II the logistics. The project will be managed by professionals at RCE and implemented in stages. A pilot project will be launched in the store with the lowest turnover. According to the Iron Triangle (Atkinson, 1999) of Project Management, Cost, Quality and Time are three main factors affecting completion of a project (Morris PWG, 1993) (Turner, 1996) (Pinto, 1998). With a host of business processes changing the way projects are managed, RCE will be implemented in a way to avoid (Hartman, 1996) (Thamhain, 1994):Unclear dissemination of information between the team implementing the project and the support team, Misalignment of information between major stakeholders of the project and Business information data from differing from project data. With information system becoming integral to Bradford the project implementation requires the integration to be (Atkinson, 1999) Maintainable, Reliable, Valid and Provide quality information The benefits Bradford reaps from such an implementation are Improved efficiency, Improved effectiveness, Increased profits (which in the case of a pilot project will be very obvious), Organizational learning and Strategic goals With Project Governance in place, Organizational learning and redefined Strategic goals will be realized more effectively. Feedback from Bradford will qualify for continual development and improvement while Bradford can look forward to expanding its operations to other cities. Benefits of this implementation to Bradford’s community include: Satisfied shoppers who come to buy due to faster systems, Satisfied online shoppers, who will communicate via word of mouth, Personal learning and growth of shoppers and staff, Professional learning of Bradford’s staff and coming at par with the competition, Easy communication with suppliers, customers and regulatory authorities, Contribution to the economics of the society, Ability to grow more internal produce and save time and Effective control over internal operations across all stores. Project Implementation The project will be implemented in 19 weeks starting from the online shopping phase. The project will be implemented by doing a firm wide survey of staff who know the buying habits of loyal customers. Most of this data will be converted to physical numbers and a prototype web page will be put into production. Survey will also be done on a general scale within the community around Bradford to assess their buying habits. Most of the earlier survey data from earlier surveys conducted by researchers will also be considered. After a basic web-page design is implemented we would like to take a user review of its acceptability and effectiveness. A basic inventory data base will be implemented as well. This will not be shared with outside users. All the while the client (Bradford) will be part of the review process, giving any input to the design that they might deem fit. Once this phase is over we will move to the underlying code and start with the Detail Design and Development. The client would be required to give RCE all the data to input in the online system as well as the inventory data base, both of which will be linked to the accounts and the EPoS. Once code is complete, the functional data, like groceries to be purchased and items to be listed will be collected and categorized and input in the system. A System Test will be done with the client to see if the system runs as required. This will take about 4 weeks and will be done after 3 months of intensive work on the online website. Once the client is satisfied, the system will be integrated (SIT) in the Pilot store. The management will have to advertise the system long before its actual integration. The User Acceptance Test (UAT) will be done for a week and the system will go live. While System Testing for the online shopping page, RCE will start developing the Transport Management System, which will integrate with the Accounting software. The system will manage the trucks that will leave the Master Organization, their timings and the stores that need to be visited. Since this system will be integrated with the Inventory Management System it needs its direct input as well. The Transport Management System will require two inputs, one from the Inventory Management System and second from the scheduler who will schedule the trucks for delivery. This scheduling can be managed by automated attendance systems, like finger printing at each station, or entries made by staff when deliveries are made. The Transport System will be centrally managed and all entries will be monitored at the Master Organization. Inter-store transfers will be marked financially and physically. The Transport Management system will not require a lot of training as will the drivers who will be facing change in their routines and way of working and a slight change of paper-work. Intensive training and check-backs with the place of origination of deliveries can curb and help with lost orders and save cash. Confidence in RCE Today the way is forward technologically. RCE is a very basic system with no lost jobs and no huge investment. Project planning as per the proposal with a team of retail experts is a fool-proof way forward. Although some assumptions and contingencies have been kept in mind by RCE: Bradford will be open to providing complete access to their business processes and knowledge, Bradford’s systems will be completely accessible, Any changes requested by Bradford will be acceptable via a professional process, In case any project failure arises due to any contingency that may have been looked at or over looked and Bradford will be informed as soon as possible. Development Framework While developing a software it is too easy to under estimate costs and over estimate benefits much before the to-be processes are configured. This way the dimension of the ERP over-rides all potential cost factors. According to Dilip Wagle (1998) many investments in ERP are made on faith and not on good judgment. This is further confirmed by studies by Ballantine et al. (1996), Willcocks (1992), Hochstrasser and Griffiths (1991), Vowler (1990), Kearney (1990) Setting an evaluation framework for the ERP: This will be done in eight steps (Teltumbde, 2000): 1. Strategy-Fit: The fitness of the solution provided to the strategic goals of the organization. 2. Technology: The requirement of technology and its fitness to the solution and to the business process. In case of RCE no new physical technology will be introduced, existing systems will be used and enhanced. 3. Change management: ERP implementation implies change in organizational structure and therefore its management is required. RCE will require training and staff adjustments. 4. Risk: the most important part is deviation of the outcome from the promised and calculating is risk assessment. The risk of deviation causes projects to fail. RCE has low risk since its implementation is from a pilot phase in a very low income store. The investment and in case of a failure the loss will be minimal. 5. Implementibilty: the match/mismatch of the project requirements and the technological expertise and infrastructure available. In case of RCE, the implementibilty is high since experts are available and the business is situated in one place and has no cross-cultural issues. 6. Vendor Credentials: RCE has been in the business for a long time with excellent services and support services throughout. 7. Flexibility: the ability of the system to grow with the business. RCE is planned on the Outlet, Inventory and Logistics system but can be enhanced to include a Supplier System also. 8. Cost: the cost of the system over the 19 week cycle is on a per hour basis. 9. Business functionality: the ERP should fit the business needs and not be generic. RCE is developed from scratch with the business data so it is not generic. 10. Benefits: Reduced laboring, reduced response time, increased sales, multiple sales point, easy access to groceries by customers are some of the benefits of RCE that can be quantified. Bibliography Atkinson, R., 1999. Project management: cost, time and quality, two best guesses and a phenomenon, its time to accept other success criteria. International Journal of Project Management, 17(6), pp. 337-342. Ballantine, J. G. R. a. S. S., 1996. Information system/technology evaluation practice: evidence from UK organization. Journal of Information Technology, 2(11), pp. 129-142. Drucker, P., 1969. In: The Age of Discontinuity. NY: Harper & Row.. Hartman, F. J. G., 1996. Simplifying project success metrics. Proceedings of the 40th meeting of the American Association of Cost Engineers. Hiser, J. R. M. N. a. O. C., 1999. An Exploratory Analysis of Familiarity and Willingness to Use Online Food Shopping Services in a Local Area of Texas. Journal of Food Distribution Research, pp. 78-90. 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