Effective Operation of SAI Toys - Case Study Example

SAI Toys SAI Toys Overview of Recommended System The current four IT systems in place that include public website, manufacturing support system, human resources system, and sales and marketing system will be integrated or replaced into the newly recommended system. The purpose of the newly recommended system is to provide management with new features and information for the efficient and effective operation of SAI Toys. Let us look at the newly recommended system. The UML diagram below depicts the newly recommended system. The public website system will be integrated with sales and marketing system to produce a newly recommended system called e-sales and marketing system as shown in UML diagram. This means the e-sales and marketing system staff will be replaced or reduced from ten to five as a result of the integration to the new system. This system will handle the purchase or order requests coming from individual customers using an e-commerce platform on the e-sales and marketing system. This system will have new features and information available for management. One feature will be customers ordering products. This feature will inform manufacturing support system of newly ordered products as soon as customers place orders. This will help management know the number of products being manufactured and the amount of revenue being made in real-time. Another feature will be customer’s profile. This feature will build customer’s profile in order to provide customer buying patterns and behavior to management. Tracking sales and marketing feature; this feature will help management understand the performance of sales and marketing team in their advertising and promotion efforts of SAI Toys. The manufacturing support system will not be replaced, it will be integrated with e-sales and marketing system, where it will serve the newly recommended e-sales and marketing system as shown in UML diagram. It will handle orders placed by individual customers using the e-commerce platform. In case of any defective products being manufactured or reported by customers through the warranty program, the manufacturing system will inform the human resource system, where management resides. Management will be able to resolve warranty issues and approve raw materials for the manufacturing support system to replace defective products. The human resources system will not be replaced; it will be integrated with both the newly recommended e-sales and marketing system and manufacturing support system as shown in UML diagram. This system will mainly consist of management team which will deal with resolving warranty issues and approve raw materials for the manufacturing support system to replace defective products. In addition to this, it will manage issues, such as salary, complaints, and target achievement of employees working in the newly recommended e-sales and marketing system and manufacturing support system. The e-commerce portion of the system can assist the company in its effort to establish a web presence and sell their products directly to customers. As discussed in the newly recommended e-sales and marketing system, when customers place orders of products to the manufacturing support system, management will have the benefit of knowing the number of products being manufactured and the amount of revenue being made in real-time. In case customers place more orders than available raw materials, management will immediately know of the shortage and purchase more raw materials for the manufacturing support system. The e-commerce proton of the new recommended e-sales and marketing system helps the company build customer’s profile in order to provide customer buying patterns and behavior to management. This has the advantage of allowing the company’s management team provide tailored products as per customer needs. This will enable the company increase its revenue because of meeting customer demands. While there exist benefits of having an e-commerce system in the newly recommended e-sales and marketing system, drawbacks also exist. One drawback is having to train the current sales and marketing team on how to operate the e-commerce system. The company will have to spend money they do not have to train the staff. Another drawback is for the manufacturing support system to meet all customer product order demands. In not meeting customer’s order demands, the company may lose customers. In case the e-commerce system malfunctions, the entire company will be unable to sell its products to its online customers. This may lead to loss of customers who deem the e-commerce platform as not providing the services it claims to provide. SOA (Service-Oriented Architecture) will be beneficial in the implementation of this project because it addresses both the business and IT aspects of running a complex business that involves using e-commerce platform (Srinivasan, 2014) like the e-sales and marketing system. This architecture can assist SAI Toys to provide an architectural model as shown in the diagram for integrating business suppliers, customers, and partners into one enterprise of a business process of selling toys. It has the advantage of improving customer satisfaction and reducing costs because as we have seen, the number of staff will reduce in addition to management serving customers in a better way through providing tailored products to their customer through their online profile. ERP Project Failures and Lessons Learned One ERP project that is similar to the SAI Toys Project we are undertaking that failed is the FoxMeyer Drug ERP $65 million investment that resulted in the collapse of a $40 billion business (Scott, 1999). FoxMeyer was considered the fifth biggest drug wholesaler company in the entire United States in 1995, with yearly sales of approximate $5 billion and shipments of more than 500,000 items (Scott, 1999). The business of this company was mainly in healthcare services. With the main aim of utilizing technology to increase efficiently, FoxMeyer purchased SAP R/3 and implemented Delta III in the course of 1994 and 1995 (Scott, 1999). However, the implementation of SAP R/3 project had several risks. First, there was a problem with company staff because the project threatened their work. This led to disgruntled employees damaging inventory and not filling orders in an already newly stretched system, leading to mistakes materializing in the new system, such as loss of $34 million worth of inventory (Scott, 1999). Second, FoxMeyer was among the initial adopters of SAP R/3 (Scott, 1999). Since they were supplying University Health System Consortium with drugs, it had problems dealing with large unexpected volume of transactions of R/3 (Scott, 1999). However, prior to supplying the university with drugs, the system seemed to show that R/3 on servers would cope with the large transactions from customers (Scott, 1999). There were issues with the execution of the project due to shortage of knowledgeable and skilled personnel. The company did not have the required in-house personnel to operate the new system. Since the company’s competing strategy was on price, it required huge volumes of transactions to become profitable. Even with this strategy, project costs continued to rise to more than $100 million, pushing down FoxMeyer’s profitability (Scott, 1999). So, what were the factors that led to its failure? The main factors that led to its failure were in planning and implementation. In planning, the company did not choose the right software. SAP R/3 was primarily designed for companies in the manufacturing industry and not for wholesalers, in particular the ones with huge transaction operations. Also, there was no contingency plan to take care of the changes in the operations of the business. In implementation, there was insufficient testing. As a result of rushed schedule, testing of some modules was not performed. Also, the system was not tested for large amounts of transaction orders. There are some lessons that we can learn in the planning and implementation of SAI Toys recommended system. The e-sales and marketing software system that will handle the e-commerce part of the company needs to be selected carefully by both management and technical personnel in the IT department. Operational and technical expertise in the software selection process needs to have management and IT department handling it. The IT personnel need to be conversant with this newly recommended system. A contingency plan needs to be put in place in case the newly recommended system fails. This could be done through providing roll back procedures to an original point where the system worked perfectly. The e-sales and marketing system software will need to be tested with large volume of orders in the implementation phase to ensure the system can handle large customer transaction orders without malfunctioning. References Scott, J. (1999). The FoxMeyer drugs bankruptcy: Was it a failure of ERP? Retrieved from http://aisel.aisnet.org/amcis1999/80/ Srinivasan, S. (2014). Security, trust, and regulatory aspects of cloud computing in business environments. Hershey, PA: IGI Global. Read More