Atokawa Advantage Management - Essay Example

Executive Summary The issues presented and analyzed in this paper provided the insight of an organization that is on the brink of expanding and breaking out of its shell. However, being ready and actually being prepared and equipped to handle the challenges of expansion requires more commitment and investment on the part of the executives of Atokowa. The implementation of an Enterprise Resource Planning Solution to resolve the operational difficulties being experienced by Atokowa currently would also equip the organization to face the more complex task of expansion. The replacement of the current system is apropos considering the problems Atokowa is experiencing because of it. While a substantial part of the reporting and operational requirements of Atokowa is currently being addressed by the system, the strain of expansion would only exacerbate the situation. If the expansion initiative of Custom Print and the Online Ordering strategy is suspended the growth of Atokowa will be stunted and its spiral decline will commence because the current difficulties in the system will only feed on itself. The initiatives of George Hargreaves and Hayley Atokowa will diversify the revenue stream of Atokowa and at the same time expand the market while widening the client demography of Atokowa. However, implementing it at this time will only triple if not double the operational problems of Atokowa implementing it after the completion of an Enterprise Resource Planning Solution roll-out would be ideal if not the best. Table of Contents Executive Summary 1 Table of Contents 2 Introduction 2 Analysis of Current Systems and Operations 3 Pricing Strategy 4 Operating Issues of ASIS 5 Initiatives: Custom Print Expansion and Expanded Online Presence 5 Custom Print 6 Hayley Atokowa’s initiative 7 Other problem areas; Atokowa brand and the Customer Survey 8 Conclusion 9 Recommendations 10 Pricing Strategy 10 Operating Issues of ASIS 11 Initiatives: Custom Print Expansion and Expanded Online Presence 12 Custom Print 13 Harley Atokowa initiatives 13 Atokowa brands and Customer Survey 13 References/Bibliography 14 Introduction Atokawa Advantage was founded in 1964 by the father of Jonathan Atokowa from whom he took over the reign of the company. Under the leadership of Jonathan, Atokowa has expanded to several stores all around Australia catering mostly to individual and business customers in and around the locality where Atokowa stores is at. This paper would present the analysis of the operation of Atokowa to determine challenge areas, improvement areas and growth areas. The purpose of the analysis is to recommend solutions that will enable Atokowa to resolve its current issues if there are any and respond to the demands of the ever changing market landscape in the stationary and office supply retail industry. This report shall first present the result of the analysis conducted on the operation of Atokowa that will define in detail the analysis of focus areas. After the analysis of the focus areas an assessment of the focus area shall be concluded for purposes of recommending possible solutions to the challenges posed in the focus area. Due to constraints this paper shall only present the observations in the analysis and not the process in which the analysis was conducted and the observation was arrived at. In summary the analysis in the operation of the focus areas shall be provided in seriatim as it was presented in the report. The conclusion or assessment shall follow afterwards then the recommendations that should be undertaken by the management of Atokowa to resolve its current challenges. Please note that this paper shall only focus on the technological solutions to resolve the operational and management challenges of Atokowa. Analysis of Current Systems and Operations The following focus areas were highlighted in the analysis of the business case of Atokowa. Please note that in the presentation of the analysis adopted for this purpose the challenge areas will be presented after the discussion of the symptoms. The recommendations shall be discussed towards the end of the report for each specific focus areas. Pricing Strategy Previously the pricing strategy of Atokowa is very straight forward it is just the sum of the acquisition cost from suppliers plus twenty five percent mark-up plus tax. However, upon the assumption of office of Paul Fairclough he implemented a new pricing scheme that will take into consideration the pricing of the local competitors for the same items. The new pricing scheme made it possible for the store manager to have visibility on the cost of acquisition, the cost representing warehousing and the 3PL costs. Any margin received over and above this figure will be attributed to the store itself. The problem with both schemes is the absence of a definitive cost amount for operating costs, warehousing cost that would include handling fee and storage fee and cost for the actual mode of delivery (regular van, refrigerated van etc). The approximation adopted by Atokowa may be overstated or understated therefore, Atokowa may not be aware if it is losing money in its pricing structure or not. The new strategy that will give autonomy to the store manager in order for him to match if not outbid or out-price by under-pricing his competitors could also result to losses for Atokowa. The losses could be from the following: In case the price of Atokowa’s competitors is lower, the reason could be because of its lower acquisition cost or transportation cost or shipment cost or even lower quality. Therefore matching or undercutting the competitors without any actual basis for the price cut could result to losses. Operating Issues of ASIS While ASIS or Atokowa Stock Information System is capable of handling single customer transactions it is not capable of handling business transactions that would require monthly billing or invoicing of large clients. ASIS is also an island system and is not ported or integrated to the Warehousing System and the Point of Sale System which on their own are island systems in their own right. The limitations of ASIS includes the absence of predictive ordering or forecasting functionality that should provide the functionality to pre-order items that is on short supply because of its demand. ASIS also do not provide visibility on the volume of stocks in every store of Atokowa from the warehouse perspective. While ASIS is responsive to the needs of the store in terms of handling on hand stocks its applicability in other parts of the company pose if not create more problems. First among the problems encountered is the amount of manual paper work that needs to be done that would include manually entering into ASIS data that should have been present in the system had ASIS been online or integrated with the other systems. The reports generated by ASIS cannot be used by management or as basis for decision since it is incomplete and unreliable due to the amount of human interface involved in the construction or entry of data. Initiatives: Custom Print Expansion and Expanded Online Presence The following initiatives were proposed by George Hargreaves and Hayley Atokowa. It is apparent that both initiatives have the sole purpose of expanding the profitability of Atokowa. Specific objective of Custom Print is to expand Custom Print’s revenue at the same time expanding this revenue stream to a point where it is significant contributor to the profitability of Atokowa. George Hargreaves’ recommendation entails with it the diversification of Atokowa’s product line that could provide more stability to the company. Custom Print The challenges in George Hargreaves’ are the absence of infrastructure that will support Custom Print’s expansion in Atokowa stores. Even assuming that Custom Print from Sydney and Melbourne would still service or perform the necessary production work, the delivery of the items to stores that are quite a distance away would make the transportation of the goods to where the office of the customer is at will be a serious challenge in terms of cost and logistics. The quality of service may not only suffer but also the image of Atokowa may also suffer in the long run. The other challenge is the mechanism for ordering and to which facility (Sydney or Melbourne) the order shall be assigned to. The complexity and challenges include the capacity planning of both production facility and order scheduling of both production facility. On the alternative, if in case Atokowa chose to disperse its custom printing capacity to each of the stores. The quality may not be consistent since the core competency of Custom Print is located in its two main production facilities. The additional infrastructure for the stores that would include copiers may require investments that could be disproportionate with the income. Hayley Atokowa’s initiative The expansion of Atokowa’s online presence is a vital initiative that could make Atokowa responsive to the changing façade of the retail stationary and office supplies industry. Bringing the business online could open new market and possible another independent revenue stream separate and distinct from the revenue being realized from Atokowa Stores. The initiative however is not getting enough support it is in fact being resisted even by the colleagues of Hayley in the executive level. The operation of the expanded online presence initiative of Hayley includes the online ordering of items and products. To project a possible operating process: When ordering online the customers will enter their address and other details including mode of payment. For exigency if in case the customer is near an Atokowa store the items can be delivered to the customer using the delivery vans in every store. If in case the address is too far or the volume of the order cannot be accommodated by the nearest store the order itself will be assigned to the warehouse wherein they will be the one to deliver the items. The online ordering initiative would not only expand the sales and customer base of each store it could potentially enable Atokowa to set-up delivery or pick-up points where Atokowa stores are not present. This possibility will not only provide a foothold in the area where there is no Atokowa store but the presence alone would be a good marketing exposure for Atokowa stores. The potential data that can be gathered by this initiative includes the determination of the number of potential customers in an area where there is no Atokowa store present. The source of consternation from the co-executive of Hayley Atokowa is the absence of confidence to the capability of the current system. The current system’s inability and inflexibility when it comes to pricing is a concern including the current warehousing systems ability to handle individual delivery of items for customers. An analysis of the capabilities of the current system, reveal and confirm the inflexibility of the system when it comes to warehouse management and the pricing structure. The accuracy, efficacy and timeliness of the reports being churned by the current system is at its best quite a challenge, the additional transaction type would increase the risk of developing bad reports. The additional manual work and questionable reports may lead to the negation of any profit from the initiative. Other problem areas; Atokowa brand and the Customer Survey Atokowa have ventured into putting its own brand name over several items that it sells to its store. While the venture is profitable since the middle man or distributor do not have any place in the costing system because Atokowa directly purchase the items from its manufacturer. However, no framework or guidelines were ever put in place that will govern the type of products or items the Atokowa brand can be placed. The lack of criteria led to recalls because the quality of Atokowa product has no basis. Atokowa also conducted a customer satisfaction survey with disturbing results that pointed to the systemic problem of an unreliable information technology system. “The long waiting time in the store” can be attributed to the manual paper work that needs to be conducted just to bill the customer correctly. While “lack of knowledge by store assistants” and “incorrect invoicing” also points to the lack of tools that would enable assistants to be better informed about products. The ability to collate purchases should have been easy had the system being used can handle the business customers in Atokowa stores. Conclusion The number of challenges experienced by Atokowa could put on abeyance several initiatives that should have enabled it to compete if not stay ahead of its competitors. Several organizational management challenges also impede the growth of Atokowa and at times causes friction if not disagreements among the executives of the organization. The absence of a common direction could have been responsible for the island technology infrastructure that pervades in Atokowa. Custom Print expansion and the Internet presence initiatives propose by George Hargreaves and Hayley Atokowa respectively are indications of a systemic organizational weakness in Atokowa. New initiatives should be welcomed evaluated, studied and examined based on its merits to determine if it is worth venturing into. The pervasive attitude in Atokowa is to question first any initiatives instead of studying its feasibility. The root cause of the laid back attitude if not resistance could be tracked in the lack of infrastructure that could support any initiatives. The lack of self confidence maybe rooted on the fact that even the current difficulties cannot be resolved by the current decision support infrastructure that includes the information technology infrastructure. It should be noted that there is wide agreement with regards to the limitations of the current system. Other solutions should be proposed to resolve the organizational challenges, this paper for its part have only limited its analysis to technology related issues and solutions. However, an organizational management issue that can be supported by technology that could be applicable to Atokowa is the transformation of Atokowa into a learning organization. Recommendations The basis for the succeeding recommendation is the adoption and implementation of a new Enterprise Resource Planning System that would take into consideration the system needs of Atokowa. The specific solutions to the problems uncovered during the analysis phase shall be discussed as each focus area is discussed below. Other solutions that tackle organizational management changes shall also be discussed at the specific focus area. Pricing Strategy The combination of the Materials Management and Procure to Pay Module or more specifically the modules covering supply chain management shall have the following functionality that can resolve the cost accounting challenges of Atokowa. It is recommended that a detailed determination of all costs associated to every product be conducted and used in the costing of each items or products sold in every Atokowa store. Cost accounting will ensure that revenue or profit is realized as each item is sold (Karimi, et al., 2007). The present system of decentralized pricing may continue however, what needs to be displayed are only the pricing passed on by Atokowa where it have already considered its profit any additional price and the resulting taxes could be autonomous and assigned under the purview of the store manager. It should be noted that the display of Atokowa’s pricing structure should be considered as a security risk. The number of personnel even if they are trusted who has access to the actual pricing structure of Atokowa makes it susceptible for abuse and accountability. In this regard it is recommended that Atokowa develop its authorization matrix that would provide the level of authority and access given to specific people. This will ensure that any access to sensitive information is limited if not accounted for. Operating Issues of ASIS Replacing ASIS with the warehousing module of an Enterprise Resource Planning solution would enable the warehouse manager to conduct proper forecasting that will later on enable him to do predictive ordering of hot items. The warehousing module of the Enterprise Resource Planning solution should be integrated with the Point of Sale system of the Enterprise Resource Planning solution. The recommended point of sale system should be equipped with functionality of invoicing large orders for business entity that are billed monthly aside from the regular transactions (Murray, 2010). The recommended system that will replace the current system should include the procure-to-pay module, warehouse management module, materials management module, and materials ledger module. The warehouse management and material management including the materials ledger modules shall enable Atokowa to automate the predictive ordering and forecasting of items that are easily sold in every Atokowa outlet. The same systems can be used to create a supply plan that will allow the warehouse manager to efficiently deliver items to Atokowa stores at the right time items that is supposed to be depleted already at the stores (Koenigsaecker, 2009). Intimately informed of the demands for new supplies of items or products the finance department would be able to determine the actual purchase schedule. Thru the operations of the modules mentioned the sale of items shall be known from each stores of Atokowa. These functionalities would ultimately allow Atokowa to have better control of its cash flow (Yang & SU, 2009). Not only would Atokowa have better control of their cash flows, vendor and supplier management can also be managed better. The Enterprise Resource Planning has a module that can address this particular issue (Morris, 2011). Categorizing vendors and suppliers as well as their performance would enable Atokowa to determine which supplier or vendor can deliver fast or can provide soft pricing and or discounts. The information obtained therein would eventually enable Atokowa to meet its demand even if the situation dire. Initiatives: Custom Print Expansion and Expanded Online Presence The initiatives proposed by George Hargreaves and Hayley Atokowa can be supported in full by the recommended software changes or the implementation of a full suite of an Enterprise Resource Planning Solution. As articulated in the previous recommendations that resolve current and existing challenges, the same solution can also be an essential factor in the success of George Hargreaves and Hayley Atokowa’s initiatives. One of the key features of an Enterprise Resource Planning Solution is its ability to gather data past and present that would enable the solution to generate reports that can be used in business intelligence (Wallace & Kremzar, 2001). Please note that currently Atokowa do not have the capability or even the infrastructure to support the following initiatives. Thus, the implementation and roll-out of the initiatives should be held in abeyance until such time that the recommendations contained herein are fully implemented. Custom Print Both initiatives can actually complement each other. The online system can get the orders for Custom Print and sent directly to the facilities of Custom Print. The progress of its transaction or order can be monitored through the Enterprise Resource Planning Solution. It is recommended that the Custom Print initiative be approved in order for Atokowa to develop and expand further this business as a significant contributor to its revenue stream (Burns, 2011). Harley Atokowa initiatives Harley Atokowa’s initiative of allowing online ordering would increase the market presence and widen the demography of Atokowa’s customers. As indicated above the pricing structure of Atokowa should be revisited to include the actual share of the cost in warehousing, transport and administrative expenses including all other expenses related to the acquisition of the product. With the pricing structure revised the concerns of Paul Fairclough should be put to rest (Jain, 2010). The development of a supply plan from the combination of several modules in the Enterprise Resource Planning Solution should provide more control to Anton Humphreys in managing the storage and delivery of items to stores and also to individual customers who placed their orders over the internet. The Enterprise Resource Planning solution can also support the creation of delivery or pick-up points where customer who are located in an area where there are no Atokowa stores can get the items they purchased overnight. Atokowa brands and Customer Survey Atokowa brands can be developed over a set of criteria that will set the standard for items where the Atokowa brand can be given. The ERP would be able to handle the Atokowa brand in terms of the vendor or supplier management module. To resolve the issues revealed by the customer survey a more functional point of sale system should be rolled out to handle all types of business. References/Bibliography Burns, M., 2011. How to Select and Implement an ERP. 180 Systems. [Online] Available at: http://www.accountingweb-cgi.com/whitepapers/ERPWhiltePaper.pdf [Accessed 23 August 2011]. Jain, S., 2010. ERP: Recipe for Success. [Online] Available at: http://www.computerworld.in/articles/erp-recipe-success [Accessed 18 February 2011]. 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