Organic Cosmetics Business - Case Study Example

Author] [Instructor] [Date] Business Report Organic Cosmetics have also come in the wave of the global financial crisis . The Christmas sale which was once a sure period of a high sale has also decreased by 30 percent this year which has badly affected the business and annual turnover of the company. Many companies in order to tackle this situation have started reducing the number of staff as they consider the recession is the only solution to tackle the financial crisis. Jill on the other hand, being an intelligent and smart business professional, have different views. She does not believe in reduction of staff members which certainly show her kind attitude towards worker. She realizes that the situation can be dealt technically and if certain policies and methods are incorporated in the company. The situation can be smartly tackled without cutting down the number of staff. At the same time she is also apprehensive about the issue that if she fails to meet the requirement she will be forced to take the bitter decision of reduction of staff members. Jill is well aware that decrease in annual turnover is that she has increased the product range of company however, lack of internal operational efficiency in terms of handling information, business transactions are not computerized and are filed in cabinet which are not even filed when it’s a busy day, are the root cause of company’s declined rate of profit. The main problem due to which the company has been caught in the financial crisis wave is because of lack of coordination within the company and communication among stakeholders. Most of the time the stakeholders are not in picture completely as they are not informed about each and everything which can affect them directly or indirectly. The company lacks a proper information system which is an integral part of small or larger business there days. It’s not wrong to say that a company with poor information system or no information system will always end up in failure and disappointment. The company’s problems are well highlighted by the disputes and arguments that arise between Accounts Manager and Customer Relation Managers about outstanding dues and between Accounts Manager and Procurement Manager outstanding dues. The thing which adds to the situation is that Jill has vast product range but she doesn’t know exactly about which product gives how much profit. Fortunately, Justin, a young and confident graduate from Deakin University, working in Organic Cosmetics had a informal chat about the current prevailing situation of the company. He is confident that if dealt properly, the company cannot only survive the situation but also gain profit. Justin is very much in favor of bringing new technologies in the company to replace the obsolete and time consuming filing system as in the obsolete system we cannot even tell how much people owe to us and how much we owe to people in split second. This thing is alarming and Justin wants to bring about changes which will maintain the record in a much appropriate way. And this incorporation of new technology will also help in communicating with all the stakeholders about situation which can affect them directly and indirectly. Proposed Solution An information system is made up of all the processes that collect, scrutinize and compile data or information. The Information System includes software, hardware, people communication system and data itself. The processes involved in this system are data input, data processing into information, storage of the data and information and the results such as financial report, management reports. Business software to needs to be incorporated to support business growth and increase operational efficiency of the Organic Cosmetics. The company needs to incorporate this information system at earliest to overcome the operational issues caused by the rapid growth which has immensely increased. By introduction of the new information system like Infor ERP System 21 and Infor SCM Demand Planning for demand and distributing planning of the company. The increased product range gave rise to major process and stock management issues including incapability to determine profit or loss caused by individual product. The problems currently faced by the company are imbalance of inventory due to vast product range, inability of the company to predict customer demand. The new information system will also streamline the supply chain and order management functions. The company though has a vast product range and enjoys a repute of high quality but the company is suffering from demand and supply issues due to improper inventory management and inability to effectively track inventory effectively. This system has capabilities to make more informed decisions on purchasing. The company is also facing administrative inefficiencies due to lack of efficient computerized order system where orders were taken over the phone, fax and letters and then filed which leads to extreme mismanagement as many transactions remain unfilled (Kotter, John P. & Dan, Cohen.,2002). The information system would grow and keep the pace. The integrated process management of the system and workflow capabilities of the system will pave way to precisely plan the business and will reduce the administrative needs to keep record as the database will be computerized. The system focus on manage and control purchasing and supplies. Organic Cosmetic is a huge brand and its information system should be such that things needs and information needed are one click away through which the inventory and purchasing is managed and the annual turnover can be calculated on the very next day of the closing. With changing trends in business, the need for business information systems has increased. Business information systems have different types of information systems like transaction processing management information decision support, that support the business functions of accounting, finance, marketing, operation management and human resource management. The system must be supported by cross functional information systems. The business function of marketing is related with planning, promotion and sale of current products and developing strategies for the new products and markets to serve in a better way the new and old customers. Incorporation of sale force automation system is also very important. In this system there is extensive use of mobile computing and internet technologies to automate many information processes for sales support and management. The Organic cosmetics should provide its workers with notebook PC’s, web browsers and sales contact management software to help its sales department use the resources at internet and intranet websites which supports the selling process. The advantages of web based sales service is that it paces up the process of sale. It will also increase revenue through targeted marketing. It will also make a data base of sales directly into the system without the manual transaction and inventory system. It will also give better information to customers in products availability, new products and promotional schemes, the shipment time, taxes and freights (Gomez-Mejia, Luis, David, Balkin and Robert, Cardy 2008). The Sales managers should make a strategy, keep track and support the sales department. The technology bases system will give a sales analysis report. That report will analyze sales by product, product line, customer, types of customer, sales person. These reports would definitely help marketing managers monitor the sales of product and performance of the sales officer. This way the sales and production would get better and better. The product managers in the company need information to plan and control the performance of specific products, product lines and brands. Computers would help provide price, revenue cost, and growth information for existing products and new products. Product Managers will need to plan and control the performance of specific products, product range, and brands. Computers based systems will help provide cost, profit and products increased or decrease demand and development of strategies of new products. The system will also provide database and analysis for price related decisions which is major function of computer based system. The system will be capable of evaluating the performance of current products and the prospects for achieving set goals for the proposed products. Marketing Managers should try to increase sales at minimum cost of promotional activities. Marketing information system use market resource information and promotion strategy to help allocate budget select mode of advertisement and control and evaluate results of these promotional activities. The human resource information system should be part of the company since these are meant for supporting the plans for needs of the business and development of employee to their full capabilities and control all policies and programs pertaining to Human resources. The data base of the current employees is not that authentic and it is a must for a company to keep complete and authentic record of their employees. A proper human resource information system will definitely help out the organization to know their employees in a much better way. The data reveals that the company owned vehicles are not GPS connected. In a company like organic cosmetics having vehicles without GPS is what carelessness on administrative part. It is necessary to get all the vehicles GPS supported as the vehicles would just keep track of their time and all those drivers who don’t follow the specified route will be tracked and can be penalized for such kind of activity which is possible for them if GPS or tracking system is not installed. The non support of tracking system is something which has made a possibility for the drivers to have undesirable delays in the transport of material to the company and transport of goods to the retailers. Therefore this information systems becomes mandatory to eradicate all such possibilities of unwanted delays that might happen. Accordingly company with a product range of 500 products should have atleast 20 to 25 trucks. The warehouse needs to be on modern systems and Radio Frequency Identification system is a must to be incorporated as this will keep a proper inventory of what product is available in the stock and which product is in excess and which product supply is required. This will manage the cash flow as the amount which is relevant will be invested and unwanted expenses that might incur may not occur. One kind of stock items hold 6 different codes which is a really odd thing. The code system of such kind be introduced that the items of same kind comes under similar tag code and the different code situation is no more in the organization. The data base should be accessible to every one on equality. And every one in the company , who is a stakeholder, should know about the goods and bad happening in the company and what profit or loss company is having. JUSTIFICATION The need of Information system so far is very much important and it has become mandatory to put Organic cosmetic on lines of modern technology. So far, if the company has been doing profitable business is just because the personnel in the company are very hard working and the mind at the top is a smart boss who has made a priority list and who knows how to take the right decision at right time. The luck has been good that the company’s turnover has been brilliant. But on Christmas promotional period the owner realized that a solution to the problem is required on priority basis. The above-proposed solution to tackle all the problems is very much appropriate and justified system as it will bring the Organic Cosmetic Technology in the lead. Let it be sales, production, financial matters, logistics, purchase of raw material or human resource, the introduction of above mentioned system is inevitable as this kind of system will provide the necessary information to all the stake holders which is the main target of the company. The company which is facing a lack of coordination will certainly find out that the disputes and arguments which once use to arise are over since the data base has become computerized.With introduction of Information Systems, the Sales would increase as the marketing techniques adopted will be much more influential and the lead time of product purchase and delivery will reduce. The use of internet and intranet will certainly catch eyes of more and more customer because the product range will be easy to view and easy to choose from. The close collaboration of the organization and its employees and considering every one equal and giving access to the company data base would bring sense of responsibility over each and every employee. The use of PC laptops and mobile phone would certainly increase and pace up the company profit as this technology would let the work force fulfill the requirement on the move. The GPS equipped trucks would also bring about a lot of help in reducing the delays which are undesirable as the company enjoys a very good repute in terms of standards and timely delivery. The marketing strategy is a very important part , the more catchy the marketing strategy will be the more the customer will get attracted. The use of internet and intranet is highly necessary for the company and training sessions for all the employees regarding knowledge of computer and IT should be run to make them computer literate and advanced. The system of finance will be so speedy that if the year closes today so the account statement is on the table free of errors the very next morning. Through this the turnover can be properly tracked. The inventory management system would definitely give a better overview of each product and its popularity among the customers and how much profit does the each product generates. The main aim of production system is to give the best quality practice in production of a product. So this will also help in maintaining high standards of Organic Cosmetic products. The account system will help in recording and reporting transaction and other economic events like processing of order, Accounts Payable, Accounts receivables, Inventory control and General Ledger. This way the data base of all transaction made in the company will be maintained properly and the disputers about payables and receivables will be over. Infrastructure Requirement The infrastructure which is proposed to be implemented needs many things that will be procured and some of the things which are already available will be brought into use. The company certainly need all the computers to be upgraded to atleast a core 2 duo system as it will speed up the processes. The company needs software relating to accounts, marketing, inventory management, supply which will readily help the company to keep the data in a rationalized way. The personnel needs to be trained for that training specialist should be hired to train the staff and make them computer literate. New barcode reading device has to be brought into action for better record of items. System of RFID has to installed which will lessen the tedious work of maintaining a manual inventory. GPS systems in available truck is required and since the company has a 500 products range then atleast 20- 25 trucks are a must and that too GPS equipped. Data base software should be used as they are ready access to the products available and personnel working in the company. The Cable internet connection needs to be of higher capacity which will give a much dedicated connectivity. The company website is a must to get designed and for this services of web site building professional needs to be hired. Estimated Cost The main cost associated in implementing this information system is due to technological upgrdation of the company. The company certainly need to spend the amount at the moment in order to benefit in the long run. The cost of software which will be utilized will be in between $4000 to $8000. The price of 20 more computers and laptops would be around $ 10000 which is very nominal. Then It would cost around $300000 dollars to buy supply vehicles equipped with GPS. The incorporation of the RFID and bar code system will be around $ 3000 to $5000. Then the cost of internet which is very nominal is included in the cost that will be incurred on introducing the new information system. The cost that will be incurred is not such a big cost to pay if compared with profit that will be earned and the efficiency increase and productivity of the company. References Gomez-Mejia, Luis R.; David B. Balkin and Robert L. Cardy (2008).Management: People, Performance, Change, 3rd edition. New York, New York USA: McGraw-Hill. pp. 19. ISBN 978-0-07-302743-2. Kotter, John P. & Dan S. Cohen. (2002). The Heart of Change. Boston: Harvard Business School Publishing. Read More