Systems and Operations Management at Atokowa - Essay Example

? Case Study: Systems and Operations Management- Atokowa Contents Contents 2 Executive summary2 Introduction 3 Analysis of current systems and operations 4 The input-process-output model (IPO+S) 5 4V’s typology 8 Business process mapping: 9 Decision making levels 10 System levels 10 Role of systems in supporting business processes 11 Pareto analysis 11 Current issues in the organization 13 Conclusion 16 Recommendations 16 Bibliography 17 Executive summary Atokowa Advantage is an Australian company, located in Sydney, supplying stationery to individuals, businesses and organisations. The company also does customized printing to clients using a variety of document formats. This report is made out of an intensive system analysis process that provides vital recommendations which the management, with the leadership of the CEO, will adopt to improve service provision in Atokowa. It gives information obtained through models that analyses how systems and operations are currently run including: the input-process-output, 4V’s typology, Business process mapping, decision making hierarchy, pareto analysis, system levels and the role of systems to support business processes models. It uses tools of soft systems methodology to investigate the current operational issues in Atokowa; this analysis also summarizes the main business requirements based on the identified needs. It also provides explanations on how the organization can improve its quality management processes, proficiency is systems and operations and business improvement techniques which improve efficiency in management. Lastly, it identifies human resource components and management issues that arise when implementing quality management, business improvement and recommendations that promote excellence. Introduction Stationery business in Australia is a rapidly growing industry because of increasing consumer demand for papers and other specialty documents. However, stiff competition is also witnessed because many people are starting this line to eat a piece of this chunk. In addition, increasing consumer needs and changing business environment are also making these businesses re-invent their models to remain competitive in this market. Figure 1: Location of Atokowa's outlets in Australia The report analyses systems and operations management practices at Atokowa and makes concrete recommendations to improve business environment to maintain its positive growth trajectory. I urge the management to put the recommendations in this report into action to make the company stay ahead of the rest in business innovation and efficient use of available resources. Analysis of current systems and operations In order to evaluate if Atokowa’s is economizing the use of assigned resources, different tools are employed to comprehensively address these issues in this report. Operations management is designing, controlling and re-modeling the production process to ensure that products are made at the minimal cost, but at the same meets client requirements (Jacobs & Chase, 2011, p. 151)1. The following are the models of analysis used to investigate Atokowa: The input-process-output model (IPO+S) Organizations periodically analyses their internal systems to see if there are problems causing inefficiencies when performing business tasks. This model provides a representation of factors that make up business process at Atokowa, gives the particulars of the processes and defines the input and by-products resulting from the stated process. Figure 2: Input-process-output model for Atokowa Company Input At the purchasing level, they source their products from different suppliers since the company has a diverse product range. It is the duty of category managers to identify their suppliers; they also determine the kind of products to purchase at a cost that will ensure the company also gets a reasonable margin after eventual sale of these products. Once the goods are in company stores, the product information and volumes are fed into the Atokowa Stock Information System (ASIS) which tracks the product from then till it is eventually sold to company clients. The management however, has misgivings about the use of the system in handling purchasing operations. The management then analyses their product movement by manually perusing their order requests to note highly circulating products; they then use this outcome to decide on individual quantities purchased from the manufacturers. According to internal evaluation on effectiveness of the ASIS system, Cavendish recommends that Atokowa adopts new technologies to handle stock at all levels, from purchasing to delivery. Inefficiencies of the system results to Atokowa remaining with obsolete goods; this happens when many purchases are made for goods with little market appeal which then remains tied up to other stock in the company stores. Shipments are accompanied by documentation showing legality and nature of the products. Once the goods arrive at the port, it is transported to the company warehouse for eventual processing and dispersal to the retail outlets. Stock management is a problem at the company outlets since the management repeatedly stock orders from the Melbourne warehouse. Quarterly stock takes are conducted to establish the exact quantity of running stock (Mandan, Lowland & Butcher, 2008, p. 39)2. The products are then entered in the company database, Atokowa Stock Information System (ASIS), which is a Microsoft Access database system that supports management of inventory, scanning of goods, computation of the totals and feeding the payment to the list of transactions done in a day. Process The system is supported by a Local Area Network (LAN) which allows for seamless exchange of information among all departments within the stationery chains. Through this, store managers make stock requests to the company warehouse based on market demand. The warehousing department verifies the orders presented to establish if some outlets requested for products they do not need or if some made small or no orders at all, for fast moving stocks. If the requested stock is in the warehouse, the employees at this facility pack the product and send it to the outlets within seven days using commercial transportation companies. Australia being a vast country, the distance between some stores and the warehouse at Melbourne is vast. The management allows these towns (within the localities of Brisbane and Perth) to make big orders in every two weeks to prevent delays and tedious logistical processes. Another problem with this operational system is that it is tough for the store managers to effectively set the reorder levels and amount of stock needed with ever changing business environment. Output The ASIS deducts the number of goods sold through the tills from the available stock numbers thereby giving information on the amount of available stock at the end of a trading day. Daily reorder report is produced that gives the actual details of stock in hand. This report establishes if a product has reached its reorder level as set on the system by the management; this is the set minimum threshold that a specific product can reach to be reordered. This ensures that the outlets add on to their stock according to the amount of sales moved by the same product. 4V’s typology This is conducted to help us understand Atokowa’s capacity in terms of type and volume of products moved over a specified period of time. 4V’s analysis will: note how many products the system operation support, quantify the changes in market demand, establish the exact number of products and services conducted by the analyzed operation and investigate system process at this company. Volume By volumes, the company sells many products on a daily basis because of its wide client base. It receives container consignments from Shanghai Port which acts as a consolidation point for goods received from suppliers in China and India. The company has a team that is in charge of making bulk purchases from the overseas manufacturers. Orders are sent to the stores on a weekly basis and this is testimony to high rate stock movement. Variety The Company has a high variety dimension as it deals in products that are physically and functionally diverse in nature. Because of this, the operational procedure in the company is complex and arriving at common ground on a number of issues is difficult. It manages a complex inventory system that handles a wide product range and therefore it is sometimes difficult to note high moving stocks against low moving ones when processing orders. For instance, an organization may buy all printing papers ordered in a store, in one instance. Other clients seeking the same products will then wait for the succeeding week to acquire the same product as order requests are done on a weekly basis. Variation in demand This is the anticipated rise or fall in demand of these stationery products. The business is facing competition from other industry players who are adopting new methods of managing their internal system. This poses a threat to Atokowa’s market dominance and the company needs to improve service delivery to appeal better to its clients. Visibility Atokowa requests its customers to make feedback statements noting how well or otherwise they are served by the company. Since the company has issues with its inventory processes, it is ideal for the company to use modern means of communication to handle customer complaints about late deliveries and can also use this application to track the actual location of their products using GPS tracking. Business process mapping: This process will outline what Atokowa exactly does, the employees responsible for these assigned tasks and organizational expectations on standards of system performance. It also determines ways in which success of the company’s business process can be measured. Atokowa is a business engaged in selling stationery and differentiated office equipment to individuals, businesses and organizations. The clients either come to their stores or orders for these products when making purchases. Decision making levels The company is managed by a clear decision making framework that splits decision making across the organization hierarchies. Management control This is the board that makes long term plans for Atokowa which shapes long term growth. The board has Jonathan Atokowa at the top managerial level supported by Paul Fairclough who is in charge of overall company operations across all the branches. Knowledge based level These are the employees in charge of specialized functions at the stores; they are sent to implement various system changes initiated by the company. In Atokowa, these employees include employees in charge of IT department headed by Operational level Makes short term decisions in the outlets when faced with a system problem. An outlet may have display problems where the customers find it difficult locating products at the isles; the store manager then acts by directing the staff to rearrange these products in the most visible way to improve customer experience at the stationery shop. System levels The system levels should be in three; the initiation level where goods are entered into the system, authentication level that involves verification of the data so entered and the authorization level where any good out of the system are approved. The management level will be in charge of overseeing all the operations at each of the three levels to ensure smooth flow of work (Boca, Grassley & Hacky, 2008, p. 81)3. Role of systems in supporting business processes It allows the company bar code their products and office equipment for easy processing of transactions with the customer at the points of sale. This system also supports scanning of goods, computation of the totals and feeds the payment to the list of transactions done in a day. Systems provide outputs at different levels that help companies make short term management decisions for instance, determining the amount of goods to be reordered at the store. This is possible because the system deducts sold goods from the overall stock numbers and alerts the store manager when these numbers fall to the minimum threshold. Pareto analysis This analysis will analyse all system and operational problems in Atokowa’s system and list them in order of priority to ensure only the most pressing needs are addressed. Item Problem Cause Score 1 Rigidity of the ASIS which cannot allow for monthly payment via formalised invoice procedure. Inappropriate system 23 2 The ASIS cannot be used to compute quantity discounts. Inappropriate system 9 3 Manual, paper based business documentation and customer feedback mechanism Inappropriate system 14 4 Complex stock management system (setting reorder levels) Lack of proper training 17 Figure 3: Pareto analysis problems score table 1. Lack of proper training (item 4) – 17 complaints. 2. Inappropriate system (items 1, 2 and 3) – 46 complaints The table above shows the problems with the system currently used in the organization with their respective causes. The scores in the last column is an indication of the number of system users who had issues with specific functionalities. This then generates a graph that denotes the most prevalent issue which affects majority of the workforce. This graphically illustrates the list of priorities no system rectification. Figure 4: Pareto analysis graph Current issues in the organization I conduct this analysis as a component of Soft Systems Methodology (SSM) to identifying these three elements: what Atokowa is trying to achieve with its business operations plan, the problem that hinder smooth implementation of these programs. It also identifies how the proposed solutions are going to alter business process and employees tasked with its implementation. Clients The system changes will directly affect this important stakeholder since it will change the way they communicate with the management and employees in enhancing service delivery. These employees cannot track their orders because Atokowa is not providing a communication platform that enables real time checks. The proposal to provide a calling and email services coupled with social networking will help create a forum linking the company with its clients. The clients can then forward their complaints directly without using written clarifications which take a long time to respond to. Both the clients and the company will benefit as this will create efficiency that enhances organizational image and service delivery (Check land & Pouter, 2006, p. 19)4. Actors These are Atokowa employees involved actual system changes implementation; the development team in the Information Technology department is tasked with the responsibility of installing the software to all points of sale and in relevant departments. All other employees including the tellers use the system to process customer transactions. Transformation Receiving goods The changes in this system will enhance service delivery in the purchasing, sales and storage departments in Atokowa. It will increase efficient management of stock at the warehouse where the goods are received for eventual dispatch to the company outlets. Additionally, the warehouse manager together with the staff do verification that the goods that the delivery invoiced are the ones it delivered. The storage department then enters this imported stationery into the information system. The Finance Department is in charge of this operation which also ensures the goods entering the store are in good condition. Thereafter, the inventory controller at the finance department counter-checks each booking with related invoice to verify compliance with the invoice number, value added tax (VAT) computations, invoice amount, invoice quantity and reasonability of the prices. Physical Stock Units Quantification Stock counts are to be done on a monthly basis. The company staffs, led by Paul Fairclough and Heads of Departments are involved in this exercise. The quantity of inventory in the information system is updated by this stock counts. Variations are noted and the store managers account for the damaged or lost items as per the stock take results. Monthly inventory to cost of sales reconciliation Upon requisition of items from the warehouse, the outlet managers take control and book the supplies in their store records. This is an automated process such that the moment an item is booked the finance department gets a notification. It then verifies that the right procedure has been followed by counter-checking the requisition form. The department then interfaces the inventory management system to the departmental information system and verifies that all costs that should be going to cost of sales are interfaced there and those related to operating expenses are interfaced there. Slow moving inventory report On a monthly basis, the store management will receive reports from this system that shows stock movements in the individual stores. This data shapes medium term strategies on the stocks to be ordered according to the sales volumes. The procurement department at the warehouse in Melbourne therefore orders in appropriate amounts. Worldview The proposed system is going to change the way stock is managed in the company; from the receiving department in the warehouse to the selling level at the point of sale. This creates internal efficiencies which promotes accountability and transparency of company operations through an all inclusive system. Steady flow of information to the clients will also create good company image which increases sales volumes. Owner The head of this process is the entire management, with the actual implementation task given to the IT department under the guidance of Paul Fairclough who is in charge of company operations at the branches. Environmental hindrance Time is a constraint since this system requires immediate approval and adoption since the problems faced by the company is real and already affecting their operations. The company has internal policies guiding employee actions and responsibilities. Due to this protection, the employees may neglect the system thinking that it is not in line with their terms of references. Proper employee empowerment is conducted to enable them have the capacity to handle this new system. Their input is also taken into consideration when designing the system to make it customized to company culture (Slack, 2011, p. 93)5. Conclusion The proposed system has sufficient checks and balances to provide support to existing business processes and inventory management at Atokowa. With its implementation, coordination of activities among the purchasing, storage and individual stores will be easier since it provides an all inclusive interaction which links all processing functions. Identification of slow moving goods will ensure that the storage facilities are used optimally; since they will act as temporary stop over points for the procured equipments. This will also ensure that the company only orders for goods they mostly need and services required in response to market demand. Recommendations System upgrade The system is going to reduce paperwork in the organization by creating an environment where product information is processed directly from the time it enters company premises till its eventual sale to the clients. This enables the store managers better manage their finances and payouts to the warehouse. It has a functionality that allows for computation of trade and quantity discounts which act as incentives to the customers that eventually accelerates sales. Finally, the periodic reports output in the system will help in decision making since the managers track product availability against demand. Staff training This is conducted since Atokowa employees are the primary clients to this system; they are the system consumers who will ensure that it meets organizational objectives. In the light of customers’ complaint that the system is cumbersome because of much paperwork involved when handling complaints, Atokowa should ensure that the employees improve on their client handling skills to present a good public image. Bibliography Jacobs, F. R., & Chase, R. B. (20102011). Operations and supply chain management (Thirteenth ed.). New York: McGraw-Hill Irwin. Bocij, P., Greasley, A., & Hickie, S. (2008). Business information systems: technology, development and management (4th ed.). Harlow, England: FT Prentice Hall. Slack, N. (2011). Essentials of Operations Management with MyOMLab. Harlow: Pearson Education Ltd.. Checkland, P., & Poulter, J. (2006). Learning for action: a short definitive account of soft systems methodology and its use for practitioners, teachers, and students. Chichester: J. Wiley. Mangan, J., Lalwani, C., & Butcher, T. (2008). Global logistics and supply chain management. Chichester, England: John Wiley & Sons. Read More