Effective Strategy for Increasing Customer Satisfaction - Essay Example

? Strategic Information Management [Insert Your Full Here] [Insert Your s Here] April Table of Contents Introduction 3 2 Optical Filters and Business Model 3 2.1 Business Model and Strategic View 4 2.2 Business Environment 5 2.3 Porter’s Five Forces Model 6 3 The Business Issue 6 3.1 A Review on the Current Strategic Needs 6 3.2 Information System at OFL 7 3.3 A Way Forward—Upgrading the IS at OFL 9 4 Upgrading the Synopsis software to CRM software 9 4.1 Strategic Objective for the CRM 10 4.2 CRM and MRP towards the MIS 10 4.2.1 CRM System 11 4.2.2 MRP 12 4.3 The New Information System and its Benefit 12 4.4 Gauging Performance against Objectives 13 5 The Potential Implication on OFL’s Competitive Advantage 14 5.1 Sales and Marketing Team 14 5.2 The Business Intelligence IS 14 6 Conclusion 15 7 References 16 Appendix A 18 Appendix B 19 Appendix C 20 Strategic Information Management 1 Introduction Organisation relies on accurate information to execute strategies along set objectives. Thus, information that goes into the system must be analysed at various levels, according to the task organisation requirements. Therefore, the discussion about the best information system (IS) to be included is critical in order to support the decision-making process (Lucey, 1997). This case study takes an in-depth look at Optical Filters Ltd. (OFL), a company that is attempting to improve its sales order process to better satisfy its customers. In an effort to improve its processes and increase market share, the company has decided to revisit their business objectives (i.e. the way they make decisions), to find new ways of communicating the important information in real-time. 2 Optical Filters and Business Model OFL is a world leader in the design and manufacture of EMI-shielded and contrast-enhancement windows. The company was established in 1988 in the United Kingdom (UK), and has remained a family-owned and operated business. Its proficiency lies in optical expertise and the dry film lamination of plastic and glass filters for displays and enclosures. OFL is based out of Thame, Oxfordshire and is registered to ISO9001:2000 for the design and manufacture of products to enhance displays. The company currently supplies its products to the aerospace, defence, and security industries. OFL employs approximately 40 employees in its UK facilities with a turnover of close to ?6 million per year (Optical Filters, 2010). 2.1 Business Model and Strategic View OFL has been a major supplier of heated glass to 3M and BAE Systems, which have been the company’s two largest customers. The company is involved in a high-variety, low-volume business (Naylor, 2002). Thus, due to the nature of production, OFL must always use skilful assembly operators and engineers to complete sales orders. There are three major objectives OFL focuses on when servicing its customers: Quality products with competitive price On-time delivery Short lead time Strategically, the business has reported looking forward to increase its market share in both the UK and the United States (US). This goal is the primary reason for establishing effective customer interaction procedures. To make this a reality, the company realizes its image and performance must be changed. OFL must focus on the following two primary objectives of IS development: Improve the information flow across the organisation to create a visibility about sales orders, production capacity and materials management To improve OFL’s reputation, in term of deliveries, quality, and shorter order processing time These objectives are in line with the strategic decision and plans for the next fiscal year. The relationship between the above objectives and the strategy that must be followed in the IS design to support and add value to what they are attempting. 2.2 Business Environment In order for a business to be successful, it is important for the company to always be mindful of the surrounding environment that influences its business. As highlighted by Porter (2003), when a business markets its product, it is essential that the company researches the environment. Appropriate methods include analysing its political, economic, social, technological, legal, and environmental elements. In this discussion, the aspects of technological, social, and economical influences and advancement of economic growth in the UK, has led the country to be one of the strongest economically (World Bank, 2010). More and more companies are entering the market and purchasing power has significantly grown greater among others in the industry (OICF, 2010). Thus, along with the improvement of global economic aspects, the standard of manufacturing has tremendously improved around the world. People are becoming more educated, need for education and skills has increased leading to the boom of business, at least in the aerospace industry, since 2002 (OICF, 2010). Business use of technology in daily operation, management, and decision-making is becoming vital (Tallon, 2007). Using information technology (IT)/IS is becoming one of the main infrastructures in the business management process. Thus, OFL has also developed, positioning itself so as to not be left behind to compete in the industry. IT systems commonly used by companies are websites, blogs, podcasts, Enterprise Resourcing Planning (ERP), Material Resourcing Planning (MRP), customer-relationship management (CRM), and more. These systems are used by companies to promote their products and/or services, and also as marketing (Willcocks, et. al., 1997). 2.3 Porter’s Five Forces Model Analysing the company based on its industry using the Porter’s Five Forces model (Porter, 1985), the competition in the industry is great. OFLs competitors are equally as large and have unique competitive advantage attracting customers to their facilities. The manufacturers do not have a connection to one another within the industry. This is because competition is extremely high as the number of customers is small, so each company is marketing within the same realm, focusing on the same target markets. On the other hand, it is not difficult for new companies to enter the market. Any organisation that has the necessary capital investment and an interest in the business can easily setup a manufacturing facility and begin operation. Thus, the reason competition is so high within the market. 3 The Business Issue As highlighted in the business environment analysis, it is crucial for OFL to be able to compete in the market successfully in order to meet their business objective to gain bigger market share and be the top player. The competition is becoming greater in this industry, thus only those company with an excellent competitive advantage will be able to continue to exist in the market. Hence, to achieve its business strategy to reach out to bigger market share, OFL business strategy need to be aligned with the existing and future activities particularly addressing the technological aspects like enhancing its information system facilities (Burn, 1991). 3.1 A Review on the Current Strategic Needs At present, OFL is facing capacity issue to meet the customers’ demand; however, statistic showed that the company was well below 70% of its full production capacity. Numerous areas were identified as the source of inefficiency that included the sales management process, production, and stock management system. The fundamental issue found was that information was not flowing fast and accurate enough from one area to another causing issues of lack of information and creating inefficiency in sales management order process, stock management and production which results in the loss of at least ?150,000 in monetary value a year. The management identified that they needed a complete management information system (MIS) to: Improve their performance activity Form linkages in value system The information system model provides information of current financial situation, inventory availability and as well as the information of suppliers database for automated ordering system. Since OFL is just an SME, its budget towards the technological infrastructure has never been a priority. However, as the business is growing along with the customer demand has been much more aggressive, the company feels the next strategy is to improve the way the information is disseminated to across the board on a real-time so that the decision-making process becomes faster that will help it their daily production and customer service. 3.2 Information System at OFL Currently, OFL is using small capacity MRP software that is provided by a software company called Synopsis Ltd. The company provides the access to the use of the software and the facility where basically the platform of the software is maintained at the contractor’s side. Basically, the way the system supports on these few areas: Sales order processing Bill of material Accounts Work order creation Inventory Management System (IMS) It is a very basic system that the company is utilizing from the Synopsis software as they had focus on the bigger picture of the information system (IS) usage. For that reason, the system is just operating as an information storage facility as well as an assistant in doing day-to-day tasks in the area mentioned above (Robson, 1997). A performance management consultant did an analysis on OFL when the company engaged him to gauge its business performance in 2008. The report highlighted that the following were the problems contributing to the non-performance of the company in the industry: Late deliveries stood at 42%, which is costing the company almost ?50,000 waste Quality issues stood at 25% with return of products by the customer causing the company almost ?35,000 a year Internal waste due to errors and lack of communications causing production backlog of 32% causing the company almost ?40,000 waste a year Looking at the report and realizing the actual need for the improvement of the business, the board of directors has revisited their business strategy and now has looked at the IS strategy in order to strengthen the customer order and the manufacturing process. Lucey (1997) highlighted that it is important that the strategic aspect on the investment gets the nod of the board of directors or the owners as it is important to ensure to see the implementation for the system is through. 3.3 A Way Forward—Upgrading the IS at OFL The report from the consultant was taken seriously on board by the owners. Hence, the decision was made and it was taken accordingly in order to ensure that this strategy is taken appropriately and fast. Upgrading the system should come along with the clear flow of information. The information needs to cover every area of the operations and it needs to also reach out to the management. Robson (1997) pointed that in the need of a proper IS, one should also be able to put in place the control mechanism in order to overview and ensure it is on track. Earl’s multiple methodology (1989) was one way for the company to identify its future strategy. Earl’s framework provides the best way to analyse and move forward to develop the IS system as described in the model (see appendix A). It is important that the involvement of every member in the organisation in the process of decision-making especially when it comes to the software installation across the department. The process of feedback to the top level as further strategic review can be taken. 4 Upgrading the Synopsis software to CRM software The lack of proper information flow throughout the operational level is causing issues. As such, this need to be addressed as highlighted by Laudon & Laudon (2004) about the type of IS system that is needed. The authors went on pointing out that at this level it covers the sales and marketing, stock, finance, and Human Resource (HR) information that need to be managed; hence, the Transaction Processing System (TPS) is needed. Laudon and Laudon (2004) presented, there are three major type of information that is needed in every level of decision making process. That information type includes the TPS, which caters for the operational levels, MIS that caters the mid-management level and the final one which is catering to the senior management level to make strategic decisions. 4.1 Strategic Objective for the CRM OFL is a small medium industry. As such, the company with a turnover between ?6 million and ?7 million can’t afford to run a comprehensive IS model at its facilities due to the fact that it’s too expensive. However, the decision to improve performance of the business is vital to support the business to move to the next level while trying to make the customer’s happy and find new customers. Customer always come always will be happy if their request and needs are fulfilled. The strategy forward is to have a better system with a lower cost which pushed OFL to opt to the outsourcing strategy as described by Robson (1997). 4.2 CRM and MRP towards the MIS In the case of OFL, the organisation has opted to move forward to use the CRM system provided by one of the major software contractor that has enable the integration of the information at across all the departments to be made available and processed accordingly. The CRM software covers the area of sales and marketing department that includes the IS about the sales, customer information, creating customer communication, and many more. It also will be integrated with the MRP, which will enhance the information at warehouse management productions—capacity and processes and material usage. The integration of both MRP alongside the CRM gives a good combination of holistic information that is enough for the management of the OFL to consider while in the decision making processes (see appendix B). The diagram shows the details of information that will be in the CRM and MRP that would give good information like MIS for the mid- and senior level management to make decisions (Laudon & Laudon, 2004). In doing so, the information flow right from the beginning at the sales order and marketing are well processed and the information till about the sales can be defined by using the CRM system. Thus, the IS that is implemented across the organisation will enable the visibility at stores wide in terms of for the order ahead, stock availability, best-selling items, peak sales hours and commitment to be made on the lead time for the orders. The implementation of the IS enhances the decision-making process across the stores (Lucey, 1997). Along with the immediate level of TPS, the process of decision making rely very heavily at the middle management and senior management level. As such, the need to manage the information obtain with accurate indication such as those of the most sellable products, the best time of the product sales by type and the trend of sales certainly are important information that are required during the decision making process at a higher level. Real time information enables the company makes faster and wise decision for the growth of the business (Lucey, 1997). 4.2.1 CRM System CRM system has been chosen for OFL in order to support its sales team to increase the sales. There are almost three basic categories that can be dealt through CRM which includes sales force automation the covers every area of the sales process, information about the spending in the sales team in their effort to do the sale that is called sale force automation (SFA). Among other details in the CRM is that in has the contact management system that exists to track and record all the sales. The system supports to deliver information of insights on the sales forecasts, product knowledge, and quote generation. On the other hand, the CRM also contributes towards the marketing area for OFL. One more area that is included in the CRM, which would benefit the company, is the customer service and analysis. Hence, it is expected that CRM will support the sales and marketing team completely. 4.2.2 MRP The MRP system must be upgraded at OFL. The system will now cover every area that includes from work order creation to engineering and then production. It supports in terms of getting information about the material management, production and logistic. It should give a clear view with regards to the material management system, production capacity availability and then integrated to the CRM system. 4.3 The New Information System and its Benefit The need for the information undeniably an important facts in order to make the right and accurate decision. Based on the information and the interpretation made, the company will accordingly plan its activities to meet the business objectives set. OFL has a set of objectives in order to achieve the company’s bigger version of being the leader in industry (Optical Filters Ltd., 2010). For that reason, it is important that the company sets up the right MIS in the company to assist the people at all level to make their respective decision to meet the company’s objectives (see appendix B). Aligning the IS towards the business needs is very important. The strategic decision in getting the CRM system that will provide business intelligence information would be a great asset for OFL (Robson, 1997). On the other hand, the synergy between the IS type diagram against the OFL business operation flow. This clearly explains how the strategic move of IS implementation that draws various information and presents them in an added value information. 4.4 Gauging Performance against Objectives Companies need to organize or put together a set of plan to gauge the performance. The Balanced Scorecard model was introduced by Kaplan and Norton (1992). Kaplan and Norton’s Balanced Scorecard focuses on the objectives set and how they can be monitor on the organisation is progressing compared against the set objectives (Kaplan and Norton, 1992). The Balanced Scorecard model is divided to four areas which include operational, customers, finance, and learning and growth. By using the model, the business objectives need to be expressed in one or more of those four columns. Within OFL, it is critical that several objectives within each of the four elements are addressed according to the business strategic plan (see appendix C). 5 The Potential Implication on OFL’s Competitive Advantage The implementation of the new IS in OFL would bring various benefits. The use of the right IS that can enable various important statistics available at any time for the management to review and use in the decision making process achieved amicably amongst the team would focus on goal achievement rather than analysing if the data presentation was correct (Tallon, 2007). Based on Earl’s framework (Earl, 1995) and information about the current business environment, OFL has a number of advantages by implementing the CRM and upgrading its MRP system. 5.1 Sales and Marketing Team There is a great deal of information vital for OFL to have in order to establish the projection and prospect of sales forecast in the future. CRM gives the company information about the trend of the product ordered and the timing analysis for the product manufactured. This information should help this marketing and sales department to have an idea to focus on the sales of the type of the products that are sold the most. Alternatively, this information should guide the OFL to plan their marketing strategy in order to push the slow moving products. Further analysis through CRM can give information on the management of stocks. 5.2 The Business Intelligence IS There is various information that one may have in the system. However, as the business intelligence IS works, one should draw the attention to it. The information would definitely give an impact organisational aspect. It may change the requirement for the operations as described by Lucey (1997). The enhancement of CRM use would also impact the way the company monitors performance. The use of IS would enable for a longer period planning. The use of IS would encourage the company to identify the critical success factor (CSF) which then can be used as part of the marketing tool (Kotler, 2003). The identification of CSF will definitely increase the sales and revenue for the company as can be used as a pulling factor and something to talk about OFL. 6 Conclusion IS has always been a crucial part of any organisation. The implementation of IS throughout the OFL business system greatly helps with integration. The details of business activities turned into useful accounts and numbers would enable the company to monitor its full performance. Indicator and signs of customer purchasing trends would be very useful guide when the management of OFL work on their yearly projection. In essence, the IS implementation would add value to the decision making process for OFL and the management should use the information obtained wisely to plan business activities to achieve its business goals. 7 References Appendix A Appendix B Appendix C Read More