Systems and Operations Management - Atokowa Advantage Company - Assignment Example

? Executive Summary The challenges Atokowa are facing is the birth pains of an expanding business. In an expanding business the old processes, attitudes and corporate culture should be revisited. The old ways were good enough to carry Atokowa up to this point. However, in order for Atokowa to raise up to the challenge of a much more sophisticated clientele, a more demanding market and a more competitive industry a new and better processes, attitude and corporate culture should be developed. Modernizing the infrastructure to support the demand of the new landscape is another must that should be taken into serious consideration. The solution provided by the combination of a supply chain management system and enterprise resource planning solution will provide the framework that will support Atokowa in terms of its demand for data, information and knowledge. Corporate ambidexterity will enable Atokowa to respond to the current challenges and the demands of the future while protecting its bottom line. The same is true for transforming Atokowa into a learning organization. The recommended solutions not only will support an ambidextrous organization it will also provide the necessary infrastructure to a learning organization. The initiatives proposed by George Hargreaves and Hayley Atokowa can be considered the first step towards the right direction in expanding the market and widening the demography of Atokowa. The proposed implementation and integration of an enterprise resource planning solution and supply chain management system will support the initiatives. Creating an ambidextrous and learning organization will create the necessary corporate culture of excellence geared towards continuous improvements. Table of Contents Executive Summary 2 Table of Contents 3 Background of the Case 4 Business Analysis 4 Issues 5 Pricing Strategy 5 Operating Issues of ASIS 6 Customer Service Operations 6 Custom Print 6 Warehousing 7 Atokowa Supply and Purchasing: 7 Atokowa Brands: 7 Expanding Presence in the Internet 8 Information Technology 8 Conclusion 8 Recommendations 10 Pricing Strategy 10 Operating Issues of ASIS 10 Customer Service Operations 11 Custom Print 11 Warehousing Supply and Purchasing 11 Atokawa Brands 12 Internet Initiatives 12 Atokawa as a Learning and Ambidextrous Organization 13 Change Management 14 Bibliography 15 Background of the Case Atokowa is an Australian company providing office supplies and stationary products catering to business and individual clientele. Founded in 1964 the company now boasts of key presence all over Australia providing one stop shops for stationary and office supplies. When the company was turned over to Jonathan Atokowa, he expanded the business to include several key executives covering specific areas of operation within the company. Jonathan also focused on technology after realizing that this will be the future of the industry. Business Analysis Atokowa business process can best be described as having three revenue streams. The service revenue stream is provided by the Custom Print, the product label stream and the retail outlet revenue stream. Custom Print provide a production chain process that starts with an order from a client, actual production work from Atokowa and then delivery of the manufactured goods. Atokowa labels are conferred to generic products for maximum profit. However, the choice of product is random and there are no real criteria or structure in the choice of product and the quality of product that will be sold under the Atokowa label. A real effort to develop an Atokowa brand and have it Toll Manufactured to ensure quality and consistency should be planned for the future (Henry J. Johansson, 1993). Atokowa retail process includes consignment and actual purchase of items from vendors then selling it at a slightly higher price. Agreements with label owners and manufacturers and distributors do not include actual supply chain plan agreement, purchases and supply are determined by orders from Atokowa for delivery to the warehouse then eventual distribution of goods to Atokowa outlets (Gattorna & Walters, 1996). The Decision Making Hierarchy is individualistic with the president and Chief Executive Officer providing the direction and the directors providing ways of how to implement the direction. There is operational and fiscal autonomy as far as each director is concerned when it comes to decision making. However, there should be an effort to restructure the authorization matrix for the decision making hierarchy to ensure that each director is accountable to a certain amount only (Ramachandran, 2004). The current set of information technology systems is independent from each other. Integration of each system used in every major business process should be integrated and there is interoperability when it comes to data and functionality. Reports should also be enhanced including the operational control such as transaction authorization and approval (Tarn, et al., 2002). Issues Atokowa as a business entity is suffering from the weight of its own expansion. The reactionary nature of its answers to problems indicates an immature organization that needs lasting to solutions to recurring problems. The following issues that were identified will have its corresponding recommended solutions at the end of this paper. Pricing Strategy Atokowa’s pricing strategy is a direct computation of the item’s acquisition cost plus adjustments based on the perceived operating cost attached to the items. Each store is given the option to add a few dollars or cents to be competitive to the local price of the items plus Goods and Service Tax. The efficacy of the pricing strategy or its profitability has not been explored due to the absence of data that would provide an effective cost accounting strategy. Operating Issues of ASIS ASIS is the Atokowa Stock Information System it does not provide functionality that will delineate individual customers and business customers. Individual customers are the walk-in transient single item purchase customers. Business customers need to be retained and special arrangements like month end billing cannot be accommodated in ASIS. There is a need for level discounting that would give more incentives to customers who order in bulk. Customer Service Operations There is a need to resolve the issues revealed by the survey that Harley conducted. The high incidence of the following “Long waiting time in store”, “Assistant didn’t know how to process my account” and “Invoice on my account was incorrect” are systemic problems associated with a Point of Sale system that should be replaced immediately. There is a need to exert more effort in customer service techniques and handling as indicated by the numbers in the other survey items that are related to attitude calibration among the store personnel. Custom Print Is currently localized in Sydney and Melbourne, there is a great potential market that is currently untapped at the location where the Atokowa stores are located. There should be a mechanism or infrastructure that will support Custom Print services in each of the stores to widen Custom Print’s market base. The issue in this regard is the lack of infrastructure and political will to explore and develop market areas to increase the profit of Atokowa. Warehousing The warehousing system is an island system that is not connected to any other system. The current system is useful and responsive to the need of the warehouse however, its functionality is not sufficient in stacking container vans and tracking its progress from suppliers. The current system also does not interact nor get update by Atokowa’s vendors or label owners. Atokowa Supply and Purchasing: Supply and Purchasing in Atokowa do not consider the best practices to ensure transparency and also predictive purchasing. The supply and purchasing is based on demand and is reactionary. This practices cost Atokowa several opportunities to get the best priced product with high quality. An overhaul of the system is not only needed to respond to the current demands but also to ensure that Atokowa can respond to the changing demands of its clientele. Atokowa Brands: Atokowa have developed its own brand by putting the Atokawa logo to a number of products, however, there is a significant amount of challenges in the quality of suppliers, vendors and manufacturers. Recalls, should not have happened in the first place and should not happen again Atokowa’s lack of mechanism or framework that will screen items in terms of quality. Criteria should be developed to ensure that quality products only be given to items that passed the criteria. Expanding Presence in the Internet One of the issues that Atokawa now face is its initiative of expanding its business to include internet based customers. The initiative is not getting enough support if not being resisted even by its own senior executives. Increasing Atokowa’s internet presence would enable the company to tap market that it has previously neglected. Information Technology Atokawa’s Information System Infrastructure is a set of nonintegrated islands of non-connected systems that function independently from each other. There is no comprehensive and detailed long range plan for Information Technology. IT purchases and use of system is at best reactionary to the challenges presented at the time when they are purchased. Atokawa retail stores each operate their own independent ASIS system. The organization also has Sage Finance and HR and Payroll Systems. Some departments operate a combination of a semi manual to fully manual processes. The information from various operating department makes it hard to accurately and timely process needed information for decision support because they come in different formats. However, the systems that generate cash flow and payroll ensure that Atokawa is compliant to financial and business regulations. Conclusion Atokawa as a company have endured the birth pains associated to new companies however, its current pains are rooted on the fact that its business is maturing and organizationally Atokawa need to grow with its maturing business in terms of culture and business infrastructure. It is apparent that there is a strong desire from each of the individuals in the organization to do what is best to ensure the continued success of Atokawa as a company however, cooperation and open communication has not been established even among the top executives (Osterwalder & Piqneur, 2010). This problem pervades even in the face of problems where pockets of solutions are developed wherein the solutions should have been tackled holistically (Karimi, et al., 2007). To illustrate: There problem encountered in the items bearing the Atokawa brands should have not stopped at recalling the products only. The solution should have included resolving the weakness in the operation or process that allowed the problem to happen in the first place. Atokowa should develop a strategy that will allow itself to learn from its mistakes not by finding out who is at fault but developing solutions to problematic processes that allowed the mishap to happen in the first place. Atokowa, as presented indicates an organization that has the tendency to dwell on the problem rather than develop a lasting solution that would translate to operating policies or procedures that will positively affect the entire organization. Atokowa’s executives have their own domains but when problems are encountered as a company only then will cooperation towards solving the problem is cooperation is realized and visible (Boudreau & Ramstad, 2007). Atokowa’s information technology infrastructure is barely responsive to the demands and requirements of its operation and decision support system. The business direction and goals of Atokowa is in the right place however, the infrastructure and the corporate culture that will carry the entire company in realizing their business targets are not sufficient. Corrective measures to the current challenges can best be met by the succeeding section. Recommendations The following recommendations address the issues that have been identified in this paper. As a caveat the recommendations indicated in this paper do not necessarily resolve all the issues in its entirety but the solutions recommended herein need the invested effort of all the individuals in Atokowa. The effort should include willingness to change the corporate culture and the willingness to invest materially to the tangible solutions provided in this paper (Starbuck, 1992). In general it is recommended that Atokowa implement an Enterprise Resource Planning Solution or ERP for short, integrated with a Supply Chain Management System or SCM for brevity. There is also a need to homogenize the information technology system to ensure that the integrated data can be used by all the processes. Pricing Strategy The combination of an SCM and ERP system will provide the functionality to enable Atokowa to build their pricing strategy to include variables such as cost of shipment, cost of operations and other cost variables in the pricing structure. The pricing structure can also include local variables that would take into consideration the prices of competitors within the locality where the Atokowa stores are located. Further study can also be conducted to determine where the competitors are getting the supply of their products from. Operating Issues of ASIS A new Point of Sale System that is integrated with the recommended implementation of an Enterprise Resource Planning Solution and Supply Chain Management System should be implemented to ensure that predictive and an efficient supply plan can be developed. The Point of Sale System should dictate the demands and scheduling of purchases. The Vendor Management System and Materials Management of both ERP and SCM can manage the costing and bidding of items including the quality criteria of each item (Knolmayer, et al., 2009). Customer Service Operations All the issues that were discovered in the survey conducted by Harley are issues that can be resolved by a responsive point of sale system. The point of sale system can provide an accurate invoicing system that can be used to resolve number three of the concern intimated by Atokowa customer. The Point of Sale system can also provide the proper way of handling, pricing and billing as well as discounting available for every item. The long waiting time could be resolved by a faster check-out counter because of the new automation system. Custom Print Custom Print’s exposure and services should be highlighted in each of the Atokowa store or outlet. Even if the presence or capability is located in Sydney and Melbourne a reduced if not scale that is responsive to the demands from the Atokowa store can be built regionally. Only large volume transaction can be handled by both Sydney and Melbourne and delivered thru the outlet. Warehousing Supply and Purchasing The warehousing system should be updated if not replaced all together by the SCM or ERP’s warehouse management module. One or a combination of both systems would enable Atokowa personnel to resolve the ordering problem as well as the capacity planning for the containers vans being shipped from vendors offshore. The vendor management system would enable Atokowa to order in advance and also provide a supply chain agreement from vendors or label owners (Hoover Jr., et al., 2001). Atokawa Brands Atokowa Brands should be retained because of the higher profit they earn for the company, however, in order for this successful venture to flourish more, criteria that would govern the quality of the products being branded as Atokowa should be developed. Manufacturers, Suppliers and Vendors should also be screened to ensure that only quality products are sold and distributed bearing the Atokowa label. Internet Initiatives The internet initiatives should be explored and studied further along with the following improvements: First; A Supply Chain Management System integrated with an Enterprise Resource Planning solution should be implemented in Atokowa to ensure that a seamless supply plan is developed and established that will be responsive to the intricate demands of the internet market to resolve concern of Anton. The integrated combination of a Supply Chain Management System integrated with an Enterprise Resource Planning Solution would also ensure that prices of every Atokowa products are accurately priced according to the actual costs associated in the procurement and delivery of the products to address the concern of Paul Fairclough. Second; all the island system should be integrated to ensure that data are collected accurately for it to be converted into reliable information that in turn can be effectively converted into usable knowledge. Knowledge developed from a good information technology infrastructure can eventually turn into cutting edge business intelligence items that can be used to enhance the market and industry position of Atokowa. Capitalizing on the internet market’s inherent visibility to wider market demography should be the main driving force in developing the web based marketing strategy. Atokawa as a Learning and Ambidextrous Organization Atokowa should develop a framework that would allow itself to continually develop and mature its processes. The framework should include a quick resolution to encountered problems but also a way to improve the process that would prevent the same problem from happening again. A framework similar to ISO 9001:2008 can be implemented for this purpose (Serrat, 2009). The framework should also not allow mediocrity to permeate in Atokowa, key performance indicator metrics that would ensure that actual operational numbers are reflected should be gathered. Acceptable performance threshold should be developed for each of the identified metrics of the key performance indicators that will be the basis for future adjustments until the operation is near to its optimum efficiency in conjunction with the other processes. ISO 9001:2008 provides for this kind of continues improvement in its operational framework (Cianfrani & West, 2010). Ambidexterity in the organization should also be encouraged to develop that would allow the company to handle new initiatives while at the same time preserving and ensuring that its current competency is not compromised. Ambidexterity fused with developing a learning organization in Atokowa should be supported to grow as a collective corporate culture. A learning organization within the context of an ISO framework would allow the organization to learn from its mistakes capitalizing from the solutions provided to previous mistakes from another part of Atokowa (Serrat, 2009). Ambidexterity and transformation to a learning organization does not happen overnight, teambuilding session to address the immediate problem of communication should be conducted as a first step. Transforming the current policies and procedures to ensure that ambidexterity and learning is not only discussed and used as a by-word but it should be practiced within the organization’s operation as well. The infrastructure should also be built to support the drive to an ambidextrous and learning organization. Change Management The recommendations mentioned above cannot happen overnight attempting to do so might have dire consequences for Atokowa. However, the proper way of implementing the recommendation is thru a tiered or phased implementation strategy that will prepare not only the infrastructure but also the organization as it embraces the changes. Proper management of the changes thru an effective change management strategy can be implemented. The Change Management Strategy should include holding several workshops, trainings and information campaign all throughout the organization as each change is implemented. Changes in the policies and procedures including changes in the key performance indicators of each process should coincide with the timetable of each recommended changes. A change agent that is intimately knowledgeable with all of the organization’s operation should be appointed as the person responsible in affecting the necessary changes and strategies. Bibliography Birkinshaw, J. & Gibson, C., 2004. Building Ambidexterity in an Organization. Boston: MIT Sloan Management Review. Boudreau, J. & Ramstad, P., 2007. Beyond Human Resource: The New Science of Human Capital. Boston: Harvard Business School Publishing Corp. Cianfrani, C. A. & West, J. (. E., 2010. Cracking the Case of ISO 9001:2008 for Service:. Milwaukee: American Society for Quality ISBN 978-0-87389-762-4. Cianfrani, C. A. & West, J. E., 2010. Cracking the Case of ISO9001:2008 for Manufacturing: A simple guide to implementing Quality Managemeint in Manufacturing. Milawukee: American Society for Quality ISBN-13: 978-0873897617. Garvin, D., 2000. Learning in Action:A Guide to Putting the Learning Organization to Work. Boston MA: Harvard Business School Press. Gattorna, J. & Walters, D., 1996. Managing the Supply Chain: A Strategic Perspective. 1st Edition ed. London: Palgrave Macmillan. Henry J. Johansson, P. M. J. P. W. W., 1993. Business Process Reengineering: Breakpoint Strategies for Market Dominance. In: Business Process Reengineering: Breakpoint Strategies for Market Dominance. New York: John Wiley & Sons, p. 209. Hoover Jr., W. E., Eloranta, E., Holmstrom, J. & Hutten, K., 2001. Managing the Demand-Supply Chain. 1st Edition ed. London: Wiley. Karimi, J., Somers, T. M. & Bhattacherjee, A., 2007. The Role of Information Systems Resources in ERP Capability Building and Business Process Outcomes. Journal of Management Information Systems, 24(2), pp. 221-260. Knolmayer, G. F., Mertens, P., Zeier, A. & Dickersbach, J. T., 2009. Supply Chain Management Based on SAP Systems: Architecture and Planning Processes (SAP Excellence). 1st Edition ed. London: Springer. Osterwalder, A. & Piqneur, Y., 2010. Business Model Generation: A Handbook for Visionaries, Game Changers, and Challengers. Hoboken, New Jersey: Wiley and Sons. Ramachandran, R., 2004. Business Process Management: A Balance Between Process Efficiency and Business Agiliity. [Online] Available at: http://www.tcs.com/SiteCollectionDocuments/White%20Papers/Business%20Process%20Management%20A%20Balance%20Between%20Process%20Efficiency%20and%20Business%20Agility.pdf [Accessed 15 December 2010]. Serrat, O., 2009. Building a Learning Organization, Makati: Asian Development Bnk. Starbuck, W., 1992. Learning by Knowledge-intensive Firms. Journal of Management Studies, p. 724. Tarn, M. J., Yen, D. C. & Beaumont, M., 2002. Exploring the rationales for ERP and SCM Integration. Industrial Management & Data Systems, 102(1). Read More