Capability Evaluation
Before the hiring of Vice President of Information Systems Jim Wood in 1992, Springs was severely lacking a clear IT vision and leadership. By Focusing on Information Technologies and utilizing Wood’s expanse knowledge of project management methodology and ability to develop and hire skilled technicians, Springs would improve manufacturing flexibility and efficiency and reduce cycle time considerably. Wood’s directed Springs’ migration from current main-frame systems into advanced microprocessor technology to enable direct access of vital information through employee’s desktop terminals. As their working environment expanded, Springs’ manufacturing systems were also upgraded to support high volume order fulfillment transactions. With the guidance of Woods, Springs appears to be headed in the right direction (McFarlan, p. 5, 1997).
The introduction of new technology into existing working environments carries significant benefits in addition to many technical issues. Tying all of Springs’ facilities into one unified area where workgroups can share information and computer services creates many of these problems. These difficulties can range from the interfacing of different software, to networking and stability issues. At their current position, Springs’ technicians would have to support over 40 different software configurations and this ultimately wastes valuable resources (McFarlan, p. 6, 1997).
According to Wood’s…“A unified, networked enterprise would enable organizational units to work together and with business partners…However, if people are using different software packages, they can’t share documents and collaborate their efforts which ultimately impacts productivity, cycle time and customer service (McFarlan, p. 6, 1997).” As Springs invested heavily into installing and rolling-out a company-wide desktop pilot program with the installation of 200 PCs, their main priority was to “bring all of Springs’ divisions into a corporate suite of applications within an enterprise server architecture, from which a Web-enabled architecture could emerge (McFarlan, p. 6, 1997).”
While the company developed a project management model in which partnerships between users and technicians could be formed, the single most significant dilemma between the integration of the two was the ‘evolution versus revolution’ problem. Revolutionizing their current capabilities faster than the human organization could adjust severely hindered progress. Standardizing the utilization of project management standards would be key, and once their long-range Information System (IS) plan was implemented, developing the ability to implement the plan required Wood’s to establish a new IS management team, upgrade the skills of current employees, and bring in additional support form outside sources. A survey conducted in 1997 revealed that most employees suffered from a lack of adequate training, and the recruitment and retention of IT professionals capable enough to implement Springs’ evolving strategic plan would consistently plague the organization (McFarlan, p. 6, 1997).
Prior to the arrival of Wood into the organization, significant investments into new technologies were well underway. Although many of their systems still had to be revamped, one system would prove too costly to replace and the benefits afforded by it were adequate enough to match organizational demand. The PACER system concerns Material Resources Planning (MRP), and by providing material and capacity visibility, the system improved manufacturing’s planning and scheduling capabilities. Once the PACER system was online and running effectively, other programs could then “encapsulate” it (McFarlan, p. 7, 1997).
Springs’ order management system (OMS) was one of additional systems that could be run simultaneously with the PACER system. The system creates new strategic alliances with retailers, and encompasses 16 distinct applications ranging from order receipt, pricing, customer data bases, and product shipments. The system provides the company with the ability to process and track orders with pinpoint accuracy and allows faster customer responses, acknowledge orders, determines the inventory and production times, and lastly permit Springs to commit to prompt delivery dates. “With OMS to service customers and the manufacturing division’s PACER directly interfaced, Springs was now able to electronically tie order fulfillment directly with factory planning and scheduling”, and would ensure that Springs and their progress would remain on track (McFarlan, p. 7, 1997).
Springs’ Information Engine was another element created to support their existing infrastructure. The data warehouse provided consolidated sales and inventory data to support management decisions, and the PC investment could allow easy-to-use graphical user interfaces to company data. A subsequent real-time online human resource system unveiled by IT director of Financial and Human Resources Carl Hicks lets HR personnel access accurate, consolidated human resource information. He also implemented a “consistent technical infrastructure across financial systems which resulted in improved efficiency in payroll and other administrative functions, error-free month-end closings, compilation of the year-end statements and better customer support (McFarlan, pp. 7-8, 1997).”
As Springs began to realize the benefits associated from the new systems, one system still proved to be difficult and costly. However, once implemented, the product planning and scheduling system for the finishing plant finally provided the benefits Springs expected from their investment in it. Unfortunately, Springs wasn’t in the clear just yet. One problem that remained was to get their new and existing systems Y2K ready to tackle the new millennium. 30 consultants and collaborators working around the clock would ensure their systems as well as their suppliers remained Year 2000 compliant (McFarlan, p. 9, 1997).
Now that all aspects of the organization have been integrated across the enterprise, Springs can now leap forward to implementing ‘electronic enablement technologies’. The long-term implications of the Internet, Intranet and Extranet beyond marketing and sales would be paramount to improvements in productivity and service by sharing data, standards and procedures across the board. Customers can access vital systems and databases that facilitate the use of value-added hook ups, and allow Springs to remain in proactive mode as opposed to a responding mode (McFarlan, p. 10, 1997).
Springs’ recent investments in the technologies to reposition themselves from the “support” to the “strategic” quadrant of the IT grid have so far been successful. As they prepare to move into e-commerce as their primary business means, the company is still going to have to move beyond their current customer offerings and direct additional investments in new systems, equipment and proactive marketing capabilities. Their existing Intra, Extra and Internets are going to be primary areas of focus in the creation of value added e-business strategies primarily directed towards Springs customers and all aspects of their business operations.
4 Pillars of Net-Readiness
The framework encompassed into the “4 Pillars” includes leadership, governance, organizational competency and technology. The evaluation of Springs will be based on these factors. Springs and the people running it have clearly brought the company into a position where they are capable enough to support e-commence and the many facets associated with it. Bowles, Wood and Hicks have all completed their jobs both efficiently and effectively, however, new leadership may be necessary to bring them into the future. The IT investments made by the leaders of the organization are sure to have an effect on the governance of Springs. As their competitors develop new technologies, Springs is going to look for news ways to keep them on top of their respective market. Their name recognition and dominance of the market in the past are sure to be significant factors to their competitiveness.
The competency of the organization from where they stand as of now is consistent with the technology available at the time. The use of IT in all facets of their corporation is sure to keep them capable of meeting the demand of both their customers and competitors. Lastly, as advancements in technology improve over time, so must the organizations investments into them. New and innovative technology will continually improve business operations be fueled by all companies demands to remain competitive.
E-Business Design
Electronic Business or e-business is defined as “The use of Internet and digital technologies to execute all business processes in the enterprise.” The driving force behind the use of the internet and e-business itself is e-commerce. The definition of e-business “includes e-commerce as well as processes for the internal management of the firm and for coordination with suppliers and other business partners (Laudon, p.25, 2004).” To facilitate the use of digital technologies into Springs current platform, and essentially create the digital firm, they must be willing to redefine their current business model, reinvent their processes, change their corporate culture, and create closer relationships with customers and suppliers (Laudon, p.25, 2004).
The e-business design that will be chosen to bring Springs into the technological revolution will be the development and implementation of an Enterprise System (ES) with a concentration in the area of Supply Chain Management (SCM). An ES “provides a technology platform where organizations can integrate and coordinate their major internal business processes. They address the problem of organizational inefficiencies created by isolated islands of information, business processes, and technology. ES integrates key processes (sales, production, and logistics) of an entire firm into a single software system that allows information to flow seamlessly throughout the organization (Laudon, p.52-3, 2004).”
The integration of IT into all of business activities can have a significant impact on the efficiency of a business and its ability to compete with competitors. Incorporating discrete business processes in sales, production, finance, and logistics, the entire organization can respond more efficiently to customers request for products or information, forecast new products, and build and deliver them as demand requires. This in itself eliminates the need for warehousing and the overhead costs with managing them. Although this requires extensive amounts of investment in both time and capitol, the benefits reaped will off-set the cost (Laudon, p.55, 2004).
The second area of concentration in which Springs should direct their efforts, is into the creation of a SCM system. A supply chain is and integrated value chain, which is a connected series of organizational resources and activities involved in the creation and delivery of value, in both the form of finished products and services to the end customer. “The network facilitates distribution options that perform the function of procurement of materials, transformation of materials into intermediate and finished products, and the distribution of these finished products to the consumers.” From where they stand as of now, Springs could implement an SCM program based of their existing intra and extranets that would produce results today in the form of reduced costs and increased profits and efficiency, create the environment for successful change and deliver long term strategic advantage (Martin, p. 15-21, 2000).
E-Business Blueprint
The E-Business Blueprint is both a product and as well as on-going process. Unfortunately for those at Springs, there is no such thing as a typical supply chain management plan. Before tackling such a task, it is important to first consider many of the variables unique to their industry and their characteristics of the company itself. Management itself will be forced to take an end- to-end view of the supply chain from suppliers, manufacturing, order procurement and eventually order fulfillment. Examining the supply chain in terms of products and services and the challenges associated with competitiveness are paramount. It is here where they will have to decide where they wish to differentiate themselves from the competitors by extracting value out of the supply chain by bringing products and services to market faster at the lowest possible cost.
The first part in the creation, facilitation and execution of Springs’ e-business blueprint requires them to first develop a strategic plan. Critical questions to be answered first would be identifying critical customers (Wal-Mart, Target), where those customers are, where their customers are, and where are in the process are they most important? Next they have to examine other factors and determine final customers needs (volume, performance, demand patterns) product and service development, demand planning, information sharing, cost information for both development and reduction, performance target setting and timing milestones (Martin, p. 66, 2000).
Developing a clear and articulate vision of what Springs will look like in the system is the first goal once key aspects of the business have been identified. In the next phase, one must identify the step and processes existing at each level of the supply chain. Here, Springs can eliminate excess time and areas of overlap in their vision. Following the identification of processes, one must also identify potential issue area. Once, completed defining how the supply chain processes work together come next (Martin, p. 97, 2000).
In the facilitation stage of the e-business blueprint, Springs must identify those who they will collaborate with in the execution of this vision. The first process in this stage is the segmentation of customers most likely to join in the creation of the value chain. After completion of this stage, Springs must further segment their customer based upon their distinct set of needs, and even segment suppliers accordingly. Next Springs must match customer and suppliers into the proposed supply chain, which is immediately followed by both defining the potential benefits and making the proposed selection of the integrated supply chain. Consideration of these factors will also include the design for operations efficiency, basic standardizations, achievement of performance standards etc. Once completed, Springs can tailor their logistics network for their differentiation strategy and look for flexibility issues that may hinder future performance (Martin, p. 99-103, 2000).
The last stage in the e-business blueprint is the execution stage. Once an action plan had been proposed and approved by management, Springs can begin on formalizing their value chain. At this point, Springs develops and implements a test pilot program where they focus on establishing information systems and negotiating quality improvement for processes, material and information flow, price, lead time, and other critical values. After the program us up and running, a full-scale, broad-based implementation plan goes in place. Although the chain is set-up and running, management must continually monitor and evaluate the company based on continuous performance and improvement (Martin, p. 107, 2000).
E-Business Implementation Plan
The goal of a blueprint is to provide a balance between day-to-day operations and long-term strategic decision-making. The improvements in Springs IT infrastructure has enabled them positioned themselves to fully embrace the many facets associated with-commerce. By strategic aligning their company to meet the needs, wants and demand of their customers, Springs has ensured they will remain competitive for some time to come. The visions of those leading Springs in to the future of business have performed adequately enough to prepare for the next wave of business enterprise. However, as E-business matures and becomes a core foundation of corporations, it demands more disciplined management, and thus should be an area of focus with Springs. As for competency, the technology Springs has invested heavily in have brought them to the place where they are now, but as improvements in systems hardware and software transpire, it is the responsibility of Springs to continually adopt and implement these changes. After years of hard work, preparation and planning, Springs is finally not only ready to tackle e-commerce, but they are ready tackle the future as well.
References
Laudon, J.P, Laudon, K.C. (2004). Management Information Systems: Managing the Digital
Firm (8th ed.). Delhi, India: Pearson Education
Martin, J., Roth, R. (2000). Suply Chain Management Development Strategy: What a company
needs to know to develop World Class Supply Chain Management. Moving from concept to reality. Reno, Nevada: ECRU Technologies Inc.
McFarlan, W.F., (1997). . (Report No. 9-398-091). Boston, Massachusettes:
President and Fellows of Harvard College, Harvard Business School Publishing.
