Table of contents.
1.1 About this report.
1.2 Background on the company.
2. Overview of the company and its business operations.
2.1 Organizational structure.
2.2 Company's products.
2.3 Business operations.
3. Analysis of company's problems.
3.1 Management Problem.
3.3 Order processing.
4. Solution to problems.
4.1 Management Plan.
4.2 Costs and Benefits.
4.3 Major Changes in Business Processes.
4.4 Steps Managers Should Take to Handle the Conversion.
4.5 Quality Assurance Measures.
4.6 Identification of major new technology changes.
5. Impact of the changes.
5.1 On the Organization and management.
5.2 On the human resources.
5.3 The risks and benefits of the changes.
1.1 About this report.
In this report you shall find an in depth analysis of the problems that the company Healthlite is experiencing at the moment. After the analysis has been covered there will be an introduction to the steps that the company has to take to solve the problems, after that you shall read the impact of the changes on the company and its business process.
1.2 Background on the company
Healthlite Yogurt Company is an U.S. market leader in the yogurt and other related health products in that industry. Healthlite has corporate headquarters in Danbury, Connecticut and has several production plants in different states in the U.S.A.
Healthlite sales have tripled during the past five years, however new local competitors are challenging the company to take extreme measures to stay in the market, thus changing its operating activities.
2. Overview of the company and its business operations.
2.1 Organizational Structure.
Healthlite has corporate headquarters in Danbury, Connecticut. All production takes place in processing plants that are located in New Jersey, Massachusetts, Tennessee, Illinois, Colorado, Washington, and California.
At the corporate headquarters, Healthlite has a central mainframe computer system that maintains most of the major business databases. Each production plant has a minicomputer system, which is connected to the mainframe, from which it receives customer orders and any other relevant information. Once processed centrally, order data are then fed to the appropriate local processing plant minicomputer.
Healthlite has 20 sales regions, each with 30 sales representatives and a regional sales manager. Healthlite has a 12-person marketing group at corporate headquarters. Each salesperson is able to store and retrieve data for assigned customer accounts using a terminal in the regional office linked to the corporate mainframe. Reports for individual salespeople (printouts of orders, rejection notices, customer account inquiries, etc.) and for sales offices are printed in the regional offices and mailed to them.
However some times the only way to obtain up-to-date sales data is for managers to make telephone calls to subordinates and then piece the information together. The central computer contains only consolidated, company-wide files for customer account data and order and billing data.
2.2 Company's products.
The core products of Healthlite are yogurt and health-related products. Yogurt has a very short shelf life, and it must be moved very quickly.
Because Healthlite has a series of yogurt-based products, such as frozen desserts and low-fat salad dressing, it needs to adjust its share of shelf space in the grocery store to have more shelf space to display its new products.
2.3 Business operations.
The current system requires sales representative to generate customer orders and write hard-copy tickets to place orders manually through the mail or by fax to headquarters. Each ticket lists the amount and kind of product ordered by the customer account. Often, orders are delayed when the fax machines break down.
Approximately 20 workers at corporate headquarters receive the order information and then open, sort, and enter the order tickets from regional office. Those workers handle 500,000 order tickets per week. The complete ordering information is transmitted every evening from the mainframe in corporate headquarters to the minicomputer at each of Healthlites processing sites. The processing centre produces the amount and type of yogurt ordered and then ships the orders. The shipping managers at the processing centres assign the shipments to various transportation carriers to deliver the products to regional receiving warehouses.
Each salesperson is able to store and to retrieve data for assigned customer accounts using the minicomputer system in the regional office. Salespeople need to produce individual reports, including printouts of orders, rejection notices, and customer account inquiries. These reports are printed at the regional offices and then mailed by fax to the marketing group at corporate headquarters.
The sales and marketing data are manually maintained in the regional office while the corporate headquarters only stores the consolidated enterprise-wide files for customer accounts, orders, and billing data in the mainframe system. Because sales and marketing data are maintained manually in the regional office, managers sometimes need to make telephone calls to subordinates and piece the information together to get the up-to-date data, which uses up some time. These types of operations are very stressful towards the managers and very time costly.
The marketing group in the corporate headquarters needs sales and marketing information to do product planning, to make pricing decisions, to complete product advertising and promotional campaigns, and to forecast market potential for the new and existing products.
Needed sales and marketing data, such as sales and advertising expenses, promotional campaigns, and customer shelf space devoted to Healthlite products, are maintained manually at the regional offices.
3. Analysis of company's problems.
These are the problems that the company is facing at the moment.
The order process is too slow and inefficient. Inefficiency comes from writing customer orders manually and from the lack of reliability of the current fax transmissions. Also, duplicate data entries happen in both regional offices and corporate headquarters, which generate more errors and confusion for the people who have to handle the information, which again leads to slow operation.
Accounting discrepancies between the sales and headquarters have reached over $1.5 million.
The company has an old-fashioned information system, which makes it insufficient, and leads to a lack in competitiveness.
3.1 Management problem
The management problem has always been very difficult to solve. Management needs to be aware of the lack or failure of one or more systems in their business.
First of all, the managers might not be aware of the problem and are also not aware of the working floors struggle with the ancient information system. This situation can off course be avoided but constant upgrade is never possible straight away.
Usually an information system is changed when it is really necessary. When the change is being implemented, most probably the most advanced system will be immediately used for the restructuring. Because restructuring is a very tedious and difficult process, this can only be done one in a decade, or even for two decades. Management is responsible for recognising that a change has to be made. Until the bad news of the antique system has reached the management or even headquarters, it might already be quite late. The final step to be taken is, to make a quick decision.
The problem for the main information process will be, that the management will not be able to receive information when it is gathered but maybe a day later. Also information of sales, like in the case of Healthlite, will not be readily available but needs to be collected and assembled by the management. The lack of efficiency and loss of accurate information will slow the business down. In the case of Healthlite, the management could not communicate with their subordinates and data about sales, advertising and outcomes of local promotional campaigns were simply not delivered to the management level. A call or request had to be made to be able to get the demanded information. It is obvious why this system has a tendency of failing.
3.2 Organisational structure
Within a company, it is vital for the everyday business to communicate. May it be for the sales department telling production how many units clients demand, or the sales department is telling the management how many sales have been made in one region. Also vital is a close connection with the management and the accounting department.
In the case of Healthlite, the different departments are not able to communicate, and cannot obtain needed information from each other. The mainframe, which should be the gathering point for all the business information, only gives limited access to the information needed. Because Healthlite has a widespread sales area, the organisation and analysis of those sales is vital. 'Who sells most, who sells the least?', 'Where do we need to increase advertising?', these are the questions that need an immediate answer, backed up by the reasonable information. Without this organisational-wide information system there is a strong tendency of fading control of the management, because it is not able to monitor and guide the departments and sales offices into the right direction.
3.3 Order processing
A very bad side effect of an antique information system is, that Healthlite still uses the paper-based means of information transfer. Healthlite Yogurt Company still uses inquiries, which have been written on paper. This is a very expensive and complicated way of keeping records. For example, every sales representative is obliged to fill out hardcopy tickets to place an order for a client and the data processing for this kind of information transfer makes it very time costly for the company to recognise orders and finally deliver them to the production and distribution centre. As stated in the case, Healthlite was 'choking on paper' one time because a lot of orders came in at once. This means delay and finally loss of customers. To enable a fast and smooth delivery, the system must connect sales people with production and production with distribution centre. This connection, and enabling availability of information, is helpful to make predictions and fast decisions.
The administration system of a firm is the most important and quickest mean of information transfer. It depends on the use of it if the firm really needs to upgrade it. If it is used in a family business, probably using the old way of collecting and retrieving information will be appropriate. But for a multinational company, it is the wisest decision to change the information system as frequent as it is possible.Especially administration, which is the backbone of internal communication, needs to be fast, accurate and easy accessible. Having an old or even antiquated information or administration system is bad for inter-business communications. Like in the case of Healthlite, the information that is needed by the different departments, for example on sales, is stored in the local sales branches, without being reachable for management or production. The negative side of the old information system is that management has no access to the sales figures, and also other information internally. The administration system, used in the right way, can ensure a smooth and quick running of the day-to-day business actions, just by allowing the internal departments to communicate with each other. This way, paper or faxing can be skipped and e-mails, or electronic memos pass through without the delay which paper-post has.
Technology is one aspect with which businesses always have a struggle. Technology is always changing, which makes it difficult to find a benchmark to go from.
Technology is the most important factor to deliver information efficiently. If it is up-to-date and fast, and considering the staff is educated to use it effectively, it is the only way to maintain a healthy business environment. Modern technology enables to link different departments with each other through the intra-net, which is the internal network. That way, not only the departments can communicate, but also share information.
Management, which is always curious about what is happening in those different areas of its business-body, will be able to monitor and delegate at the same time, in a faster and more accurate way.
The technological factor is also connected with how efficiently the old system was used. The systems usually had a useful life and just became obsolete.
But if technology has not been used to its full extend, and is, after a painful restructuring and implementation, bound to be used in the same way, it will have the same effect after a while. The problem won't be gone but just moved to another time. What the system needs to be used for is exhausting all the resources of the available technology.
But besides the human failing to operate the system efficiently, it will give the business the opportunity to process, store and retrieve information faster, cheaper and for a larger interest group within the company worldwide.
For Healthlite the problem was, that there was a system, which sort of helped to collect and store data, but this data was so narrow (customer data), that it actually did not help in any way with improving business.
What the company needed, were the information from the regional sales departments, how the sales figures were, and monthly deviations. Also, at the end of the year, a clear add-up of the accountancy of the sales departments and internal activities enables, to balance expenses and revenues of the different departments accurately.
4. Solutions to the companies' problems.
4.1 Management Plan
An elaborate management plan will have to be developed by Healthlite Yogurt Company and as it would include major changes in the business strategies of the firm and would have to be carried out during a quite extensive timeframe, it is recommendable that they appoint a special team to be responsible for its execution.
The company would first have to identify all the management, technological, and organizational problems facing their business and formulate the adequate solutions for these. The major objectives of the plan will be for Healthlite Yogurt Company to redesign its business practices for sales, marketing, and order processing so that the firm operates more efficiently, is more competitive, and so that internal communication is more effective. The more specific goals of the plan will be to create a more integrated information system, which would allow for orders to be submitted automatically rather than manually, which would link all the departments of the firm, that all information is available to everyone, and would reduce the costs and time of implementing various tasks. The timeframe for the execution of the management plan would probably be not less than three years as the information system should be designed and people should be trained how to use it effectively. Moreover, adopting new business practices and adjusting to them would take a lot of time. Receiving feedback about the new technology, information system, and company strategies after implementing the management plan should also be taken into consideration in the timeline.
4.2 Costs and Benefits
The costs associated with the execution of the plan will be: the expenses incurred for the hardware, software, and installation of the new information system; the fees for the new personnel needed for the maintenance of the network, as well as for the staff that would teach the employees how to use it; the cost of maintaining a web page enabling on-line ordering and the associated costs of advertising and encouraging its use by the customers.
The benefits of implementing the plan will be: reduction of operating costs due to the new digital order processing system; faster distribution of products by avoiding unnecessary delays of orders; improved customer service and satisfaction; more effective communication between regional managers and headquarters; better analytic and monitoring opportunities for management due to the optimized flow of information between departments; increased profitability and competitiveness and better opportunities for sustaining the growth of the company.
4.3 Major Changes in Business Processes
The first step for Healthlite Yogurt Company would be to abolish the practice of placing orders by writing hard-copy tickets. Instead, sales representatives should enter the orders directly into the information system and that data should be accessible by all departments. This would save a lot of time for both the sales representatives and the staff responsible for processing the orders at the headquarters. There would also be less inaccuracies and delays due to the use of information system rather than the use of fax, telephone or mail.
Reports about orders, customers, promotional campaigns, etc. should not be printed at the regional offices and then sent to the headquarters. Salespeople, managers, and the marketing staff could all access this information, which will be published and available on the company business system. Then, there would be no need for managers to call subordinates in order to obtain up-to-date data. This would also improve the communication between headquarters and regional offices, as well as, between sales managers and representatives as information about shelf space, pricing discounts, etc. would be disseminated quickly and effectively.
Healthlite Yogurt Company has to also consider the launching of a web page, which would allow customers to place their orders on-line and the training of staff that would help clients get accustomed to using the web page for ordering.
4.4 Steps Managers Should Take to Handle the Conversion from the Old System to the New One
Establishing a new information system would not directly in itself be beneficial for Healthlite Yogurt Company. It is crucial that organizational behaviour is transformed so that the potential of the new information system could actually be used in an advantageous manner. Thus, managers should try to eradicate any outmoded organizational practices that would prevent the efficient use of the system. They should also try to implement the change very smoothly and through continuous training of the whole staff of the company.
Healthlite Yogurt Company should first ensure that the team formed to implement the change process throughout the firm is comprised of both senior managers and personnel from the IT department. The team has to inform all employees well in advance about the changes that are going to take place in the company and about how and when the training sessions are to be conducted. It has to prepare and distribute user manuals before the change has started, has to continuously supply updated information throughout the process and provide user support after the change has taken place. It should, also, ascertain that all employees take part in the organizational and technological changes of the firm and that they understand and support the implementation of these changes. It might be useful for the company to set up a way in which it could receive feedback from all employees about the new system both during and after its execution. In this way, the team would know if further training is needed, if the conversion process is being handled successfully, and if some improvement of the system and the business processes could be achieved.
4.5 Quality Assurance Measures
Healthlite Yogurt Company's management is a little conservative and although it is wishing to adopt a new system using modern technology, it wants to be sure that this system has already proven to be useful and suitable for such a company. As quality assurance is quite important for Healthlite, it has to hold responsible all employees and departments in the company for ensuring the quality of the new system.
One of the measures they could take is to make the ordering and distribution process more simple by using the new digital order system, which would eliminate task repetitiveness and would reduce the time required for implementing these tasks. They might also inquire clients' views about the planned changes and use these as a guide to improve customer service and products. Furthermore, the company can obtain information about other companies in the same industry that have implemented similar changes so that they have a point of reference to compare the impact of these changes on the business processes.
4.6 Identification of major new technology changes
The points that have been identified in the solution indicate that Healthlite Yogurt Company needs a very sophisticated and accurate system.
Taking reference from the structure of improved information system, the statement is clear that Healthlite is facing an overall reconstruction of its information network. This does not only apply for inside business correspondence, such as transferring information from Regional Sales Offices to the Management, but also from customers to production directly.
Through an information system that enables every department in the business to communicate with each other, the transfer and sharing of this information will increase the speed of business actions as well as tracing trends and overall market analysis.
Split of the Mainframe
By referring to the proposed structure of Healthlite, the business, which used to have a centralised Mainframe from which everyone could retrieve information, will be split into two. The old Mainframe did not give the opportunity to share information between the departments, but only from Headquarters. That way information seldom reached the department it was meant for in time. Especially for the management this factor was very troublesome.
With the improved system, the mainframe is parted into two separate sections. One is for Accounting, Sales, Marketing and Advertising within the company.
The other Mainframe is for Distribution, Production and Inventory within the company.
By parting the workload of the one Mainframe into two, the load is being divided and gives the separate and maybe smaller mainframes the opportunity to structure its processes and increase the speed of work.
This use of divided information can also increase accuracy the information stored. By giving the company these two mainframes, departments that are interested in one or two departments of one mainframe, now can look at specific information from one Mainframe. This new way of directing information and processes should help increase speed and efficiency for all the departments. These departments would not have to change in themselves. They will just have to adapt to the new information system. This means re-training of employees.
Use of faster and better information
As it can be seen from the new Mainframe proposal gives the new system the improvement of communication between the different departments of the business. This does not only count for the major departments like Sales or Production but also for the ones that gather and edit these business information on an hourly bases. The sales region departments with their 30 sales representatives will be very glad to see that they now can correspond with their management directly. But the way the improved communication will not be over the phone or by paper-mail, but by the intra-net, which will make it possible for the sales department to edit the information into it, and the upper-management to retrieve it and make statistics from those up-to-date information.
The technical factor of the new and improved information systems will be a dramatic change from manual to technical and automatic information maintenance.
The system will be latest state-of-the-art data processing systems. For the contact connections, which will transform the old data-delivery systems into new hyper-speed delivery may be wireless Internet, for internal use, intranet. The wireless network will only be used inside the business, so links can be established everywhere. For long distance links, like to customers or factories, a standard-line will be most appropriate. What can be added to this point is, that the standard-line can act as a hot line for ordering new products and stocks. This would eventually enable the supermarkets to use J-I-T (Just in Time) purchases, by using a link between the distributor, namely Healthlite, and its stock control. This way, the supermarket would not even have to contact Healthlite personally, but let the computer do the order.
The security for these kinds of systems will have to be increased. Great databases have been excellent targets for piracy or other crimes. Because of the old paper-based transactions, the chance of crime was quite large, but only from inside the business. And because we do not have enough information about the overall security of data, this point cannot be further explained. But, with the new system, the chance of getting influenced by the outside, hackers and other individuals or groups, is much higher than before. The protection from damage form outside has a much greater influence than before. The use of encrypted code words and identification numbers will become standard in the Healthlite business actions. Chip-cards for entering the building, or for using confidential files have to be number one commitment of the business restructuring.
5. Impact of the changes
When the changes take effect in the organisation there are a number of factors that must be taken into account. First of all It is important to keep the employees of the company, involved in order to ensure the acceptance throughout the design and implementation of the new system. In the company's business, senior management has voiced the aim to reduce the number of employees, and thus management must address morale issues when they are making these changes. Management will therefore accomplish this by having open communication and by establishing support groups that will aid employees in the turnover process. This is very important to keep up the moral of the employees and to keep them happy.
Senior management acceptance and understanding is another point to take into consideration, as well as strong management leadership, are vital to a successful implementation of the new system and business process. If management does not support the process or if management fails to use the software as well as the hard ware successfully, they are not able to increase positive attitudes and competence, as well as better turn over and better management of their responsibility centres.
The business personnel structure will change as well. The company would have to hire more technologically advanced employees to take a the role in managing the information system. The current organization is highly un centralized across many locations throughout the United States, this could lead to problems in the long run of the implementation of the new system and in the design of new business processes. There for, it will be very important to make sure that all of the company's processing plants are involved throughout the entire systems development process.
Healthlite Yogurt Company is already the leader in the yogurt and related health products market and is further increasing its sales and production. Thus, the firm has a very promising prospective for expanding its business, gaining more market shares, and sustaining its excellent image of providing high quality products. At present, Healthlite does not take full advantage of the technology available nowadays. However, the emergence of local competitors, the increased use of information technology, and the rapid growth of the company require that Healthlite implements an information system connecting all the departments of the firm.
Healthlite needs to eradicate the practice of using hard-copy tickets for placing the orders and of using mail, telephone, and fax for reporting purposes. These processes are inefficient and result in much task redundancy, delays, and misplacements of orders. Thus, employees would have to get accustomed to fully utilizing the opportunities of the new information system by placing orders electronically and by gathering all the data they need from the shared files of all the departments' personnel.
The company has to implement an enterprise system so that it could integrate all its departments and business units together. This, however, needs to be done gradually starting with a good management plan and thorough training and involvement of the whole staff. The information system has to be developed so that it is useful for the company and it suits its operational and organizational goals and needs.
Furthermore, Healthlite would need to launch a web-site enabling its customers to place their orders online and to advertise this new option which would facilitate both the clients and the firm. This innovation and the quicker response to customers' needs due to the more efficient and timely operations would result in more satisfaction and loyalty of the clients.
Moreover, its crucial that Healthlite accomplishes a fully integrated information system because this would guarantee its competitive advantage, its expansion opportunities, the clients' satisfaction and the reduction of its operating costs.
Healthlite Yogurt Company
Already ordered? Yes Get your Customer ID here
Item No. Name Quantity
Item 3 Any questions about our services?
The form above could be the new order-entry sheet of the Healthlite Yoghurt Company.
It might not be a good form, but just the means of making it possible for customers to order from the Internet, will make manual ordering out-dated.
The main point is, that the order process can be speeded-up and become very accurate.
The information gained for this assignment was retrieved form the Management Information Book:
Laudon, K. & Laudon, J. (2002) Management Information Systems: Managing the Digital Firm. New Jersey: Prentice-Hall Inc.
Further information was gained by the websites: