Modern Material Inc Case Study free essay sample

Introduction of Supply-Chain-Management2 Key Individuals and their Effectiveness3 Companies Involved5 Organizational Issues:6 Business Processes Impacted7 Management Takeaway10 Areas of Agreement10 Areas of Disagreement/Concerns11 Recommendations:12 Lessons Learnt16 References17 Objectives (What do you think the author is trying to demonstrate or bring out in the case? ) * A company’s competitive position and profitability can be improved through the use of Supply Chain Management System (SCMS) which if successfully implemented will lead to exemplary customer service. Oz, 2009) * System requirements should be clearly defined and the necessary processes analyzed and agreed upon by all key players/groups before software is coded to avoid reworks and unnecessary spending. * Cohesiveness, coordination, communication and leadership should be evident between stakeholders and management for the successful implementation of a project. * Information systems strategy must be in alignmen t with business strategy and processes to ensure business continuity. Company Background Modern Materials, Inc. (MMI) was established in 1927 and grew through a series of small mergers and acquisitions ultimately earning its name in 1991, when it took over a major competitor and subsequently broadened its product line. We will write a custom essay sample on Modern Material Inc Case Study or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page MMI manufactures products that are used as raw materials by large manufacturers and the construction industry and was described as one of the giants in the manufacturing industry with two of its facilities producing basic products with special properties and shapes. However, due to difficulties being faced by the manufacturing industry such as overcapacity, foreign competition and reduced profits; spiralled by a depressed manufacturing economy, the company came under immense financial pressure. Ultimately, the company lost money in two of five years and downsized in 1998 which left the remaining workers stretched thin and working at a hectic pace. After the mergers, MMI had several issues as each premerger company became a division of MMI, and each division inherited the Information System (IS) organization of the company from which it was formed, hence, reducing effectiveness. To ensure that a single IS strategy was being maintained and adhered to; MMI outsourced its IS operations to STC, a major player in the IT outsourcing business in 1994. As part of the contract, STC offered employment to all of MMI’s IS staff, most of whom accepted the employment offer. Notably, STC did not evaluate the software and hardware employed by MMI to determine efficiency and applicability. In addition, only a small group of analysts was retained by MMI to address concerns regarding problem definition and process analysis. Introduction of Supply-Chain-Management In 1995 Harvey Woodson was hired as vice president for quality to improve MMI’s competitiveness and profitability. He believed exemplary customer service was the best strategy to do this using the supply-chain management technique. Oz (2009) describes supply-chain-management as the coordination of purchasing, manufacturing, shipping, and billing operations, often supported by an enterprise resource planning system. This system involves entering an order, creating a manufacturing order to guide it through to the required manufacturing process, scheduling it into production, producing, warehousing, shipping and routing it so that it arrives at the proper time, invoicing and billing it, and handling any testing issues or claims that might arise. The company’s information systems however needed to be aligned to Woodson’s plan as supply-chain-management is dependent on efficient processes supported by appropriate information processing systems. Key Individuals and their Effectiveness Several persons were involved in Modern Materials Inc’s attempt to implement a Supply Chain Management system (SCMS) in the company with varying levels of effectiveness. They are as follows: 1. Harvey Woodson, Executive VP, Quality was passionate in his resolve to improve MMI’s competitiveness and profitability. He believed that improving customer service would give MMI competitive advantage and subsequently pushed to develop the company’s Supply Chain Management (SCM) by reengineering its business processes and having efficient information systems to support this drive. He used his seniority to motivate workers to do their best. It can be argued that Woodson was very effective in carrying out his role and drove change within the organization by utilizing several soft techniques. After all, he promoted the project among employees, extolling its benefits and how it would ultimately improve the company. His knowledge about the system and strategies was not shared with others, hence when he departed in 2000, the project was in trouble. Being responsible for a project of this magnitude, he could have ensured that the policies and procedures re succession planning were properly developed and documented. Overall, Woodson was effective given the limitations identified above. 2. George Leach, Director of Planning in Construction Division Although Leach was a sophisticated IT user, he never had the IS expertise to undertake the SCMS project. The case postulates that he understood the SCM process. However, understanding SCM and being a user of technology does not necessarily translate into someone who has the skills/expertise to ensure that the system is well implemented and that there is clear coordination among all stakeholders. He attempted to keep the project on schedule; however his incorrect definition of requirements further delayed the implementation of the MMI order entry system. The case explained that â€Å"when the requirements for a system component fell behind schedule Leach would step into the breach and assist in defining the requirements and specifying appropriate processes†. While this is commendable, as Project Leader, Leach should have been managing the process in such a way to ensure that it remained on schedule. Leach’s lack of IT experience affected his effectiveness. 3. Charles Hastings, Chief Information Officer – Hastings’ selection to the post of Chief Information Officer was a reactive rather than a proactive move. It can be argued that being in charge of IS at one of MMI’s plants was not enough for him to be employed in this post. After all, the system being developed was to be spread across all MMI’s departments. His IS experience may have been limited; however he assessed the project in a timely manner and provided overall IS leadership where it was lacking. The case shows all the problems Hastings found; lack of project management responsibility and lack of communication and provided only a cursory glance at what Hastings accomplished. He emphasized that the order entry system was successfully installed, coordination issues were being addressed and the project plan was redone. However, the case does not provide any information to indicate the degree of success the order entry system had or how Hastings planned to address the deep rooted coordination problems. There was also no indication of how realistic the new project plan was. It can be argued that the most effective move Hastings made was to hire the consultant, Carol Young, to take a comprehensive look at the project. 4. Matthew West, Financial Vice President – Based on the financial history of the company, West strongly believed that the project should be abandoned or put on hold for revisiting at a later date. However, he was effective in presenting the financial context in which the project operated. 5. Carol Young, Project Manager – Young’s experience and expertise in project management was unquestionable and her business-like approach to the task was commendable. In her assessment of the project, her findings showed a great level of research. While, Hastings’ projections were on the surface, Young was detailed. For example, she and her team interviewed the functional persons involved (first time they were being included in anything related to the project) and identified the implications for lack of testing and staffing needs. Young did a â€Å"health check† of the project where she evaluated the company’s risk, financial and schedule management. She highlighted Leach’s short-comings as a project manager as well as criticized his ‘big bang’ approach that was costing MMI time and money. She recommended the ‘rolling wave’ approach as a better option. While her recommendations were valid, Young’s tone was confrontational and was interpreted by Leach as being offensive. Young’s involvement in the case was effective as she was able to present a realistic picture of the project and identify a clear path to successfully implement the project. GROUP The Task Force * Comprised of four senior executives and chaired by Woodson * Responsible for developing a proposal to be presented to MMI * Appointed UCA to develop the new system Also had the alternative of enhancing the current system Companies Involved STC – The case describes STC as a major player in the IT outsourcing business. In accepting MMI’s contract, most of the MMI’s IT staff were offered jobs. STC also became responsible for MMI’s hardware and software and were responsible for coding, testing and installing the system. They were also responsible for solving th e company’s Y2K compatibility issues and bringing in Carol Young as consultant on the orders of the Chief Information Officer. There was no indication as to how STC was chosen and whether or not their track record was successful. It can be argued that the lack of leadership at MMI led to STC’s poor performance. United Consultants Associates (UCA) – Appointed by the task force under Woodson’s leadership, hence management thought they were a good fit. They were employed to develop a single plant operation that would be expanded and enhanced to suit MMI. They provided the code for a system developed for MMI’s competitors, lead the requirements definition effort and helped to develop the system design and program specifications. However, a few red flags were raised when it became clear that the system to be developed was far greater than what UCA had previously done. Also, the fact that the IS system implemented by UCA had only 50 – 60 per cent functionality was questionable. It would have been more realistic to get a company that had 100 per cent functionality. Individuals Mary Ellis – Construction Division representative on steering committee Organizational Issues: MMI is a multibillion dollar manufacturing company and one of the giants in the industry. The company has, however, experienced many organizational challenges which affected the successful implementation of the SCMS project. These included; lack of leadership, teamwork and clear policies and procedures to guide the implementation process. Some of these challenges are detailed below: * MMI experienced difficulties such as overcapacity, global competition and a depressed manufacturing economy that plunged profits and as a result the company had to downsize. In order to regain market share and boost profitability, MMI developed a strategic plan and sought to develop new information systems. The organization had a conventional IS structure with each division/department having their own systems and eventually outsourced its IS organization to STC. This meant that STC had control of MMI’S hardware and software. * The organizational culture seems to support hiring within as opposed to hiring the most suitable candidate, even if it meant looking externally. This was eviden t in Leach’s appointment. * There was a lack of cohesiveness, teamwork and effective leadership within the organisation. Business Processes Impacted The case indicated that MMI’s production processes were â€Å"highly automated, with exceptional computer controls,† however the inadequacies of the business processes and supporting information systems does not facilitate outstanding customer service. Modern Materials Inc. implemented a new Supply Chain Management System in order to provide outstanding customer service and improve the company’s position and profitability. Supply chain management involves the â€Å"oversight of material, information and finances as they move in a process from supplier to manufacturer to wholesaler to retailer to consumer. It involves coordinating and integrating these flows both within and among companies. † The objectives of the new Supply Chain Management to be implemented by MMI are highlighted below; 1. Reducing inventories 2. Increasing market share 3. Enhancing profits 4. Reducing operating costs 5. Increasing customer service The following business processes were reengineered and replaced by the new Supply-Chain Management System (SCMS): * Sales-order entry * Sales forecasting * Order status * Pricing * Scheduling and planning * Manufacturing data collection * Inventory control * Quality tracking * Traffic Shipping * Invoicing * Billing * EDI Additionally, with the implementation of SCMS, the following business functions will be impacted: * Customer Service One of MMI’s main objectives is to improve profitability through exemplary customer service. This includes, taking orders, producing the product and getting it the customer at the right time and the best cost. SCMS would enable MMI to achieve this goal by managing customers’ orders more efficiently and reducing the delivery time from 120 days to 45 days; ultimately enhancing customer relationships through better service levels and value-added services. Marketing SCMS would allow MMI to identify its profitable and non-profitable products which would help to drive the company’s marketing efforts. The compatibility of the MMI’s marketing concepts with SCMS will help to ensure that the company satisfies customers at a profit through inter-functional coordination. * Finance and Accounting SCMS maximizes efficiency and provides the opportunity for the company to realize cost savings. The system will track and record payments, cash receipts, and all cash movement. SCMS will help MMI to create the visibility that leads to improved budget management, effective cost-reduction strategies and more accurate forecasting. SCMS also facilitates the easy tracking of financial transactions, thus allowing for detailed analyses of trade payables and receivables. With the implementation of SCMS, MMI will have a better view of the long-term financial health of the organization. * Operation The implementation of SCMS facilitates reduced inventory because of the expected improvement in the delivery time. Operational information regarding supply chain management is usually available in real time. * Human Resource Management With the implementation of the new SCMS, staff will need to undergo training so that they can be equipped with the knowledge and skill sets needed to maneuver and manipulate the system. This will ensure effectiveness and efficiency of staff before, during and after the system has been implemented. SOFTWARE: Applications: * Microsoft Excel * Microsoft Access SYSTEMS Production systems which were replaced with one integrated system The data processing systems: Supply chain management system * Sales-order entity system * Sales forecasting system * Order status system * Pricing system * Scheduling and planning system * Manufacturing data collection system * Inventory control system * Quality tracking system * Traffic system * Shipping system * Invoicing system * Billing system * EDI system Management Takeaway The case provides an interesting glimpse into the life of a company and specifically the dynamic relationships and issues that manifest themselves when implementing a project. After analysing the case, it is clear that in implementing the SCMS project, Modern Materials Inc could have handled the process better, however, there were areas in which they excelled. This section will highlight the areas with which we agreed and disagreed as well as make some recommendations and indicate lessons learnt that MMI could possibly consider in moving forward and in implementing other projects in the future. Areas of Agreement 1. Hiring Woodson as project leader for the SCMS. He understood leadership and was a good change agent who spent time explaining inconsistencies and encouraging others. . The decision to establish the Chief Information Officer position (CIO) and appoint Charles Hastings to fill the post. This decision, even though a bit overdue, was very instrumental in bringing leadership to the project. The CIO was charged with the responsibility of straightening out the problems with the SCMS systems. 3. Business process reengineering BPR helped MMI to fundame ntally rethink how they do their work in order to dramatically improve customer service, cut operational costs, and become world-class competitors. 4. Leach’s role in defining systems requirements; however this must be done in consultation with the person responsible for that area or processes. 5. Leach’s recommendation that MMI continue with the SCMS as this will give the company a competitive edge and provide an integrated supply plan for the entire organization in real time technology. 6. The following recommendations made and actions taken by Carol Young: Recommendations * The need for an elected project manager who takes full control of the entire project and promotes effective communication between all stakeholders. Employing more efficient business processes. * Completing each stage of the project as opposed to Leach’s strategy of working on a number of the phases independently; thereby ensuring that each stage works properly, ultimately saving the company money by eliminating the process of reworking if a fault is found after the fact. Actions * Performing a â€Å"health check†, interviewing func tional and end users of the project and reviewing the project plan. * Researching what needed to be done to make the project a success Areas of Disagreement/Concerns 1. Decision to devote most of STC’s resources to dealing with Y2K compatibility issues which resulted in less resources being spent on the SCMS project and added to its non-completion. 2. The decision by UCA to begin the systems design and program specifications without input from the users. 3. Despite the numerous benefits to be had from SCMS, the importance of trust comes into play and hence MMI must develop mutual trust and understanding between parties (suppliers etc) to achieve collaboration. 4. Reorganizing the task force and replacing senior managers with middle level managers. This project required MMI changing the way it does business, and considering its importance to the long term viability of the company; MMI should have kept the senior managers. 5. Mathew West’s recommendation that the project be abandoned. As the Vice President of Finance, West considered the overall dire financial condition of the company, highlighted the financial context within which the company operated and questioned the affordability of the project’s completion. It can however be argued that West failed to assess the benefits to be derived if the project was to be completed and implemented on time. 6. MMI not having a project leader with demonstrated experience in implementing projects of this magnitude and nature; distinct from the leader of the steering committee with overall responsibility for the project’s implementation. 7. MMI not conducting a risk analysis or having IT governance of the project in place. As such, the project was not properly planned, and possible risks, obstacles and setbacks were not considered. 8. Carol Young’s affiliation with STC and her recommendation that she be brought in to manage the project. This can be viewed as a conflict of interest as she was a hired consultant of STC, an affiliate company. Recommendations: 1. MMI should proceed with the Supply Chain Management System (SCMS). Despite the obvious monetary challenges that the company is presently facing MMI should implement the system as planned because of the array of benefits to be derived from SCMS, inclusive of regaining market share and increasing profitability. 2. Appropriate Technology to support SCMS. MMI should consider purchasing Radio Frequency Identification (RFID) which has a system that allows information about a product to be recorded. â€Å"It contains an electronic product code (EPC) which provides much more information than the Universal Product Code. The tag can include the date of manufacturing, the plant in which the product was made, lot number and many other details that help track its movement and sale†. This would help MMI to improve its service and enhance its customer relations. 3. Project Managers should be clearly identified. Effective project leaders are critical for the successful completion of any project. If MMI decides to proceed with the project as recommended, a project manager should be appointed. 4. Feasibility Analysis. MMI should  undertake a  feasibility analysis of the project on an economic, technical, operational and temporal basis. This would  better assist MMI to determine project outcomes ahead of time, thus allowing the stakeholders to make better/more sound decisions. 5. Customer Relationship Management. MMI should consider implementing customer relationship management (CRM) systems to support its SCMS so that it can plan its resources. CRM systems increase the quality of customer service information captured which can be further analysed to learn about the buying habits and service preferences of customers; ultimately enhancing strategic planning. 6. Project implementation should have a clear deployment strategy. This involves planning how and when execution takes place, the training of operational staff, data conversion and piloting (acceptance testing). IT projects undertaken should first be ‘piloted’ in all departments that will be affected by the change. To this end, staff directly involved in /affected by the changes should be frequently informed on the project’s progress. The company should ensure that sufficient time is dedicated to testing. There should first be unitary testing, once this is successful then MMI should proceed to integration testing. If there are any issues, this must be dealt with before full implementation. 7. An independent audit should be commissioned by MMI’s management team, MMI should invest in an independent external audit. It is recommended that the audit be carried out by a company/organisation that has no prior affiliation with the SCMS project so that an unbiased and objective analysis of the project’s status and the way forward can be determined. 8. An organizational structure should be outlined for the project. A representative from every facet of the project should be accounted for in the organisational structure to ensure that information is communicated in a structured manner. This will increase the efficiency of the communication process thereby reducing delays. 9. A clearly defined communication strategy/plan should be developed for the project. Developing a communication strategy or plan will facilitate the smooth running of the project. This may help to identify potential areas of concerns, allowing for project leaders to be proactive rather than reactive. A communication plan would have proven beneficial to MMI in its dealings with independent/outsourced contractors UCA and STC. This was due to a breakdown in communication between the companies which accounted for a great percentage of the delays in the beginning stage of the project implementation. These companies should have specific service level agreements which have a clause for consequences of non performance 10. Alternative cost saving measures should be considered by management instead of staff cuts. It is recommended that instead of cutting staff, management look at alternative cost saving measures. Management should consider that the project is still in its implementation stage and the existing staff is already stretched beyond its full potential. As such cutting staff may have a negative impact on the successful completion of the project. 11. Effective monitoring mechanisms should be introduced by management. Management should implement project management systems to facilitate tighter control and monitoring of projects. This will help to ensure that delays are minimised, deliverables are achieved, deviations dealt with immediately and the project is kept on schedule. 2. Policies and Procedures should be adequately documented and updated on a timely basis to facilitate knowledge management. There should be documentation and timely updating of processes and procedures used during a project’s implementation so that team members are aware of how particular systems work. 13. Mapping of business processes should be undertaken by the relevant department manager. IT projects an d processes must be implemented based on what the actual specifications are and not on what the IT specialists think they ought to be. Therefore the project leaders must ensure that consultants liaise with the required department head before designing a project. The processes and requirements should be properly defined and signed off by affected parties before coding is done. 14. MMI should ensure there is succession planning in place. In the case of the SCMS, too much of the project was in the hands of one person. When under taking a new project, management must ensure that its project management team has the requisite systems and people in place to facilitate easy handover if necessary. Developing a succession plan will aid in minimising completion lags and cost-overruns where there is a change in the team composition 15. The composition of the Information System Steering Committee should be reviewed. This committee should consist of the CEO (Chair), all senior executives, Chief Information Officer, selected technical managers, selected users, domain and subject matter experts and champions. 16. MMI should employ effective IT governance. This is critical if MMI wants to earn value from IS/IT. Effective IT governance helps to clarify business strategies, measures and manages the amount of money spent and assigns accountability for organizational changes. (Solutions, 2007) 17. MMI should implement a business recovery plan. The business recovery plan will assist MMI in outlining the procedures for bringing the business to normal operations after a disaster or other emergency. The plan will also help MMI’s management to better identify their key staff, vendors, equipment and clients; establish a communication protocol and identify any alternate emergency location for work to resume. Lessons Learnt 1. A project plan should be implemented with clear communication strategies. 2. Poor project planning, insufficient communication, ineffective management (process, project and change), failure to align with constituents and stakeholders and poor or missing methodology and tools are recipes for the failure of any project. (Gulla, 2012) 3. Business activities outsourced should be monitored, similarly to any internal activity, in an effort to  prevent loss of control and damage to the organizational brand. 4. System requirements and definitions should be properly established/agreed upon before the project is embarked on. . Management should ensure that stakeholders are in agreement with the project so that there is cohesion and no dissent. 6. Change project and process management are key to successful implementation of any project. 7. When embarking on large company wide projects as in the case with MMI, persons with demonstrated Project Management experience and relevant technical exper tise should be appointed to spearhead same. 8. For IS to be effective, the necessary business processes and support systems must be in place and must be aligned with company objectives. 9. When undertaking projects, risk analysis must be done and contingency plans drafted. References Gulla, J. (2012, February ). Seven Reasons IT Projects Fail. Retrieved October 28, 2012, from www. ibmsystemsmag. com: http://www. ibmsystemsmag. com/power/Systems-Management/Workload-Management/project_pitfalls/? page=3 Oz, E. (2009). Management Information Systems 6th Edition . Massachusette, USA: Course Technology . Solutions, H. G. (2007, October ). How to prepare a business recovery plan. Retrieved November 6, 2012, from www. hostway. com: http://www. hostway. com/newsletter/2007/08/