Toy Story – Change through Information System Essay
A company like Toy Story whose major interactions are with other businesses (B2B), should develop information system (IS) overtime. It has almost no interaction with the consumers and its customers are wholesalers and retailers. In today’s fast moving and technology-oriented environment, no firm likes to do business with a firm which uses traditional methods in its business. Most of the successful organizations in the world today have IS installed in their organizations and the employees are trained to use computer systems in every aspect of their work. Paper-based procedures are being abolished in all most of the large organizations. Employees become more efficient when processes are automated and the management also witnesses fall in cost of production and expenses. However there are also issues in the implementation of IS. ‘People’ is one of the most important components of an IS and if they are also the stakeholders and users to IS and if they oppose the change, the implementation cannot be successful. If properly implemented, taking employees into confidence, the change can be managed quite smoothly and the managers can enjoy the increase in return on investment (ROI).
Toy Story – Change through Information System
A toy manufacturing firm, Toy Story, is under the study in this report. This report will describe the issues the firm is facing and their potential solutions. The root cause of all the problems Toy Story is facing is usage of traditional methods of recording information and no existence of an information system. The problems identified in the business case will be discussed in detail and recommendations of possible solutions will also be given. Introduction The need of information system exists in every organization that operates in a competitive atmosphere. Companies which have cunningly implemented information systems in the past are flourishing and those which have not are facing rising costs and dependency on human resource. With a total product line of approximately 1200 toys and almost 600 customers, Tor Story faces a lot of trouble in recording transactions and important information.
Toy Story is currently operating with only spreadsheet and MS Access databases. It does not have a computer based order processing system instead customers has to use telephones and traditional mailing service as a medium of placing orders. At the moment, the organization only houses at most 25 percent computer literate staff and no database system for customer records. The production department is suffering from production of low quality toys. There is no track of the orders placed to suppliers therefore no one knows the supplier of low quality material. There is terrible interdepartmental communication as the blame game among employees takes place because of no records. Production process has never been documented and is only in the heads of the staff. If these people leave the organization, there will be loss of precious knowledge about production methods.
With 150 vending machines, this strategy has been successful so far but the systems recording Toy Toob’s income flow are paper-based, uncertain and not accurate. A well placed information system (IS) can help many of these issues to be resolved but in return Buzz will face a lot of resistance in the implementation of IS from the employees. This resistance can be tactically resolved by involving them in the change process right from the beginning. Problem Areas The toy industry in general has been also affected as the other industries have due to the global recession. Sales for Toy Story have declined up to 30 percent in the recent sales period of Christmas. The management of Toy Story is considering dismissal of staff as a result of severe drop in orders from the retailers. Although the company is relying heavily on the financial reserves that have been built up but if things do not get better, layoffs will be the only option left. The owner of Toy Story does not want to dismiss the staff as he has a strong sense of ethics.
Toy Story is working in a manual work environment where paper-based work is employed in most of the procedures. With only 45 computer literate employees, the company makes little use of spreadsheet, MS office and Access. Order processing system in the company is not computer based and as a result the customers have to face difficulty in placing orders. Customers have to rely on traditional mediums such as phone, surface mail, fax and email to place orders. As a result, order filling takes time and the customer has to bear delays in deliveries especially when there are stock-outs. These problems are annoying the customers and many of them are even switching to the competitors for purchases. The quality of toys at Toy Story has also become a major concern for the management as the quality of material from its suppliers is sometimes not acceptable. The company makes and maintains paper records for these suppliers and filed in cabinets; sometimes the records are not even completed or filed during busy times.
The material for the toys is ordered from a wide range of suppliers overseas and orders are placed via email, telephone and fax by the employees. The suppliers with the low quality materials are not identified because of improper records and numerous suppliers. Some suppliers do not send the material at all, which results in disarray on the production line and clashes between the managers of the departments involved. Internal communications in Toy Story suffers from a lot of misunderstandings and lobbying. The production process of Toy Story has never been documented and the production methods are only in the minds of the employees. Toy Story has realized that the information and knowledge that the processes need, they are all inside the heads of the employees and not with the company. If the employees leave the organization, they will take the knowledge with them, causing serious crisis in the production process.
The profits from the vending machine strategy are driving up the bottom line of the company. The management is not certain about the contribution that Toy Toobs are making to the net profit. This is because the recording systems for Toy Toob’s sales and income stream are manual and inaccurate. Toy Story not only lacks organized statistics about the company but also lacks valuable knowledge resources such as customer data, supplier records and transaction information which are necessary to make strategic decisions.
Prioritization of Change Concerns
The most important of the concerns in the organization that need change is manual and paper-based work. Only 45 employees who make up 25% of the total staff are computer literate. In today’s technologically advance working environment all of the employees should know how to use a computer and they should have one personal computer on their work desktop. Many business processes can be streamlined using computers and software such as placing an order to the supplier, managing suppliers profiles, maintain and add records, automatic generation of reports and RFQs. Of the total 18 computers in the organization, only eight are connected to internet and an intranet within the organization has not been developed yet. Manual work needs to be eliminated in the organization and the processes need to be automated to achieve efficiency and competitiveness.
The expenses and cost of production for the firm have been increasing over the years and no effort has been made to make reductions in them. There is no use of technology and automation of business processes that is why the expenses are ever increasing and there are inefficiencies. The second gravest problem in Toy Story is that the management has not given enough importance to customer data and the customer itself. The customers count up to 600 which are mainly retail store owners, distributors and wholesalers. These customers face delays in deliveries because of manual work and traditional order processing system at Toy Story. For this reason many customers are turning towards competitors for toy products. There is no concept of customer relationship in the firm and employees are not trained to collect important customer data which can be very helpful. It is not possible for the employees to collect and records customer information in a paper-based environment. The third serious problem is the relationship with the suppliers and insufficient records of supplier invoices, quotations, order details and price history.
This problem poses a serious threat to the quality of raw material being used in the production line and hence the quality of the final product. There is no culture of recording transactions with the suppliers and information about supplier. Although some records are prepared manually and stored in cabinets, but they are never opened up if there is raw material of low quality from any supplier. There are approximately 60 suppliers for Toy Story, therefore no one in the company knows from which supplier the material has been delivered. Hence the material is neither returned nor rejected but is used in the production of toys. This reduces the quality of final product and causes clashes between managers of production department and accounting department.
The fourth problem on the prioritization list is not so serious for the company right now, but when the employees start leaving the company then the importance of knowledge of the employees will be felt. There is no documentation of the business and production processes that are being employed in the firm. Only the employees performing the tasks know how they are being performed and loss of staff members will result in production problems. This knowledge could also become basis of power for the employees who perform important tasks. These employees could then use this power to threaten the management or demand a pay raise. The fifth and the last issue on the prioritization list is about the performance metrics. There are no metrics and techniques available to accurately measure the income generation from different sources of the firm. The performance metrics not only allow the firm to measure its performance but also guides the management in decision making where to invest more and where to reduce the investments.
In the case of Toy Story, Toy Toobs are a great success and it is helping the firm to cover the expenses and reduction of revenues from decreasing sales. But no automatic, riskless and accurate systems exist in the organization to record the profit contribution of Toy Toobs to the bottom line. At the time of economic uncertainty and when most global firms are experiencing change in business environment, if a firm does not have performance measurement system, it will be impossible for the management to set a strategic direction of the organization. IS Implementation The firm needs integration of departments and also business process reengineering to automate all the business processes. This will not only increase employees’ efficiency but also cut the expenses. Paper-based work has to be eliminated and all the tasks should be streamlined to achieve automation. Use of intranet and internet needs to become a part of the routine of the employees. Although there will be a great uproar from the employees as no one likes change in their working environment but they need to be trained to use the computer and advance technology.
The best solution for the Toy Story will be to implement an Enterprise Resource Planning (ERP) system in the organization as soon as possible. This will automate all the processes, allow smooth communication within the departments, make the employees more aware of the global scenario and make the business and production processes more efficient and less time consuming. The appropriate staff will need to be trained and more hardware and software needs to be installed on the systems. ERP will help the managers to allocate resources more efficiently in the enterprise and make more use of them. It will help managers to assign tasks to the employees and forecast sales and demand. It is evident from the case that the staff and management have no realization about the importance of customer data and information. The firm is not practicing any form of customer relationship though it has over 600 customers globally with different statistics. Customer Relationship Management (CRM) needs to be employed in the organization.
This will help the employees to records transactions with the customers, track customer orders, view customer history, prioritize customers and make customer profiles. This will not only reduce the transaction cost but also allow Buzz to reduce the employees as an effort to cut cost. Many powerful tools are available in CRM to dig or ‘mine’ customer data to help the management make more customer oriented strategic direction. Most of the big organizations in the world have implemented CRM as a step towards building long lasting relationships with the customers and have gained customer loyalty and increase in profits as a result. In CRM implementation, sales force plays an important part as they have the most interaction with the final customers. They should be trained and equipped with sophisticated equipments which will allow sales force automation, field force automation, lead management, integration with other departments and uninterrupted communication with the sales office. Insufficient relationship with the suppliers and lack of record keeping is resulting in lower quality raw material from suppliers. The organization needs to maintain records on a system which will help in the procurement cycle. Placing an order to a supplier will become very easy and efficient when manual and paper-based work is eliminated. RFQ generation, catalogue management, supplier selection process, supplier analysis, supplier short listing, supplier evaluation consume a lot of time of the procurement department employees.
All these processes can be automated and through this only the best suppliers will be selected. Hence the quality of material being supplied will be up to the standard; the supplier not performing up to the expectations can be switched. For a manufacturing firm like Toy Story it is very necessary to implement Supply Chain Management (SCM) to build and maintain long-term relationships with the best suppliers. The knowledge and experiences of employees need to be documented in order to be on the safe side. When an employee leaves an organization, it takes all the contacts and knowledge with him. In order to prevent production process of Toy Story from a disaster, the management needs to enforce rules in the organization which will compel the employees to document all their production methods and their contacts. These methods, contacts and knowledge of employees will be with the organization and even if the employee leaves the firm, his experience and knowledge will stay with the firm.
Implementation of Knowledge Management (KM) will help the firms to tactically store the employees’ knowledge in their system as the employees are not important for the business but their knowledge that they have developed through experience. Decision Support System (DSS) is needed to record all the performance metrics and data about strategies. DSS then helps the management to make decisions about particular strategies and it also assists in deciding whether the strategy is feasible or not. In the case of Toy Story’s strategy of vending machines, the managers need to know that how much they are earning from this strategy and whether they should invest more.
Inputs and Outputs for Recommendations There will be many inputs for our highest priority change recommendation which is the implementation of ERP. Inputs for ERP include all the transaction information contained in all the files of the organization and paper work needs to be typed.
Other inputs are listed below
-Training of users
-Data stored in all the current databases
-Data of each department
-Number of users
-Reporting requirements from the users
-Previous year’s sales and production details
-Master production schedule
-Recommendations from the end-users of system
-Employees details -Consultancy provided ERP vendor’s experts
-Testing the current systems
-High cost of purchase of ERP
When the ERP is smoothly and tactically implemented, the output would be favorable for the company. Increase in ROI will be witnesses by the management as the time goes by which is used to cover the high cost of implementation of ERP in the first few years. However if the employees are not involved in the process, they become resistant and they may discard the change. Automatic generation of RFQ, invoices, update of accounts, inventory checks, forecasts, integrated database, hiring of a Database Administrator (DBA) are the outputs of ERP implementation. Stakeholders’ Needs Stakeholder is anyone who has interest in the organization or who will be affected by the change in organization.
Following is the list of stakeholders of Toy Story:
-Customers (Retail store owners, wholesalers, distributors)
-Owners (Stockholders and Buzz) company like Toy Story, which has net profit for the last year of US $ 4 million, should not gamble at this point of time.
When the market conditions get better, the company should then definitely go for the change as it is far behind the other competitors. In Toy Story, where only 25 percent of the employees are computer literate and no one is a master user, heavy training sessions and great investment of money and time will be needed to prepare the employees to use the information system. New computers will also be needed for all the users of the system, management will need to deal with all the ethical, cultural and security issues; costs for all these changes will be too high for Toy Story in the current scenario of recession. Management of Toy Story should invest in information systems such as ERP as soon as the sales start increasing after the recession is over
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