2 business case study

Case Study 2

Case Study – Speedy Office Supplies Web Expansion Project

Company Overview

Speedy Office Supplies has been in business for 15 years and is recognized as the leader in discount office supplies. We have a reputation of providing high quality products at reasonable prices and offering superior customer service. We are selling to corporate clients, governmental agencies, and individuals. Our customers are served by over 40,000 employees through direct sales, catalogs, e-commerce and more than 2,000 stores. Eighty percent of our business is currently done in our 2,000 retail stores. Over the past five years the Retail Store Division has shown a steady decline in sales and profitability; energy costs have increased by 30% for our fleet vehicles and retail stores; employee health care costs have increased by 75% and continue to rise. Market trends and customer preferences are indicating that customers desire the ability to order their products on-line at times convenient to them. The SOS management team believes if we phase-out the Retail Store Division and replace it with a web-based ordering system and consolidation of our distribution network, we anticipate a savings of nearly 10 million dollars per year. This would also need to integrate into the existing supply chain systems. Customer satisfaction surveys also indicate a favorable reaction to the concept of webbased sales, which could increase our current sales by at least 25% over the next 5 years. Based on this information SOS management has made a decision to close all the brick and mortar stores within 18 months. We believe this decision will significantly cut costs and that we can be just as successful selling our products on our website. Currently orders for products are received via in-store requests, phone calls, or catalog mailin from customers. We access our online system to check inventory, prices, and estimated shipping dates. If the order total is over $100,000 we turn it over to a supervisor. We then call the Credit Card Authorization Company to check the customer’s credit card account. If the credit card charge is authorized we enter the order into the system. The current system is an old mainframe application and is very cumbersome. There are purchasing agreements, special discounts, and payment terms for our clients purchasing over $50,000 per year. In the past, we have billed these customers on a monthly basis, providing them with a detailed listing by location of their purchases. We want to make it easier for them to pay via credit card each time they place an order to increase our cash flow and lower our Accounts Receivable. If possible, we still want to provide select customers the same reporting on a monthly basis for their purchases by location.

Federal Express and UPS are currently bidding on the exclusive rights for delivery of all customer office supplies. Each company is proposing an online interface to track shipments, including the name of the person who signs for the delivery. The shipment will need to have a label and detailed purchase order slip with the package. The cost of shipping is determined by the size of the package, weight, location, insurance, and timeliness of delivery. The customer will need an accurate shipping cost at the time of purchase.

Project Request

Our main focus for this project is to create the shopping experience for our retail customer on the website and to place product orders on the Internet. We want to have real time information regarding product description; quantities; pricing; availability; payment processing; shipping method options with associated costs; delivery date; and order tracking. All information currently available at the retail stores and in the catalogs should be available and consistent with the Internet.

It would be nice if there were a place on the Internet for the customer to build a profile and store frequently purchased items in a list to use for future purchases. This would be very beneficial for large organizations that purchase the same products frequently. We envision using our existing customer number and allowing each customer to create a password to ensure security. Anyone could look at the products online, but only registered customers would be allowed to place orders. The web site should have search ability by several options: product item number (from the catalog), product type, color, and size. Hopefully when a customer places an order the software would quickly calculate a shipping charge and present the order total to the customer. We would not allow orders totaling more than $1000 to be placed on the web. The software should also email a confirmation to the customer if requested.

Departments Involved

The Marketing Department is responsible for customer reporting and the negotiations for preferred customer status including volume discounts. Our largest customers receive one monthly bill for all their departments’ purchases and a report showing the detailed purchases. Additionally, marketing maintains the customer profiles, which are used to process orders, verify billing information, discounts, and reduce redundancy by eliminating the need for the customer to always enter their company information.

The Customer Service Department will need access to all information regarding customer orders to assist with the web site usage and handle any possible complaints.

Accounts Receivable is responsible for processing and sending bills to our preferred customers. The web ordering system will need to notify accounts receivable when one of our preferred customers request their order to be direct billed. Some customers have negotiated payment terms and discount rates based on volumes. They work with the Collections Department for any outstanding receivables beyond 90 days. On a monthly basis Accounts Receivable produces an aging report. Inventory Management is impacted by a reduction in inventory from placed orders and an increase in inventory from cancellations and returns. They are responsible for managing the inventory and placing orders with vendors. Inventory Management is also responsible for handling returns, including items that have to be returned to the suppliers as defective. Order Fulfillment receives an order notification from the order processing system containing all necessary information required to assemble the order. They are responsible for producing the packaging slips, retrieving the supplies, assembling the order into a bin or crate, and delivering the order to the Shipping Department.

The Shipping Department receives the order from the Order Fulfillment department and prepares the order for shipment. The packing slip contains the shipping method requested by the customer

and the estimated shipping timeframe. The Shipping Department is responsible for notifying the shipping company and updating the order status.

Outside Organizations

The Shipping Company currently has an online tracking system. Our web ordering system will have a direct link to the shipping company’s web site for the customer to track packages using the tracking number provided by the Shipping Department to the order status system.

The Credit Card Processor currently authorizes customer purchases made in the stores, over the phone, or via fax. An additional interface will need to be established between the web application to receive the customer and order information and to return an authorization code.

Instructions:

Read the Case Study below, and answer the following questions:

1. What is the scope of the change being planned?

2. How complex is the change? Give examples of process, technology, job roles, business model, etc.

3. Based on the information in the study, can you thoroughly assess the environment? If so, what did you find? If not, what additional inputs might you need to do so?

4. What change risks have you identified?

5. What change structure would you recommend, and why?

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