Order 806092: Management Datasil case

1

DataSil Inc. DataSil Inc. is a fairly large distribution firm that specializes in the sale of computer equipment and electronic components in Canada. The company was recently bought by a major U.S. electronics firm whose goal was to expand into the Canadian computer and electronics market via acquisition of an existing firm, rather than establish a new subsidiary. Employee morale and motivation were extremely high leading up to the takeover when it was announced that DataSil would be restructured to include more autonomy for all employees and co-ordination of activities by lateral communications instead of relying only on top-down policies. There would also be employee salary increases as soon as all the legal technicalities of the takeover were finalized. Employees were very enthusiastic about the new management style when they were told about the plans the U.S. firm had for the company. They were really looking forward to participating in the parent company's smooth integration into the Canadian market, because they never had enriched job descriptions with the old company. They felt that they had been treated poorly in the past, because the company's former top management saw them as just workers and not as valued employees who could contribute information and ideas to the organization. They had been hired with many promises of a rewarding and interesting career, but found themselves in very routinized jobs with little room for autonomous decision-making. During the first three months, the organization seemed to be operating well. The company operated much as it had previously, but the new top management (both in the U.S. head office as well as the newly hired Canadian Operations Manager, Bill Weekes, – see figure 1.) actively solicited the views and opinions of employees and encouraged meetings to resolve any problems. Employees were also happy with their new location in a prestigious business development. The office was exceptionally well decorated with wall to wall carpeting and state-of the-art office furniture. Actually, some employees compared the office to being at home because it was so comfortable and relaxing. There was even an informal cocktail party that allowed the employees the opportunity to mingle with the members of local and head office management who were visiting from the U.S. Two weeks after the party it was announced that each branch employee was to receive an upgraded workstation, because the company would be going on-line with the head office. All orders would be sent to the U.S. distribution centre and the processing would be done there. Most of the shipments would originate from a central U.S. warehouse instead of being sent directly from the Canadian facility. Although the Canadian warehouse would still exist and would sometimes make the final shipment to their customers, it would contain much less stock than previously. Some orders would arrive at the Canadian warehouse from the U.S., and then be shipped to the final customer, others would be shipped directly from the U.S. distribution centre and a few could still be filled directly from existing Canadian stock. Many key employees attended a number of training sessions in the U.S. to familiarize themselves with the rules and procedures of the U.S. organization and its departments. It was mandatory that at least one person from each Canadian department attend. At the end of the training sessions, there was a noticeable change in the employees' attitude to the jobs. Many of them said that they were not satisfied with the new procedures because their customers would be extremely dissatisfied that additional charges for freight handling would be billed to them. In addition, it would almost always take longer for customers to get the product. About four weeks after the new procedures were implemented, the Canadian Operations Manager, sent an email to all the department managers in Canada asking them to attend a staff meeting to discuss the numerous customer complaints. The departments represented at this meeting included, Purchasing, Sales, Credit, Customs & Traffic and Warehousing. Mr. Weekes started the meeting by saying that he received a call from the controller at the U.S. Head Office stating that the Canadian branch was losing sales. He would like to know the reason why, and what was being done about it. He also stated that he received about five calls from disgruntled customers who were unhappy because their product was taking at least two weeks to be delivered to them. Customers were threatening to go to the competitors, who were offering them a lead time of three days at most. Something had to be done. "Any suggestions?” asked Mr. Weekes. Mr. Barker, who was the manager of the Purchasing department replied, "Yes, why doesn't the Customs & Traffic Department look for a more efficient carrier? It seems that this is the problem." "How would you know what the problem is?" said Ms. Wood, the manager of the Customs & Traffic Department. "Our department always has to take the blame for the other departments' errors."

2

"I agree to a certain extent with Mr. Barker," said Ms. Bowe, the manager of the Sales department. "We place an order with the distribution centre, today, for example, and the shipment does not arrive at the customer's location until two weeks later. The carrier must have some control over when it will be arriving, and if that is the case, then they must be responsible for the long lead time. Moreover, when the shipment is not made direct to the customer from the U.S. and it comes into our warehouse, it sits for a couple of days because of the complex warehouse procedures that the receiving area has to follow. It really is becoming an urgent matter and my employees are very unhappy, because the customers are calling them and expressing their anger. One of my best employees has threatened to quit because she is frustrated that she has to constantly placate irate customers. In addition, she has to expedite shipments, which is not included in her sales job responsibilities." "I am truly sorry to hear that," said Ms. Wood, "but we have told the U.S. distribution centre repeatedly that we have to find a more efficient carrier. Furthermore, those direct shipments to the customers are beyond our control. It is the responsibility of the person keying in the order to show that the goods are to be shipped by a premium carrier offering a two day delivery service maximum. If the correct carrier code is not keyed into the system at the time the order is entered, then the correct carrier will not be used. Bill, is it okay to issue a general email detailing the codes and the related carriers as well as the lead times to the destinations within Canada?" "Yes Kay, we can try that route and see what happens. However, the employees in the Purchasing and Sales departments have to ensure that the orders are entered into the system correctly. Is everyone agreed on this," asked Mr. Weekes. Everyone nodded in agreement. "I have another issue that needs to be addressed," said Ms. Wood. "We, the employees in the Customs & Traffic Department would like to know why the other departments do not approach us regarding customs matters, particularly duty rates, countries of origin and the preferred choice of carriers that need to be clarified. I was very upset the other day when a salesperson approached me for a duty rate for power supplies from an Asian supplier. It seemed that they were inquiring about the same power supplies that the supervisor of passive components in the Purchasing department had requested only two days before. I particularly asked him at that time whether these products were for special use and if he had consulted someone in the Sales department. He said that they were not for special use. Now, Bill in Sales is telling me that he needs a duty rate so that he can quote a price to his customer. However, he said these power supplies are not for general use and should be given a special duty rate. My response to him was that he should speak with the passive components supervisor and between the two of them provide me with documentation from the customer indicating this. How are we supposed to do our job effectively, if we have no co-operation from the other departments regarding correct product information? No wonder we are losing sales! No doubt we are probably using the wrong duty rates." "Well, I was not aware of this, but you can be sure that I will investigate this matter", Mr. Weekes said. "Mr. Barker, we need to speak with the supervisors in the Purchasing department. Arrange a meeting for tomorrow. Well, I believe that we have addressed the main issue regarding the customer's dissatisfaction with the lead time. How can we work around the extra billing charges?" “I think that we should just build it into the selling price the way we did before", said Mr. Nordy, the manager of the Credit department. "The customer will only see one figure on his invoice and it will eliminate the idea that he has incurred additional charges. However, I must say that, like the Sales Department, I am perturbed because customers are more than a little upset regarding the changes implemented in the Credit department. They want to know why they are being billed in U.S. dollars and why the terms of payment have changed. I am trying my best to appease them, but if the complaints continue we are going to have to implement new procedures to rectify the situation."

"Okay, I will bring these matters to the General Manager's attention. This meeting is adjourned unless there is something else that someone would like to add", said Mr. Weekes. "Ms. Wood, would you please stay a moment."

Ms. Wood waited until the other managers had left the room and then she turned to Mr. Weekes and asked, "What can I do for you?"

I understand that the employees in your department are very unhappy, is that true?" Mr. Weekes asked.

"Yes, it is." Ms. Wood replied, "My co-workers and I believe that we are in a no-win situation. I know we have specific rules and procedures, which we try to follow, but we have situations time and time again where managers have demanded that we alter the rules because the top management is aware of how crucial it is to maintain the account. The excuse given is often that, we are going to lose the account, so do whatever it takes to correct the situation. However, when the bills resulting from the special treatment of these shipments come in for payment, we are advised that we should have used alternative methods because the shipping costs were too

3

high for the customer to accept and we should have found a cheaper means of shipping the goods. So, first we are told to get the goods delivered at all costs and then we are blamed for the unreasonable shipping expense. Before we were taken over, all decisions concerning critical situations had to be made by top management and that was often frustrating. Now, we are supposed to resolve our problems by collaboration both within our areas and between departments, but there seems to be many more issues and it’s hard to find solutions. I really like working in the Customs & Traffic field, but now I don’t know whether this job is worth all the aggravation."

4

Organization Chart