Discuss about the Integrating Competitive Intelligence Management.
An ancient saying has it that “you cannot solve an impasse if you do not understand the causes of the problem.” Luckily with the modern tools and techniques of management science, problem identification and the solutions are never far off (Lawrence 2012). CHEMS Ltd. has adopted a set of processes that take up to four months from when an order is placed with the company to the time the last container is delivered to the client.
While on one hand, the processes that take almost a third of a year to implement will work diligently for an entity working in a monopolized market, on the other hand, it may be an uphill task for a company like CHEMS Ltd operating in a competitive market (Freeman 2010). To be able to comprehend fully the company operations let’s delve into its operations:
CHEMS Ltd has four processes. Firstly, the customer places an order with the company. The company examines the orders and may decide to go ahead and process the order or decline that order altogether. Only a minuscule 0.1percent of orders are declined. Secondly, the company procures the materials to be used to process the order and this may take up to 9 weeks to accomplish. Thirdly, the production of the chemical begins and is overseen by three managers. Lastly, the company orders packaging containers which are delivered in two weeks. The finished chemicals are then packaged and delivered to clients.
The production process entails three middle-level production managers who control the manufacture of chemical for CHEMS Ltd. The managers, however, do not have control on the input mix during the production process. The production process begins when materials have been sourced by the procurement section. The production managers make adjustments required for the final product required by the client without making an alteration to the inputs. They also manage quality control, and the production process including quality control takes a month.
Decision making at CHEMS Ltd. is a continuous process. The first decision made is whether to manufacture a clients order or not depending on the quotation. Overall, 0.1 percent of the orders placed by the clients are not processed. Once it has been decided that clients’ product can be manufactured, sourcing of raw materials begins. A price list and quotations are sourced from three suppliers. The raw materials are bought from the supplier with the lowest quotation which is a general rule followed by procurement divisions globally (Siqueira 2017).
After the purchase of raw materials, decisions are made during the production process and quality control. When the final product has been manufactured decisions on packaging are made and orders placed for containers to package the product. From the many logistics companies involved, a choice is made on who will deliver the product to the client through competitive bidding (Arbin 2008).
According to Errasti (2016), it is crucial for managers to provide regular reports during the production process. At CHEMS Ltd, senior managers present their reports weekly on the production process detailing the cost of the batch, weekly profits, and the sales volume. The chief accountant makes the decisions on product mixes, quality of material inputs and general project changes with approval from senior managers.
The decision-making structure can thus be summarized to involve choosing of clients, ordering of chemicals, negotiations for pricing, manufacturing of the product, approvals from chief accountant, quality control, sourcing for packaging materials and lastly choice of logistics company to deliver the product to the client within the agreed time to avoid loss of business (Engell 2008). The process is as illustrated in the figure below.
The production reports do not help senior managers in decision making. One of the greatest challenge facing the senior managers as employees is that the e-mail system not friendly. They hardly read the emails which they see as a hindrance (Price 2015).
The information system is not automated. For this reason, every time they are required to produce reports required for decision-making, they have to do it manually. The resultant reports end up taking a lot of time and are prone to human errors which may lead to poor decisions (Mclellan 2017).
Does CHEMS Ltd Reflect a High Level of Competency in Provision of Information to its Senior Managers and its IS System?
CHEMS Ltd does not reflect a high level of competency in its provision of information to its senior managers. The decision support system is not synchronized with their reports (Yang 2008). Many companies have sophisticated decision support systems that link up all the processes within the organization to enable candid analysis of the organizational performance (Yin 2015). However, this is not present at CHEMS Ltd. The senior managers are frustrated by the system and are prone to make errors of judgment during manual transfer of reports (Rajagopal 2014) A synchronized system such as an enterprise resource planning would be very useful here (Rouse 2017).
According to Barbaro (2008), the ideal information management system links all the companies operations such that it can assist in quick and accurate decision-making. It should also provide real-time data based on the past and present trends to be able to make future decisions while accounting for risks and uncertainties (Reuvid 2014). Finally, it should be interactive, easy to use and involve all players in the company and provide reports filtered reports for effective decision-making (Raza 2015). From the foregoing, the information management system at CHEMS Ltd does not meet the minimum parameters.
Another challenge faced by senior management is in terms of lack of decision support system. This is manifest in numerous meetings that end up taking a lot of time to make decisions. This would have been simplified if duties were delegated to junior managers and teamwork from the three project teams with a portal to share company progress reports (Rajagopal 2014).
According to Power (2010), decision support system can offer senior management comfort and reliability while making top decisions. At CHEMS Ltd, job dissatisfaction from the senior managers is partly due to the frustration they experience with their information management system and decision support system. They end up having hostile mind-frames which they may export to junior employees (Topolosky 2016).
Lastly, senior managers do not make the last decision as they have to share their reports with the chief account who makes the last decisions with their approval this can be a source of a power struggle in the company (Price 2015).
The current production process at CHEMS Ltd depicts numerous areas of wastage and excesses (Azevedo 2013).To start with, the ordering process and choice of the clients takes 2 days for any new order or request from customers to be processed. In addition to that, procurement of chemicals to manufacture the products and the quality control process takes anywhere from 4 weeks to 9 weeks.
Moreover, once the supplier for the chemicals has been identified and price negotiation agreed, the production begins in earnest instead of applying Just-In-Time inventory management (Hirano 2009). Further, 4 weeks are required to arrange for packaging and delivery of finished products to the clients which results in time and money wastage (Philip 2007).
The ordering and manufacturing processes reveal enormous wastage of resources. Having a price negotiating team of 10 people who only manage to save the company $25,000 per annum is a misuse of human resource that could be utilized elsewhere to make great savings (Azevedo 2013).
The information system comprising of the company emailing system and database is largely unutilized by the senior managers who prefer to create reports manually. The senior managers also do not use the company email optimally (Karim 2011)
Due to the above-mentioned reasons, if CHEMS Ltd is intent on introducing change to its staff, some of the key areas of change to adhere to would be in time management, procurement management, engineering controls or business process re-engineering, re-order levels, human resources, information system, decision support system and finally inventory management (Saeed, Khan and Ahmad 2013).
CHEMS Ltd currently has lots of wastage in terms of production. This can be associated with the 4-month period it takes to manufacture and ship a clients order. For this reason, if processes like choosing clients orders, placing orders for chemical inputs and the manufacturing process were re-engineered, the company could make enormous cost savings (Mohapatra 2013).
The operational costs would reduce due to timeliness in placing orders, manufacturing, and distribution of finished products. Instead of paying employees for four consecutive months for one order the changes could result in one month salary or less (Azevedo 2013).
Operational cost savings from say changes like automation of processes with information system would mean that CHEMS Ltd would reduce the number of workers doing procurement and other technical duties resulting in cost savings and enhance the profits (Guanglin 2014).
Changes introduced in ordering and production processes would lead to more efficient and timely production of finished products. This would mean that CHEMS limited can compete in the market favorably using strategies like Just-in-time production which would attract more clients (Arbin 2008).
The company would also enjoy economies of scale by producing quality products at low cost (Philip 2007). This would translate to lower prices than the competitors or rapid response to customer orders which would lead to more market share (Mariotti 2015).
Currently, senior managers are dissatisfied with the information system as it is. They struggle to create reports and do not use the company email system. A change in the company processes would lead to better output by the employees and better employee relations (Long 2017). This would, in turn, lead to talent retention and teamwork within CHEMS Ltd (Topoplosky 2016).
Better processes lead to less wastage and hence increase the production. Inefficient processes and systems do quite the opposite. With this regard, a small change in the processes at CHEMS Ltd. would lead to more than proportionate change in production at the company (Farrel 2008).
If CHEMS Ltd would avail its capacity and requirements to its customers before they make orders, then the company would reduce the time taken to sieve through the orders and choose what orders to manufacture. This is because all the orders would be standardized and none would be requested out of the scope of production by CHEMS Ltd (Philip 2007).This also implies that the selection team would spend less time making their choice and possibly select all clients. Instead of the 2 days taken to select the clients, the process could take less than a day.
Currently, the procurement division at CHEMS Ltd has to contact each supplier individually for different chemicals. Since the three suppliers have provided a price list for their products, the company can automate its procurement processes to reduce the time taken by the suppliers to return firm quotes. As a result, the time could be reduced to a maximum of one week in ordering (Guanglin 2014).
Currently, CHEMS Ltd produces one order after the other which takes four weeks. The company could re-engineer the production process such that different stages of manufacturing take place concurrently. This would reduce the time taken to a maximum of a week instead of 4 weeks (Mohapatra 2013).
Introducing instant quality control from the time materials are ordered to ensuring proper calibration of the machinery would ensure that there are few adjustments by the production managers and that all products conform to set quality standards. This would reduce quality control time from 3 weeks to one week (Hirano 2009).
Once the material has been produced, it should be packaged in real time. This would, in turn, ensure that the 2 weeks that are spent ordering for packaging containers are done away with. Ordering for the packaging containers should be done as the product is being manufactured or earlier. Thus when the product is manufactured, it should be packaged immediately into the containers rather than having to wait for the containers to arrive (Philip 2007).
Reliable companies with the geographic reach to the clients should be chosen to ensure reliable and safe delivery of the ordered products to the client. The week taken to arrange a courier firm to deliver the products could be done away with if the company outsourced the distribution to reliable supply chain companies (Errasti 2016).
A reliable information system such as an enterprise resource planning system (ERP) can be used by the stakeholders of CHEMS Ltd to ensure that all every process is undertaken timely to save on time (Yin 2015).
From the time an order is placed by a customer, 1 day is spent analyzing the order and choosing whether or not to manufacture the order. Ordering and procuring of the chemicals used to manufacture the products should take 1 week if the process is automated. Overlapping production and checking for quality control during the process leads to manufacturing the product 2 weeks. Packaging and distribution should take 1 week. The total time taken from the moment an order is placed to the time finished products are delivered to the client should be approximately one month.
Information systems are used in organizations to help different groups at different levels of the organization to execute their duties. With this regard, information systems within an organization are deployed in mainly three management levels. The first level management includes senior managers responsible for strategic decisions. The second level management includes the tactical managers while the last level includes operations management such as production managers (Davoren 2016).
These are information systems used mostly by the operational managers to transact the business of the company. In an organization like CHEMS Ltd., the production managers could use the transactional processing system to identify the orders placed from the customers to enable them to know how many products to make. Transactional processing systems include point of sale systems, store management systems, inventory or stock management systems and order placement systems as well as payroll systems (Markgraf 2016).
The production managers can use the stock control system to manage their products orders and know the recorder levels thus preventing delay when acquiring new stock. The point of sale system could assist in scheduling production to optimize the machinery. Order placement systems could be used to acquire more customers and customize the products made. Payroll system can be used to optimize on the workers required during production (Davoren 2016).
This is used by the middle-level managers in an organization to track the trend of their operations and make tactical decisions. They could be standalone systems or could be integrated into the transactional processing system (Karim 2011).
Management information systems include budget systems, human resource management systems to monitor the performance of the company personnel and sales management system to track the sales made (Davoren 2016).
The middle level or tactical managers at CHEMS Ltd could be interested in knowing the production trends, the sales volume for a particular period of time such as on a weekly basis. They may also like to know the employees turnover to be able to find out if there are any issues affecting workers and decide on rewards and motivation tactics to retain talent as well as identify work stressors affecting employees output(Yang 2008).
Sales management system can be linked directly to the transactional processing system to identify the company performance in terms of sales volume. They can inform the tactical or middle management at CHEMS Ltd on the sales progress made in a certain duration. Budge systems can be used to plan the company’s future requirements in order to operate effectively (Markgraf 2016).
These are sophisticated management information systems currently being used by organizations to track their operations in areas such as human resource, management of suppliers, inventory management, financial management, customer relationship management and so much more in one package. They can be customized according to the needs of the organization. CHEMS Ltd could use this system to track their processes and manage their stakeholders such as suppliers and clients efficiently (Karim 2011).
These are modern information systems running on online platforms such as social media, customer relationship management systems, company email among others. They analyze the trends of the company stakeholders and give reports on the needs of users so that the company can exploit the manifest needs to make sales. CHEMS Ltd. can use this system to expand their customer base and create a sustainable competitive advantage (Davoren 2016).
According to Yang (2008), DSS are systems used by senior managers in an organization to make strategic decisions about the operations of the company. They are usually linked to internal systems such as management information systems, transactional processing systems and to external sources to enable senior management to understand the strength and weaknesses of the company and opportunities and threats outside the company.
These are linked to databases and function on processing large datasets of structured queries. They analyze and filter the database depending on the commands executed. They mainly rely on the company databases to give senior managers information to make informed decisions. CHEMS Ltd can use this system to manage their suppliers and their inventory (Davoren 2016).
This class of DSS is linked to the company models in order to the best decision from complex alternatives that a company can make. They use a model such as financial models, accounting models and economic models to decipher the best course of action given many options that a company can make. They use parameters rather than datasets used by data-driven DSS (Yin 2015). CHEMS Ltd can use this system in the analysis of their financial position and future alternatives given uncertainties such as competition, the introduction of new laws on chemical and many other unforeseen risks (Conerly 2015).
Also known as intelligence decision support system, this system conducts data mining from the company and outside sources using a specified knowledge or pattern of logic to present the best alternative to myriad options that can be made. The intelligence used could, for instance, be best pricing alternative to competition (Yang 2008). CHEMS Ltd can benefit from this system in trying to seek new markets where the competitive rivalry is fierce or to position itself in a new market where pricing of products is still new.
This system is mainly used where the company has many documents and the user wants to retrieve certain information in an unstructured format. They are mainly used to retrieve required information from web pages in much the same way as search engines do (Markgraf 2016).
It can be useful to senior managers at CHEMS Ltd in quick preparation of weekly reports for the meeting without resorting to manual methods of making the final touches as they currently do.
This system supports groups of users in aiding decision-making through live interaction, sharing of media, communication and electronic mail. It enhances group work and group dynamics that give users more say in the decisions made for the company. This system can improve employee relations at CHEMS Ltd where it is noted that senior managers are in a foul mood after frustrations in using the email and databases. It is good for enhancing teamwork and interaction among employees (Price 2016).
Interaction of the different models, databases, management information systems and decision support system can form the executive information systems that employ life interaction of data, infographics and live graphical interface that senior managers and executives at CHEMS Ltd can use to make real-time decisions from an informed angle (Yin 2015).
As a result of increasing competition from foreign competitors, CHEMS Ltd has to make a strategic choice to change its production process to make it faster, efficient and cost-effective. That way, the company can respond on strategic angles such as rapid response to clients’ orders, cost leadership, offer premium products that are inimitable by competitors among other strategic options (Freeman 2010).
The production equipment can be changed from a technological point of view whereby introduction of an automated system from two suppliers is required for decisions to be made. The decisions have to match cost-effectiveness and the savings made in the long run after the purchase of the automated computer system (Raza 2015).
To choose the best approach to sourcing for an automated system from either Taiwan or collaboration with a local university, a decision tree model will be utilized in helping to reveal all the possible outcomes where the best outcome can be chosen (Reuvid 2014).
From analysis of the options, either buying system 1 from Taiwan or collaborating with the university the different outcomes are as shown in decision tree model shown below various outcomes are presented and whereas the outcomes may benefit the company in some way, the best outcome that saves the company on the initial outlay expenditure and running cost or one that brings the most proceeds must be chosen (Manktelow, 2017).
From the outcomes, it is evident that acquiring system 1 from Taiwan would bring the company proceeds of $3Million after subtracting the initial outlay of $2.5 Million. The second option that is collaborating with the university for system 2 would bring proceeds of 4.25M. It is therefore in the best interest that CHEMS Ltd collaborates with the University as it stands to gain more and make proceeds of $1.25Million than if it chose to buy system 1 from Taiwan. The best decision is where the company saves money and operates efficiently in the face of risks and uncertainties (Vollmer, 2015).
Conclusion
This paper has critically looked at the ordering, production and decision-making process at CHEMS Ltd, a company that manufactures finished products from chemicals. The paper has evaluated the various stakeholders involved in the company including the senior management, the employees, suppliers, and clients. From the ordering and production processes, it was established that the company bears resource wastage, especially on time resource.
The paper has established the various ways in which time is wasted and offered alternative methods to the production process. It was established that the company could spend one month in the production process instead of the 4 months it currently takes.
The paper also looks at the challenges facing the senior management and discusses ways in which those challenges can be handled including the provision of superior management information system and executive information system. Various information systems were discussed and ways they could fit in CHEMS Ltd explored.
The paper finally looks at system evaluation and how to choose the best decisions for the company using a decision tree model. Different decision outcomes were analyzed and the best outcome was chosen to benefit the company in the bid to overcome the challenge increased competition from foreign companies.
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