Redesign of Business Systems and Process
Introduction
The decline on retail sales growth and development for the Dairy Farm Group of Companies (DFG) trace its roots back in 1997. DFG a leading Hong Kong located food retailer that had established operations in various large cities in the Asia-Pacific region. Some of the reasons that attributed to the decline include economic crises that hit most of the Asian nations in the late 1997s, increased competition from the European and US retail chains that introduced their products to the Asian markets. The outcome of the competition impacted on DFG by the foreign stores witnessed the sales of the company decline due to the increased completion with the competitors such as A.S Watson, Wal-Mart recording huge sales. The mission that the company had which was “to be the leading food and drug store operator in sales and shareholder value in Asian-Pacific” was threatened. This led to the firm realizing that in order to achieve their business mission they had to redefine their strategies with stakeholders enquiring management ability to offer strategic policies and approaches to achieve their goals. These measures led development and implementation of new managerial team with new CEO hired in June 1997. The team consulted services from two consulting firms where an open bidding was done, the firms were entitled to investigate the existing system in DFG and offer recommendation to enable the company achieve their set objectives stated in their mission while creating a competitive advantage within the industry.
Company Background
The company was established in 1886 where a Scottish surgeon Sir Patrick Manson and five famous Hong Kong businessmen with an aim of supplying Hong Kong people with cow’s milk came together. The Company grew gradually by establishing the first store in 1904 at Central District depot where they imported frozen meat with three stores set by 1957. In the 1986 the company had over 300 retail outlets a major growth hence being the leading retailer and distributor within the industry. The same year the company experienced one of the major development and boost to growth when they acquired over 50% interest in Maxim’s chain of restaurants in Hong Kong. It also acquired a 25% of Kwik Save Group plc in the UK ranked as the sixth largest retailer store. In the subsequent years the firm had established various branches in vast countries in the region such as Spain, Malaysia and India among other regions. In 1997 the company had established retail stores operating in major cities in the Asia-Pacific region, Australia, New Zealand and Europe. By disposing 49% interest in Nestle Dairy Farm the firm had strategies to concentrate on profitable Asia-Pacific region. To minimize losses the firm closed loss making drug stores in Taiwan and Wellsave discount stores in Japan.
DFG’s New Business Strategy
Limitations on the current
Analysing and reviewing the existing systems that the company was operating under some limitations were identified. These limitations were used in the development of new systems by the company. The identified challenges posed by the existing systems included; vast ranges of incongruent, independent application systems which lacked information provisions with other sectors within the business operation. The company also identified the need to customize and adopt multilingual and multicultural environments on countries where they aimed at establishing systems. Another limitation the existing systems included the fact that these systems failed to record full consumer transaction details hence failure to fully satisfy them. Failure to have rich information sources in decision making also limited their operations. The company had problems with employees who had to travel in various locations by failing to fully avail information especially on remote locations.
Some of the problems that the existing processes posed included; failure to consolidate their units within various locations posed problems on information and resource allocation and the fact that each unit or store had different suppliers charging varying prices on the products had challenges on monitoring distribution chain. Poor technology used by the company that wasted human resources included the accounting function. This was done manually with the purchase orders and invoices sent through Central office wasting time and resources.
Analysis on finding on consulting firms
As stipulated earlier, the new managing team hired two consulting firms to review DFG existing systems. The two firms presented their finding based on their research and analysis on the existing systems in DFG. Firm A finding indicated that the company network on retail stores and product line giving them a step ahead of the competitors within the industry. They recommended significant improvements on the company’s operations as based on developing and implementing corporate management information systems that are propelled by current technological and communication infrastructure. This was to enable the managers and every stakeholder within the firms’ operation access information effectively and efficiently in relation to the business operations and decision making. Another recommendation that the firm recommended was on the company ability to achieve competitive advantage through effective exploitation on the potential opportunities availed by electronic commerce (EC) among other technological trending emerging by fully embracing them. Their recommendations were further specified based on the following systems that is; Store Operations to improve sales and customer satisfaction through effectively using technological advancements, Network Computing and application re-design through developing Web pages and servers reflecting the company strategies in their stores, application integration and information sharing to increase efficiency and sound decision making policies, remote access, data warehouse, data mart and inventory management and developing core competencies. These recommendations were aimed at increasing efficiency and effectiveness through strategic mechanisms to help achieve the company objectives in relation to growth and development and increasing consumers’ satisfaction. Firm B finding seemed to offer varying opinions on the solutions to the company existing systems. It proposed that the solution to the company challenges on the existing systems could not only be saved through technological advancements as proposed by firm A. The firm emphasized on reviewing organizational aspects or determinants which may limit effectiveness and efficiency on ability to attain and retain competitive advantage. In reference to developing technological infrastructure to supplement the organizational operations they recommended Technical Architecture. This is a framework that enabled rapid changes in DFG’s operations and applications supporting enacted strategies to enhance business development and growth. The firm also recommended the essentiality of developing competitive technological planning process which comprises of business component and related component. It also focused on business component emphasizing on availability, assurance, usability and adaptability. They also developed strategies aimed at boosting systems and business processes in relation to the identified limitations. These re-engineering strategies were precise in reference to Store systems, Inventory management, category management, electronic commerce.
Implementation and Evaluation
