Report to CEO and Senior Management at Riptide
Consultant’s Name
Report to Riptide: Meet and Beat the Competition with
Information Technology and Information Services
Riptide has offered high quality surf wear over the years with its winning combination of manufacturing its own products and selling its high-end products at medium prices. Riptide was a success without overstretching its capabilities as a medium-sized business. Most important though, has been the ability of the founder/owner’s charismatic and intuitive abilities to communicate one-on-one with customers and stay ahead of popular trends. The combination of understanding the customers, offering personal customer service and consistently offering high quality products has built a large pool of loyal customers. All the features that have made Riptide in the past can continue when Internet Technology/Internet Services (IT/IS) are added to the company’s basic design.
The challenge that is most pressing for the company is the decline in sales and profitability. This report addresses the reasons competitors have moved ahead of Riptide and suggests a remedy. The remedy, according to my careful research, is integrating IT/IS into the basic design of Riptide. Possible IT/IS systems have been suggested and the benefits they could provide for the company have been discussed. The main challenges to overcome are bulleted below.
- Competitors are ahead of Riptide in predicting new trends. The area that has shown the most negative impact is keeping ahead of competitors in the areas of new materials and new designs in order to provide customers with a sleeker look and higher performance surf wear.
- Online sales are pulling customers that prefer the convenience of online shopping away from Riptide.
- Competitors were observed to have a great deal of control at every step of their supply chain, from raw materials to customer deliveries, because they use an IT/IS system that fits well with the way they do business.
Three ways “time-based competition . . . must be managed effectively if an organization is going to be responsive to market changes” are time to market, time to serve, and time to react (Christopher, 1997 cited by Fernie & Sparks, p. 11). Riptide can become the leader over competitors by becoming the most responsive to market changes. Time to market requires putting Riptide surf wear clothing in the market before the competitors. Time to serve requires that Riptide become the fastest at delivering a customer’s order satisfactorily. Time to react requires Riptide to adjust to changing trends; respond to changes in demand faster than the competitors.
IT can allow the manufacturing and retail sectors of Riptide to coordinate inventory and make sure that every item can be tracked at any time of the day. Fernie and Sparks (2009) have pointed out that IT not only tracks the movement of products through the company’s processed but IT/IS also provides any necessary information on the item. The three types of supply chain management are lean supply chain, agile supply chain, and leagile supply chain (a combination of lean and agile) (Fernie & Sparks, p. 14). Christopher and Peck (2004, p. 18) define agile as “the ability to respond rapidly to unpredictable changes in demand or supply.” The agile and leagile supply chains are more suited to companies with products that experience “volatile” or volatile and unpredictable” market demands (Fernie & Leigh, p. 14). A lean supply chain is more suitable for Riptide compared to the agile type.
Christopher and Peck (2004) have made an important point for any supply chain and that is the need for resiliency. Resilience to risk of a supply chain must take into account five sources of risk: supply, process, demand, control, and environmental (Chrisopher & Peck, 2003, p. 10). Process risk refers the risk of disruption to processes in the company including manufacturing processes, the infrastructure, transport, and “internally owned assets” (Chrisopher & Peck, 2003, p. 10). Controls are the ways the supply chain, policies and procedures; the risk is that the company rules set are not followed (Chrisopher & Peck, 2003). Demand risks include the decline in demand caused by competitors that causes a disruption between the company and the market (Chrisopher & Peck, 2003, p. 11). Supply risks could be the unavailability of needed raw materials or some other upstream negative impact. Finally, environmental risks can happen when problems occur due to accidents, natural disasters or direct action (Chrisopher & Peck, 2003, p. 11). Importantly, Riptide needs to develop a supply chain that ensures as much resiliency as possible.
A demand driven design is a type of lean supply chain. A demand driven design has two divisions: the materials management and the physical distribution management. Materials management controls raw materials, parts for machinery, the packaging of the finished retail item and materials that result in the finished product (Fernie & Sparks, p. 4). The finished product then enters the physical distribution management system which includes the following components: inventory, storage areas, units, transportation vehicles, and communication as products make their way to the consumers either in the store or online (Fernie & Sparks, p. 4). Combining the two divisions into one demand driven system gives managers the opportunity to more closely control inventory and customer demand for clothing. Customer service can use the system when customers have a question about a delivery date or want to change something on their order.
Enterprise resource planning (ERP) software is available in a diverse range of configurations. Riptide needs a software product that addresses the needs of a horizontal market for a mid-sized manufacturing and retail clothing company. ERP software applications are available to link the accounting, human resource, manufacturing and retail and distribution departments.
Oracle JD Edwards Enterprise One was in the Top 10 list of Software Advice™ managing editor, Derek Singleton. This Oracle package is good for a mid-sized company but has the flexibility to handle a company expansion or to scale down the facility (Singleton, 2014). The basis of the Oracle JD Edwards is the Oracle Technology Foundation and it works on many popular systems including Windows, Unis, Solaris, and Linux (Software, 2014, Oracle). There are many ways this system would benefit the company because it is easy to use and the seven screens offer a large amount of information. The ‘item’ screen describes the inventory of stock and non-stock items and tells the user where the item is located. The user can change orders or customer preferences on the ‘configuration’ screen. The ‘enter change order’ screen gives information on the manufacturing operations and track materials through the process. The other screens are purchase order, sales order, the Item Master Screen, and the shop floor screen. Some of the advantages include inventory costing methods, improves for accuracy in ordering, the ability to “drive repeat purchases and reduce backorder, increase forecast accuracy and decrease inventory” (Software, 2014, Oracle).
JDA Software offers more detail and is also designed to enhance business decision making for a supply chain that reaches across the globe. It offers more choices for personally configuring the IT/IS application to suit a company’s unique needs. The software meets the needs for supply chain and retail management. The supported operating systems (SOS) for JDA include Web browser, Unix, Solaris and Mac OS. Each of the screens offers graphic capabilities for making graphs for demand planning or blocking out schedules for workforce management. Maps can be integrated into the JDA Transportation screen. Software Advice™ (2014, JDA) reported that “eighty seven of the top 100 consumer goods manufacturers” and “eighty two of the top 100 retailers use JDA software” (Software, 2014, JDA).
Point of Service (POS) is the new meaning for the acronym; POS used to stand for Point of Sales which is the register where customer pay for the goods they purchase. Point of Service is a retail application that can handle all the transactions necessary for sales. Other departments can also use the POS depending on the design of the IT/IS system. Accounting, the warehouse and distribution can gain information to make reports, check on inventory, track sales trends and evaluate cost-price-profit analyses. JavaPOS can be used on several platforms such as Epson and HP (Business, 2011).
The contemporary design is cloud-based POS and it can be accessed by a customer or company user from the Internet. Sales, inventory and other data is stored in a central location and can be accessed remotely from any Internet connection. Start-up costs for using the cloud-based POS are small compared to setting up an in-house system, but a subscription fee is charged. The problem with using this strategy is that a service outside of Riptide needs to be relied upon. The software cannot be designed to meet the specific needs of Riptide’s retail and manufacturing sectors. Another very important issue is the lack of control of security when using a cloud-based POS (Business, 2011). The data about Riptide’s business would be held in a centralized location some place other than at the site of the company. The server must be trusted and the server’s security systems would have to be trusted.
An important advantage of having onsite IT/IS is the ability to make sure the system is adequately protected from viruses and hackers by using firewalls, anti-virus software, anti-spam and identity protection are all available in very good security software applications. An Information Technology Operations Manager (OM) with specific duties to keep the security up-to-date and to manage the Information System would be a great asset to the company. An operations manager makes sure that the software and the hardware of a company is always functioning properly. Debra Kraft (2014) a certified quality auditor and corporate trainer, has explained that an operation manager has monitoring applications they use to track performance so glitches can be solved before they become a problem. She also makes a good point that the operations manager has two perspectives on keeping the IT/IS system running smoothly. Firstly, the OM needs to take the “internal” view that the hardware and software are always running optimally. Secondly, the OM needs to think “externally” and work to meet the needs of the company’s users and what is best for the company (Kraft, 2011).
Fernie and Sparks (2009) have pointed out that without a high standard of control, company logistics can become very expensive. Too much stock in inventory can go to waste and never be purchased. A warehouse, a distribution center and delivery trucks need to be built and maintained. In terms of deliveries, Fernie and Sparks (p. 1) explained that vehicles are expensive as “capital and running costs.” An integrated Information Technology system can save money because the processes of inventory, distribution and delivery can be closely controlled.
Conclusion
Riptide has been reluctant to meet the challenges from competitors in the surf wear clothing sector. In order to keep up and surpass the competitors Riptide must (a) meet customer’s needs faster, (b) predict trends for new materials and designs, (c) cut costs and efficiently manage inventory, factory production and supply chain controls, (d) cut production and delivery times in half (or more), and (e) develop an online presence. These challenges may seem insurmountable at first but integrating state-of-the-art Information Technology and an Information System at Riptide could solve all of these problems.
The time it takes for Riptide surf wear clothing to be placed n the market could be substantially shortened with a network IT system throughout each of the departments from the beginning to the end of the supply chain. Ordering needs for raw materials can be tracked with IT. Communicating on design plans and ordering new materials will also be faster with an appropriate IT system. Time to serve customers can be shortened by offering online ordering. Orders will reach the warehouse in a shorter amount of time and stock on-hand can be monitored. The time Riptide will need to respond to changes in customers’ demands will be shorter because preferences and needs can be gathered and evaluated by the IT system.
Several advantages are part of using supply chain management with an IT/IS system. Allowing demand from the consumers to regulate the amount and types of clothing supplied instead of pushing the consumer to buy what is available. Customers become empowered and invested in the success of Riptide’s products. A high control of the supply chain is possible when information systems are used at their optimum level. The inventory on-hand is not overstocked or understocked but can be kept as the level appropriate to the business cycles or season. In other words maximum supply chain effectiveness is reached by “linking together of previously separated activities within a single system” (Fernie & Sparks, p. 12).
Riptide fits into a comfortable niche for high quality, trendy surf wear that it has consistently held for several years. Therefore the company has a good reputation that needs to be maintained by meeting retailer demands on time and with quality clothing. The sales base has been stable and can be maintained and expanded with a resilient, lean supply chain.
Enterprise resource planning (ERP) software can be purchased to suit the unique needs of Riptide. The Oracle JD Edwards Enterprise One software application is the most suitable for Riptide of those that were reviewed in this report. The Oracle package suits the size of the company (mid-sized) and the narrow range of clothing (surf wear) manufactured and sold by Riptide.
Along with the recommendation of setting up an IT/IS system, an experienced IT Operations Manager should be hired. The OM should demonstrate experience with manufacturing and retail software. Importantly the OM should make security of the system a priority.
Last but not least, Riptide needs to have a web site designed and become a presence on the Internet. Customers will be able to communicate easily with Riptide and place orders quickly. Riptide must compete with other companies who have already established themselves as a catalog supplier of surf wear on the Internet.
The following bulleted recommendations are suggestions for change at Riptide in order to meet the modern challenges of today’s marketplace.
- Replace the old and set up a state-of –the-art IT/IS system for supply chain management including filling online orders.
- Improve supply chain information so that inventory, production and deliveries are coordinated. The information should be available and up-to-date 24 hours a day, 7 days a week.
- Add an online catalog and fill orders online.
- Offer enhanced customer service online. Include easy ways for customers to share their satisfaction and/or dissatisfaction with Riptide surf wear clothing products. Invite customers to contribute their own ideas for new designs, possibly in the form of an online contest. Add a “play area” for customers to design their dream surfer outfits on the website.
Customer service will not suffer but will be enhanced by using an IT/IS in-house system and by making a website online. Communication with customers will still be an important asset for Riptide; a new type of communication will be available.
References
Christopher, M. & Peck, H. (2004). Building the resilient supply chain. International Journal of Logistics Management, 15(2), 1-29.
Fernie J. & Sparks, L.(Eds.). (2009). Logistics and retail management: Emerging issues and new challenges in retail supply chain. 3rd Ed., Philadelphia, PA: Kogan Page Ltd.
Kraft, D. (2014) “The difference between an IT Manager & an IT Operations Manger’s Job Description.” [the nest], http://woman.thenest.com/difference-between-manager-operations-managers-job-description-15144.html
Singleton, D. (2014). “Compare Enterprise Resource Planning (ERP) Software.” Software Advice™ 1 Feb. 2014 http://erp.softwareadvice.com/
“JD Edwards EnterpriseOne Software.” (2014). Software Advice™ http://erp.softwareadvice.com/oracle-jd-edwards-profile/
Business Software Tips. (2011) “7 disadvantages of moving to the cloud.” Happen Business, 10 June 2011. http://www.happen.biz/AboutHappen/blog/Business-Software-Tips/ArticleId/7-disadvantages-of-moving-to-the-cloud-.aspx
