Procurement, Logistics and Supply Chain Management
MSC
List of Figures
List of Tables
Chapter 1 Introduction
1.0 Introduction
1.1 Case Study
Running UK music events is a highly specialized technical professional service. The group sets up PA systems and runs sound checks during the entire music event and the service is guaranteed. Loud and Clear (LC) has been in business for ten years in Manchester. The company was started by two music students who then invited their friends to join them as a worker cooperative group.
A member owned cooperative is “a business organisation that is owned and controlled by members who are drawn from one (or more) of three types of stakeholder – consumers, producers and employees – and whose benefits go mainly to these members” :73)
Currently the LC is composed of 10 members in the basic group who are musicians and qualified sound engineers. LC offers UK music events their specialized service of guaranteeing that the Public Address (PA) system will work properly for the duration of the event. The service includes PA system set-up and sound checks. The members of LC are highly invested in giving the best service possible in a professional manner.
One of the LC founding members is Elsie Black who know manages the office. The management tools used to manage the business information and data are basic and they are listed below.
computers
a business website is used
a database of basic client information
business electronic documents
two spreadsheets
an online calendar is networked between all the staff
Black and her assistant are responsible for the business office handling of documents associated with each booking, service marketing, payroll, pay suppliers and the other activities associated with a typical business.
Technicians are equipped with one mobile phone each.
Each mobile phone can receive phone messages,
text messages,
e-mails, and
alerts from the office.
The reason this research is being carried out is because the LC cooperative working group are interested in expanding and have brainstormed for business develop opportunities. The LC group members agreed that now is a time for taking on new challenges. The idea was motivated by an increased number of music events held in the North West and throughout the UK. In one year inquiries over the telephone about their service have doubled and the number of inquiries is increasing. The agreed upon two goals.
Update the office systems so the growth of the business can be handled efficiently.
In order to save on costs they are considering open source software the offers OIM support that will fit their needs.
The group wants to know the benefits and disadvantages of Open Source business management software.
Members expressed an interest in Enterprise Resource Training (ERP) and Customer Relationship applications.
They realize gaining professional advice is essential because OIM is not the area of their expertise. A challenge for analyzing what will work best for the company is the cooperative nature of their business design. Every member has one equal vote in any changes that are implemented. The members expressed concern at change and the impact any changes will have on their current roles at LC. One of the concerns is specifically about Information Technology (IT). Now the members have a close working relationship with face-to-face communication or talking over the phone. The members are worried that using more technology will threaten the relationships that make their working environment comfortable and pleasant.
1.2 Objectives
The objectives to this study are to identify and study methods for KM and business strategies in the small company, LC.
Chapter 2
Business process models
Figure 2- 1 BPMN notations for customer relationship model
2.1 Customer Relationship models (CRM)
A customer relationship model is designed to increase the customer value by gathering and evaluating the information the company has available about customer interactions (Kamakura 2005).
ERP is a popular IT software application for large businesses because of ease of use, convenience and capability of increasing productivity (Branch 2013). Large companies and corporations often hire an ERP professional (Branch 2013). Since the LC group members are happy with the size of their office staff and technician. Therefore one staff member needs to take on the role of overseeing the ERP software and the other members need to learn components of the ERP software that applies to their position in LC. Several applications as ERP modules are available; LC needs finance, human resource, supply chain and logistics management.
The components of ERP are sold as modules to make up one business management tailor made for the needs of the company. Mid-sized companies are adopting ERP (Branc 2013)
Figure 2- 3 Steps for integrating change along the supply-chain (http://gabbai.com/management/purchasing-and-supply
2.3 Supply Chain Management (SCM)
Modern supply chain management does not compartmentalize the supply chain in a different unit from the rest of the business functions (Anderson, Britt and Favre 1997). The holistic view of the supply chain recognizes the links to the business retail flow that provides products, services and information from the supply vendors to the customers (Anderson, Britt and Favre 1997). (See fig. 2-3) In order to appreciate the customer returns, each segment of the business needs to be evaluated for profitability and performance (Anderson, Britt and Favre 1997). The return on investment needs to estimates and repackaging of services and products need to be linked to division of company resources (Anderson, Britt and Favre 1997). Logistic management needs to be flexible unlike the traditional “monolithic approach . . . (of) organizing inventory, warehouse and transportation activities to meet a single standard” (Anderson, Britt and Favre 1997:4). Staying aware of the market and weekly, monthly and annual changes; the changes are a tool to discern the amount of inventory needed on hand (Anderson, Britt and Favre 1997). Anderson, Britt and Favre (1997) recommend delaying the application of product differentiation so the variation in customer needs can be filled with flexibility. Another recommendation counter to conventional wisdom is to remember that the suppliers are partners by “sharing the goal of reducing costs across the supply chain in order to lower prices in the marketplace and enhance margins (Anderson, Britt and Favre 1997, p.6). SCM can be enhanced with creative thinking, innovation and flexibility.
Flexibility needs to be understood according to the business processes taking place on each level of activities because implementing flexibility only with the company as a whole will lead to problems (Anderson, Britt and Favre 1997). (See fig. 1) An information technology (IT) system is essential in today’s business environment. The company’s IT can be set up in a way to allow for decision-making at the various process levels in order to enhance the holistic view of information flow as well as the movement of products and the extent of services (Anderson, Britt and Favre 1997).
Clear and direct communication with customers can result in reliable performance measurements. Anderson, Britt and Favre (1997) highly recommend that management activities be implemented at every link in the chain with a view to service and financial measurements. Change can be difficult for most people to accept easily because it takes time to reach a comfort level with new processes. Therefore an overall acknowledgement that changes is difficult and implement change management actions that fit the company are essential
2.4 Knowledge management in the supply chain
Knowledge is as important to small businesses as to huge conglomerates. Loud & Clear (LC) started with two co-founders, grew to ten members of their cooperative and in order to grow large and meet the challenges from competitors, then knowledge is essential. The information that is knowledge (that adds value) to the company needs to be identified, collected, analyzed and used intelligently to increase profits. Knowledge management “refers to how a company obtains exploits and stores business intelligence, or the information or knowledge used to make the company function profitably” (Sharrieff, n.d.).
Knowledge management can be achieved by small businesses but the first phase of implementing the method can be the biggest challenge (Fletcher and Polychronakis 2007). Conflict can arise in a company when trying to agree on the knowledge management methodology; in the cooperative design of LC this can be a weakness. The stakeholders of the company must sit down together and discuss what knowledge gaps exist. This is considered strength in the SWOT analysis because discussing all levels of the company with a holistic approach allows for a detailed examination of the company. (See table 1)
Fletcher and Polychronakis (2007, p. 192) noted how large corporations have many software applications that aid “encapsulating KM” but small firms need a framework suited to the SMEs rather than adapting methods for corporations. SMEs need KM “cross-sectoral process frameworks” and the “best practices that develop from the framework (Fletcher and Polychronakis 2007). SMEs need a KM framework so they have a method to “evaluate organisational readiness.” With the capture, management and sharing of KM, the information can be used to develop the company’s supply chain.
Chapter 3
3.0 Open Source Software Comparison Table
Chapter 4
4.0 Report
CRM is focused on good customer relationships but the model also takes a chance on allowing customers too much power. Customers have less experience than the professional technicians at LC so that could turn into a disruptive problem. ERP is much better suited for LC. ERP works well for small companies and is flexible enough to grow as the company grows. Training is time consuming and one members needs to be appointed to remain responsible for the workings of the ERP model at the company. The training can pay off very well over the long term and the pay back starts as soon as the ERP manager starts integrating the application into the company. One person with more knowledge than others is not necessarily pure cooperative-theory; on the other hand the system can be designed as transparent. One person must be focused on the functioning of ERP and everyone cannot put their time into software and the business model. Therefore I recommend ERP and that the office manager or assistant office manger takes the training and the responsibility for effective implementation of the ERP software application.
Knowledge management and supply chain management are integrated into the design of ERP so LC can take advantage of the two types of management by exploiting them within ERP.
ERP Open Taps can be the best choice for LC because growth is an important goal of all the members. If a simple ERP application is used, then the flexibility for expansion is missing and eventually the company will need to change software. The members of LC are around high technology that is computerized to make the events a success. Therefore the basis for a good experience with the open source software is already in place.
Getting the conversation started can be difficult even between members who enjoy each other’s company and working together. The Coop Index diagnostic tool can assist LC in devising the changes that will best meet their needs and expectations as a group of members each with an equal vote. The tool measures performance in a coop is to evaluate satisfaction of the members. Diagnosing the business using the CoopIndex tool starts with defining the LC mission statement to everyone’s agreement. Everyone will need to make some compromises but nothing is more important than all LC’s members to strive towards the same goal. The members can develop their own questionnaire after an oval mapping session or chose to use a ready-to-use questionnaire. Strongly disagree, Disagree, Somewhat disagree, Neither agree or disagree, Somewhat agree, Agree, Strongly agree, “Don’t know, Don’t understand. Irrelevant”. Comparing the answers will initiate in-depth discussions that will aid in decision-making. Members will understand the perspectives of each other. Stocki, Prokopowic and Novkovic (2012) recommend calculating the results by counting the frequencies of responses rather than using the averages. Profit and return on investment are the goals of all businesses but coops as a rule have an ethical dimension of fair play within the company. The LC membership is small enough that together they can identify the answers that everyone agreed upon and then work on the “strongly disagree, don’t know, don’t understand or irrelevant choices.”
Chapter 5
Reflection on contribution to online discussion
I learned that even though a Lean and Clean is a cooperative, cooperatives are one of many types of business organizations. Every business have many features in common regardless of type because all are engaged in commerce (Birch 2012: 77)
I also found it very interesting that the United Nations supports cooperatives around the world. In order to motivate useful discussions The Coop Diagnostic Tool was designed particularly for cooperatives. The purpose is to motivate good, practical discussions and keep them focused. The can be effective because it is designed especially for businesses designed with a cooperative organization, but other types of business need a similar tool.
Flexibility, innovations and creative thinking are features that need to be linked to the business model chosen. The cooperative nature of the business design of LC compliments these features. Change can be difficult for most people to accept easily because it takes time to reach a comfort level with new processes. Therefore an overall acknowledgement that changes is difficult and implement change management actions that fit the company are essential. Direct and regularly planned face-to-face communication between partners can ease the pain of change. Transparency on all levels is also conducive to raising the comfort level of partners and also leads to intelligent questions for worthwhile discussions.
6.0 References
Anderson, D.L., Britt, F.F. and Favre, D.J. 1997. The seven principles of supply chain management. Supply Chain Management Review. The 10th anniversary issue pages 3-8.
Birchall, J. 2012. A ‘member-owned business’ approach to the classification of co-operatives and mutuals. in The Co-operative Model in Practice: International perspectives United Nations
Branck, Fred. 2013. Supply Chain Management 22 Success Secrets - 22 Most Asked Questions on Supply Chain Management - What You Need To Know. https://www.scribd.com/doc/155769533/Supply-Chain-Management-22-Success-Secrets-22-Most-Asked-Questions-On-Supply-Chain-Management-What-You-Need-To-Know
DfEE .1998.The Learning Age, The Stationery Office, London.
Fletcher, Louise and Polychronakis, Yiannis E. (2007) "Capturing knowledge management in the supply chain", EuroMed Journal of Business, Vol. 2 Iss: 2, pp.191 – 207 http://www.emeraldinsight.com/doi/full/10.1108/14502190710826059
Fletcher, D. and Polychronakis, Y.E. (2004), Capitalising on Knowledge Management: The Case for SMEs in the Northwest of England, Working Paper Series, University of Salford, Salford.
Gersch, M., Hewing, M., & Scholer, B. (2011). Business Process Blueprinting – An enhanced view on process performance. Business Process Management Journal, 17, 732–747.
Markus, M.L. (2001), “Towards a theory of knowledge reuse: types of knowledge reuse situations and factors in reuse success”, Journal of Management Information Systems, Vol. 18 No. 1, pp. 57-93.
OECD (1996), The Knowledge-based Economy, OECD, Paris
Stocki, R., Prokopowicz, P. and Novkovic, S. 201 . Assessing participation in worker co-operatives: from theory to practice. in The Co-operative Model in Practice: International perspectives United Nations page 121 to 133
Wagoner, Jason. 2013. ERP: 68 Success Stories Emereo Publishing.
Sharrieff. n.d. https://opensource.com/business/16/1/open-source-tools-supply-chain-management
