1. Submission of the five SAP worksheets as specified in the module Blackboard site Submission link.
2. A written report as per the instructions below
Note that only the report is graded. The worksheets are necessary for full award of marks in the second coursework. The module introduces students to experiential learning with SAP software and the task of completing five worksheets where three sheets require looking up data and only two require you to create your own data (purchasing and sales functions). Completion of this work is achievable for all students on the module BUT does require attendance at labs.
INSTRUCTION: READ the following Case Study
The assignment task specification and marking scheme follow after this case study.
BUSINESS PROCESS INTEGRATION – CASE STUDY
GAMES GALORE
Games Galore is a wholesaler supplying board games, small toys and children and adult fancy dress products into the UK market. The company was set up by Hilary Manzini in 1998, starting with only seven products. A year later, she was joined by Bobby Haque who became the finance director for the company. Today the company has 120 lines and growing. The company sells into prestige stores such as Harrods and toy retailers, both major and independent and has recently acquired some supermarket accounts. The company is rapidly expanding; since April 2009, they have recruited an additional 6 full-time members of staff. The team now consists of 20 members of staff; eight concept developers work on accounts for major retailers or for their own “Games Galore” label, supported by a team dealing with sales, accounts, marketing and logistics. Once a concept for a game, toy or fancy dress product is created, the concept developers test their ideas at trade shows and if feedback is good, the company goes through a stage of collecting quotes for manufacture, from suppliers that they use worldwide. Once a quote is acceptable, they raise a purchase order with the supplier and their logistics and production team oversee the production and delivery process. The supplier base is geographically varied, from India to China to the UK. Around, 80 per cent of stock originates from 10 key suppliers. However, there are also an additional 15 active suppliers preparing products on their books.
The growth in the company has been significant in recent years. Turnover for 20012-13 was £3.25 million, and they have achieved 50% growth in 11/12 and 12/13 . This year, they are anticipating growth, to £4 million.
One of their key competitive strengths is their innovative design of games, toys and fancy dress. The company has two complementary product areas: Branded (for large toy retailers and supermarkets) and own Label for independent retailers. The company’s own label products are higher in quality (in both manufacturing and design). Branded lines are manufactured with the company’s design but are much higher in volume. In partnership with some of the company’s larger customers, they use their production knowledge and design skills to create products tailored to their specific needs. This area of the business has been expanding over the last few years, with growth in both the product range and customer base. Particular challenges are now apparent and it is urgent that Games Galore improves its negotiation with suppliers and manages data better.
The company also design and manufacture licensed products for fancy dress such as “Doctor Who” Costumes for children.
The growth the business has achieved is through a variety of sales channels managed by an office based sales team, web site and regional sales agents. The company is represented at all the major Trade Fairs for their product areas. Sales direct to the public are achieved via a mail order brochure and public website. As Games Galore grows, the number of stock keeping units (SKUs) will also continue to grow.
The company’s objectives are to continue to grow and enhance profitability and win new business in new and existing sectors by:
• Developing their fancy dress range, particularly licensed products
• Creating offerings for new games and toys.
• Win more business in UK supermarkets
• Expansion overseas.
These targets will be driven through by developing and improving the current sales and design approaches, supported by an investment in building awareness of Games Galore as a brand.
Games Galore know they have problems in both process and data management that need addressing. They have established a project to review processes in the Company, particularly around concept and product development but they also would like to hear about any other processes that could be improved. Ultimately, they would like to define a new set of processes and information reporting from these.
The company has systems originally designed for much lower and less complex levels of trading. Numerous folders and sub folders on the server, contain excel documents, PDFs and word documents, which act as the ‘database’ but as it is not searchable, in reality, historical data is not available for analysis. Work flow with suppliers is monitored through Gantt charts in excel with reports extracted from another excel document and completed by suppliers. With eight concept developers working on 6- 8 projects at any one time, and projects consisting of 5 or more products from multiple international suppliers the systems are now holding back growth. The practical problems of the current systems are seen in:
• Many different formats and documents (predominantly excel and word) requiring time-consuming tasks altering documents to be supplier or customer friendly
• Repetitive data entry tasks
• No uniform centralised database
• Limited Business Intelligence Reporting
There is no requirement to support the accounting which runs efficiently on Sage, but any integration needs should be reviewed.
The client base of independent retailers and supermarkets is relatively sophisticated, and the project would also support improved client service through improved reporting on these customer accounts. As the company grows and acquires more supermarket trade, the need is to report efficiently and quickly. The supermarket sector is highly competitive and the company needs to be proactive when generating customer reports.
Below follows short interview extracts with staff at the company.
Interview with Nana Rahman, Purchasing Coordinator
Q . What is your role in the company?
A. I’m relatively new to the company, I was employed as Purchasing Coordinator as previously the concept developers did all the ordering, making their own profit margins and there were no economies of scale. My job is to raise all Purchase orders and then I pass these to John Okoro for project management.
I also do the Supplier Evaluation forms for when we get new suppliers, we are always on the look out for these but we have to make sure they meet certain standards before we can take them on our books.
Q. What sort of standards?
A. Well, major retailers need to know they have an export license, and that they meet various standards; Supermarkets for example, use SEDEX , the Supplier Ethical Data exchange which concerns issues such as appropriate Health and Safety standards, non- use of child labour, labour conditions, sourcing of raw materials and such; you can look this up if you want.
Q. Do you do any analysis of Purchase Orders?
A. Well they are all held on spreadsheets and really the central source of these is only since I came in a few months ago so we haven’t started on this.
Q. What sort of volumes do you deal with?
A. Typically I raise around 20 purchase orders a week, some of these can be re-orders though. The busiest times of year are spring and autumn.
Q. Can you tell me about the process for purchase ordering?
A. Once a concept has the go ahead then my role is to talk to the concept developers and to start on a quotations spreadsheet containing all the information about the product they are developing, components of it, packaging of it and to use this to get quotes from suppliers for manufacture. The company then uses it as a what-if tool, for example, if we first specify a fancy dress costume in cotton, and initial quotes are too expensive, we can then look at costs for manufacture in polyester which is cheaper. Similar things apply to board games and toys– we can go high quality or low quality, depending on what we think overall sales might be and who we are selling to. I try and get quotes from three or more suppliers but sometimes, for example if the order is rushed, I only get one quote back and we then accept this. Ideally we should get several quotes before we raise a purchase order but there is not always time. Quotes go through three stages really, first estimated quotes where we try to guess the costs from knowledge of similar orders before, then real quotes back from suppliers then the agreed quote which forms the basis of the purchase order. I have to say are estimated quotes could be improved, we often just don’t get our initial cost estimates right as we can’t find previous quotes for similar products quickly.
Q Do you save the quotes for analysis?
A . Not really, quotes get overwritten as we are only interested in the final agreed quote which triggers the operational management side of the company. I should add that I have to then take the purchase order number from the Sage accounts system but I don’t use this system myself.
Q. What exactly is on a purchase order?
A. Well, standard purchase order header information then the product specification and artwork and design graphics plus packaging descriptions, barcodes for the product, quantities and then a series of dates that they have to make for delivering pre-production samples to us.
Interview with John Okoro, Operations Manager
Q. Can you give me an overview of the company’s operations?
A. Well first there is the concept development, or creating a product and this is where the business uniqueness is important. The timescale of concept to product is around 40 weeks including about 14 weeks in factory, 4 weeks shipping and around one week in transit within the UK.
When we get an idea for a new concept, this is allocated to a concept developer who contracts out to the design artwork to produce samples – from which one is selected for selling to customer, Hilary usually has the final say in this and because she’s so busy, there can be delays here. Mock ups are made and tested at trade fairs and parallel to this, we also start selling to our customers – persuading them to buy the new product and agreeing when it will be delivered and the volumes they will take if we are dealing with a large retailer. We guess the production times based on previous knowledge but sometimes get this wrong and then we get delays in delivery; not good it the customer is a large retailer!
This concept development is seen as a critical process – improvements are definitely needed in defining who does what in the process and in lead time information, plus we need to improve reporting of costs of this stage such as design and artwork.
Q. What is your role after the purchase order is raised?
A. After that, lead times are confirmed and the critical path to receiving shipment into the UK is agreed – this is dictated by critical path of the customers we are selling to; output here is a date for suppliers to meet and charts for the concept developers to help them track their product.
I then manage the production cycle, the major production cycles are in Spring/Summer and Autumn/Winter.
After the supplier gets a purchase order, they have 10 days to produce a print sample of what they will manufacture which they normally email over as a .pdf file. We have to approve this, again Hilary likes to do this and then after that it is about 20 days till we receive the pre-production sample. Sometimes this is not approved, this can be a real problem if for example, we are using a license for making something like a game where we are using a TV character – the BBC for instance need to approve colours used, we had a game based on Doctor Who and they rejected the graphic for the Daleks on the game board as not up to standard causing delays in final delivery.
Once we get approval, production begins and then a pre-shipment sample from the production line must be sent if the product is for a major retailer as they need to see and approve this product.
We’ve thought about using agents to help in China and India, if we built up a good relation, they could make sure the samples sent were sure to pass approval but there are problems with relying on agents. At the moment, I go out and visit our suppliers at least once a year.
Q. Once all the approvals are done, how so you monitor production?
I monitor this daily by contacting the suppliers for work in progress (WIP) reports, either by telephone or email and sometimes if it is a big order, I will go and visit them. Use of WIP for suppliers to complete is new and working well as we can use this to report to our customers but we do have to put this report in a different format – I transfer data from one spreadsheet to another. I also report WIP to everyone in the company who needs to know, the concept developer concerned and to Sales and Customer service as they need to update their stock due project plan so they can keep customers informed of product shipment dates. The detailed tracking information process also supports a higher level process on supplier summary and a process on shipment planning – basically putting the product into containers and trying to make sure these are filled to capacity.
I also have to report verbally every week to Hilary and Bobby, normally just reporting the problems.
Q. What about stock management once a shipment is delivered?
A. This side of things is fine, we contract out stock management to a company that gives us web access to monitoring stock levels. Major retailers pick up the stock themselves so we have low stock levels here, for our own label, we can have problems as we rely on our agent network to get us orders from the small shops all over the UK so sometimes stock levels are higher than we would like.
ASSIGNMENT SPECIFICATION
In addition to the assignment specification below, students are reminded that as part of coursework required for this module, you must submit FIVE worksheets from the exercises with SAP. Submission links for these are on the module Blackboard site under “Submit Coursework” and the worksheet reference number is clearly indicated. These are due by 6th May at the latest.
You are required to produce a report to the Management Team in the case study organisation on current process problems, potential improvements and issues to consider in implementing process improvements. In order to produce the report, do the following tasks:
1. From the case study interviews, identify ONE area where working processes appear to be inefficient. Explain why they appear to be inefficient and state which stakeholders would be affected by these inefficiencies.
2. In the absence of (essential) stakeholder input, analyse your chosen ‘old’ process, and develop and justify a new way of performing that part of the work. Produce a guide to your new process in the form of a process diagram using the models in the set text to assist you.
3. Identify and evaluate the change management issues that management will need to consider to implement your proposed process improvements.