CASE 6: Connor Metal. James Ryg CIS

Transcription

1 CASE 6: Connor Metal James Ryg CIS Due November 7 th, 2016

2 Case Overview Brief: Connor Formed Metal Products is looking to expand its current information system, which increased access to information in their San Francisco division. Connor Formed Metal Products is a divisional organization, and this structure poses issues to technology adoption, with each division being a sub organization, with its own logistics and culture. Bob Sloss, Connor s President, was worried that those cultures, and size differences would stymie the success of a system that worked so well in the main branch. Industry Competition Analysis Agrico Information: Industry of operation: Connor operates in heavy industry. They produce two main varieties of product, commodity steel springs, as well as custom metal products, such as stampings, forgings, and complex assembly components. Custom metal products make up a large portion of their produced goods, and are treated as a service relying on differentiation. Their commodities tend to be cost-focused. Company effectiveness analysis: Fiscal: In the past few years, their overall shipment volume has increased rapidly, from 11.3 million shipments in 1984, to the current 19.2 million shipments in However, profits have been inconsistent, and the impact of improvements have had an underwhelming effect on profits. In addition, 1

3 large costs were encountered due to the move of many employees to Dallas, and some other divisions are only marginally profitable. Market: Little information is given on market share, but it is mentioned that Connor is one of the larger players, as most of their competition is nested in job shops of employees. In the time period of the case, American businesses began facing much stronger foreign competition, that had somewhat higher quality, and vastly lower prices. The case implies that to compete, an American company like Connor would need to be more flexible and reliable. This caused the shift in production to custom products as a priority. Product/service: As stated above, a large portion of Connors business relies on the service component of its production. In addition, they have an advantage in that their machinery is fairly new, Critical Success Factors: After Sloss decentralization, the company gained the ability to be more flexible than other domestic producers in their field. In addition, for them to succeed, there needs to be a distributed decision making ability, to allow responsiveness. Los Angeles system gave them that ability, but a lack of information flows in other divisions, and relying on an older IBM system 36 infrastructure holds the rest back. 2

4 Five Forces Analysis: Threat of new entry: The cost of machinery to produce custom fabricated metal in bulk, or the dies required to produce coil springs is incredibly expensive. As such, the cost to enter the field is relatively high for the reason of capital investment alone. It would also be difficult for a new entrant to achieve the same level of service or reliability that Connor has developed. Bargaining power of buyers: The buyers tend to favor the cheapest product, as the quality and service in the field is notoriously poor in general. However, Connor Metal appears to subvert this somewhat, as their attention to service quality allows them to build partner relationships that make them a preferred supplier, even at slightly higher cost. Threat of substitutes: Because coil springs and custom metal products are structurally necessary in a number of structures, vehicles and consumer goods, there are few substitutes. Realistically, until the advent of metal sintering 3d printing or higher end composites, there was likely not a reasonable substitute for most uses, although it s possible that smaller objects (like those requisitioned by Hewlett-Packard and Motorola) could be substituted by injection molded thermoplastic. Bargaining power of suppliers: Suppliers complete for the lowest sales price, and unless that supplier has a unique technique or process, or significant competitive advantage, they would have little legitimate bargaining power. 3

5 Competition: As stated earlier, most of their competition is composed of employee businesses that are organized as job shops. Their quality and service is not particularly noteworthy. Overview of Stakeholders Business Stakeholders: Bob Sloss: Bob is the president of the company, and is one of the major stakeholders pushing for a rollout of the successful system. One of his primary interests with the system was the possibility of data analytics, particularly as it concerns customer trends. However, he recently changed the policies on control of divisions, and worried that each division may resist the change. Division Managers (Where software not rolled out, i.e. Petty, Allen): This refers to specifically divisions outside of the current implementation area. The managers there might be less willing to accept a larger software suite due to their smaller employee base, which already encourages information flow by nature of their small-team atmosphere. Divisional Employees: The employees face a change in their daily operation. Theoretically, employees in other divisions could feel differently about the impact the Job Boss software suite could have on them. Consumer Stakeholders: Local Consumers: Local consumers are generally loyal to local distributors, but are also incredibly price sensitive. Time is also generally a concern, something that a local production facility offers as an advantage. 4

6 Large volume consumers (i.e. Hewlett Packard, Motorola): These consumers are generally particularly price sensitive. However, for small volume, or otherwise technical stamped or machined parts, they may be willing to pay for extra service. Potential Alternative Solutions Push to all divisions: Alternative overview: This alternative would involve a full rollout to each currently operating division, each running its own set of the Job Boss software. Additional system capabilities would likely need to be added to enable some level of cross-site communication, particularly with network speeds available at the time. The rollout would be ideally focused on employee stations that show high productivity, at least initially. The presence of those terminals may create fervent first-adopters, who espouse the value and time saved for them, and the other employees may gradually request it. Alternatively, it could be pushed to the entire company, without appreciating the 4 step model. Potential business impact: The potential impact would at best be equal to the impact that Los Angeles experienced, however would likely be smaller for each division, as they have somewhat less of a need for many parts of the system to begin with. There would likely be a solid improvement to run speed and defective jobs, which would reduce costs, and improve output and responsiveness. The cost of the system could be nearly 75,000 dollars per division as well, although would likely be less in each division based on size. 5

7 Consequences for stakeholders: Sloss: Sloss is facing a decision that could potentially affect the company and his position for years to come. His largest concern likely would revolve around cash flow, as his memo had noted that the company tends to take on new debt at the beginning of fiscal years. Division Managers: For the other division managers, there may be some animosity regarding the change, as they could feel it invalidates their experience. However, a larger subset of these managers would likely appreciate the greater amount of information and trend tracking that the Job Boss system offers. Divisional Employees: This is the greater wildcard, as the technology acceptance model noted in our last class applies. This is a system that fundamentally changes how the employees do their job, and they may resent that. In addition, because the entire system relies on having the terminals at multiple job stations, it may be more difficult to approach the rollout in a smaller manner at each division. Local Consumers: In a successful rollout, these consumers would very likely appreciate the greater service they receive, as smaller local consumers are more receptive to service. If the system could implement a method of allowing local consumers to view their order status, it may even increase orders by easing their burden of information. Large volume consumers: These consumers would particularly appreciate the faster turnover time that the system could support for order completion, and reductions in cost due to savings in wastage. 6

8 Alternative Two: Push the software to a single, smaller successful division Alternative overview: This alternative is functionally another test for Connor Metal. Because Sloss was concerned about the effectiveness of the Job Boss software in a smaller division, testing it in a division like Portland could be potentially ideal as a research study. Because Portland is a smaller, successful division, the other divisions should be kept in the loop, and have it seem like a reward for Portland s success. If Portland experiences similar improvements, Sloss will be able to implement a wider rollout as a byproduct, as the other Divisions would then be extremely interested in the software, seeing Los Angeles turnaround, and Portland s increasing success. Potential business impact: This option is much cheaper than a full rollout, but would only delay the cost if the test is successful. Because Portland is already a successful division, the gains may very well be less significant than they were in a larger, troubled division. Due to the lower cost, the company would need to take out less, if any, debt as well. Consequences for stakeholders: Sloss: Sloss would feel less pressure in the event of a failure, because Portland is a small division, and already successful. Because the cost is low, it can be justified as focus group testing, and the results would give him the information he needs to be confident that a full rollout later would not negatively impact the culture or effectiveness of the smaller divisions in general. 7

9 Division managers: Much like in the first option, the manager would likely appreciate the improved information flow. The manager in Portland would feel rewarded, and therefore incentivized to make the adoption a success. He could also use his influence with the other division managers to espouse the values of the Job Boss software, leading to other divisions having an easier time following the technology adoption model. Division employees: The employees would tend to have less issues with their work, and have greater productivity. Easier access to information would likely save them time, as the program is designed to monitor jobs, and not monitor by employees. If this was made clear, the employees would likely be highly receptive to the change. Small/Large volume consumers: The impact would be the same as the first option states, just localized. Alternative Three: Do nothing: Alternative overview: This alternative is pretty simple. Connor Metal would continue to operate the software in Los Angeles, but would delay or suspend a rollout to other divisions. Potential business impact: This option would likely continue the benefits to Los Angeles, where the need was abundantly clear. Other divisions would either remain profitable or unprofitable. Now that the company is turning a profit again, and the Dallas closure is complete, the company will likely be profitable for years to come. 8

10 Consequences for stakeholders: Sloss: Sloss would be taking a safe move here. As stated above, the profits would likely stabilize, and Connor Metal would be profitable for a while, and technology aversion may go down in the early nineties, making a future rollout possible at a time when the company has greater cash reserves and less potential resistance due to culture. Division managers: Nothing in particular would change. Division employees: The state and tasks of work would likely not change much. The job log books would still require massive clerical time, and paper based operations would continue. Small/Large volume consumers: Local consumers would be beholden to the success and quality of service offered by their local division provider. Larger consumers would likely source parts from multiple divisions, and would continue to see benefits from the current Los Angeles system already in place. Selected Option & Reasoning Selected Option: Push the software to a single, successful division: This option was selected due to its relative safety. It is a way to reward a successful division and further take advantage of their current effectiveness. It is also flexible, leaving open the possibility of further expansion, and provides a valuable research base for that future possibility, potentially creating tweaks for smaller operation. 9

11 Rejected Option: Full Rollout: Connor doesn t particularly have the cash reserves required to support a full rollout at this time, in addition, even if they did, there is no information presently on how the system would perform in that environment. While a full implementation could very well succeed, it is possible that the rollout could be seen as a forced implementation, or just generally fail due to group size differences. Rejected Option: Do Nothing: The system is to promising to simply keep it deployed to only one division. While Connor would continue to maintain profits, being able to capitalize on other divisions might become more difficult without modernizing. 10