Case Study: Richard Antiques Imports (RAI)
Richard owns and operates Richard Antiques Imports, which is a family run business operated by the Richard family for over 25 years. With a goal to offer a wide range of quality mid-century and antique furniture, Richard started this business 25 years ago with 50 employees.
Richard imports reclaimed architectural and garden elements such as stained glass windows, cast iron gates, chimney pots and many other fascinating and interesting items. He purchases antiques and home furnishings in Asia, Europe and Africa, ships those items to a warehouse facility in Sydney and then to his stores in Melbourne, Sydney, Brisbane and Adelaide. Richard tracks all his purchases and subsequent shipments of these items to Sydney by using a manual system to keep a list of items purchased, shipments of the purchased items, and the items in each shipment.
Richard makes periodic buying trips to various countries in Asia, Europe and Africa. Prior to each trip, he goes through the local yellow pages and approaches his business contacts for potential antiques suppliers and their contact details such as Business name, contact person, address and contact number in respective countries. During the trips, he visits potential suppliers and selects items based on his experience and current market trends. He keeps notes about the items he purchased and basic data about their shipments including the item name, date of purchase, weight, packing instructions, cost, shipping company name, contact person in that country and also in Australia, shipping cost and approximate date of delivery. Richard has purchased hundreds of items over the years, and they have been shipped in dozens of different shipments.
Upon receiving the items at his warehouse in Sydney, each item will be labelled with Product code, Weight, Dimensions (height x width) and Retail price. Then, these are transported to one of the four metro stores where these items are displayed for sale. Recently, he hired a University student to compile a list of potential customers and send regular emails about the products available at each store.
Customers can purchase these items by calling one of the RAI stores and paying by credit card. At the time of ordering, one of the staff members collect customers details (customer first name, last name, address, email address and contact number) and their credit card details (card type, number, name on card, expiry date and 3 (or 4) digit code) at the time of purchase.
Walk-in customers select the items and pay by cash or credit card. RAI staff record the customers details at their first visit and provide each customer with a customer ID to offer discounts on subsequent purchases.
Currently RAI staff record all their customers’ details and relevant transactions manually into a register. Although, this manual system is working fine, recording data in the manual system is laborious and time consuming.
Richard makes his business stand out from the competition by providing unique antique items and excellent customer service. He has noticed significant growth in his business in the last couple of years in terms of sales and customer numbers. As a result, his staff at RAI stores were unable to manage customer data and provide the same level of service. Moreover, Richard is unable to keep track of suppliers, items he purchases on his visits, shipping company details and delivery dates. In addition to this, he is unable to provide quick answers to several questions relating to (1) Total number of items purchased by month/year (2) Total costs for each trip (3) Total number of customers at each location (4) Number of repeat customers and their frequency of visits (5) Busy periods and (6) Total expenses and the amount generated by each store and so on.
Richard attended a workshop about the benefits ERP systems offer to businesses such as his. With this, he wants to keep track of the suppliers, items he has purchased, their shipments, and eventually customers and sales. He believes that an ERP system will not only help him and his staff to record the transactions easily but also help them to generate reports to understand the total number of customers at each location, peak times, payments received/outstanding, total revenue generated, etc. In addition to this, they believe that an ERP system would be helpful in minimising inconsistencies with data and be able to manage cash flows effectively. Richard is keen to use the technology and implement an ERP system with the help of an expert (you) to manage their operations.
MARKING CRITERIA
| Criteria | Description |
| Argument for ERP | • Arguments are well structured. • Arguments and recommendations are convincing and supported with evidence. • Considers the reason for organisational change, the alignment of an ERP with the organisation's strategy, the benefits and limitations of ERPs in the context of this organisation, and the organisational commitment. |
| Argument for feasibility | • Arguments are well structured. • Arguments and recommendations are convincing and supported with evidence. • Considers the organisation’s ability to manage the implementation of an ERP and recommends strategies to improve/manage the project. • Budget considers costs for hardware, software, development, deployment, and training. |
Your Task:
For this assessment, you will develop a report for “Reliable Training Centre (RTC)”, which includes:
Persuade management that an ERP is required. Your argument should consider at least:
Reason for the Organizational Change
In a given case, it is found that Richard owns and operates Richard Antiques Imports (RAI) -a family business for more than 25 years. The goal of the organization is to provide a wide range of quality mid-century and antique furniture to the customers. Richard is purchasing several items from Asia, Europe, and Africa. He then ships those items to a warehouse facility in Sydney. From Sydney, the final products are dispatched to the stores in Melbourne, Brisbane, Sydney, and Adelaide.
Richard has to keep a track of all the items dispatched, shipped to the warehouse and shipped to the final stores. He also requires keeping a track of all the items purchased and the items that were shipped to different locations. Further, he needs to keep record for each item such as item name, date of purchase, packing instructions, weight, shipping company name, costs, contact person name and details, and the country from which it was shipped.
It helps Richard to track the details of the shipments in an easy and convenient way. Further, when the product reaches the warehouse, other associated details need to be recorded. These include product dimensions, product code, and retail price. They are then transported to the one of the four metro stores.
Further, Richard needs to keep a track of the total sales, sales values, and information pertaining to the customers. It helps him manage the stores in a better way. Currently, RAI records all these information in a manually maintained register. The manual system is working fine till date, however, with increasing number of transactions and other information, Richard need to deploy a particular module of the Enterprise Resource Planning (ERP) system for the purpose of managing this data effectively.
For this purpose, there will be several changes carried out in the organization once the ERP system is installed. The work practices and work approaches will change; further, the employees need to be trained on the modules of the ERP system so that they can carry out the daily working practices. The organization structure might also change to a certain extent considering the increase in efficiency and productivity of all the departments of a given organization.
Alignment of an ERP with the Organization’s Goals
ERP systems help in managing the daily workflow in an effective way. The reporting systems improve after deploying the ERP system and thus assist the top-level management in taking better decisions (Ren, Cao, & Han, 2015). However, the top-level management needs to make sure that the ERP system aligns with the goals of the organization.
For this purpose, the top-level management can formulate the goals and accordingly formulate strategies in the organization. The ERP modules should thereby be operated in a way that can achieve the intermediary milestones of the organization. The top-level management can also monitor the performance of the strategies implemented and Richard can take steps in this case to modify them as and when required.
Benefits and limitations of ERPs in the context of this Organisation
The major benefits of installing an ERP system in the context of given organization include - better organizational control, avoiding duplication of data, improvised communication with both suppliers and buyers, improved profitability analysis, improved decision-making process for the owner, and better usage of time from the managerial perspective (Brookfield et al., 2014). Richard will be able to collaborate with the suppliers in a better way and will be able to track the shipments through a given information system.
There will be no need of managing all the information through a manual approach. Instead, an integrated solution approach will manage the entire data and will generate reports for the management team as and when required. They would also be able to keep a track on the net sales value and thereby modify the sales strategies to attract more customers toward theirs stores.
However, there are also disadvantages associated with the installation of the ERP system. These include - high cost of implementation and maintenance, difficulty for the employees to work on it during the initial stages, internal resistance in a given work environment, inflexibility of using the system as it is generic, and additional training costs for the employees (Renuka, Kamal, & Umarani, 2017). Richard thereby needs to carry out costs-benefits analysis before implementing a given system in the organization.
Organizational Commitment from the Management
To install and use an ERP system in the organization, it is important to receive organizational commitment not only from the management team but from all the employees of the organisation. There is a need to deploy the techniques of change management so that the managers can overcome the internal resistance of change among the employees (LoSchiavo et al., 2013).
Second, the employees need to be trained on the modules of ERP so that they can carry out their daily routine practices in the organization. It is important for the employees to embrace this new change in the organization so that even they will feel comfortable using these systems. Richard needs to inform the major benefits of using this system and thereby motivate the employees in a given working environment (Jurisch et al., 2013). Only then the objective of installing an effective ERP system in a given work environment will be achieved. It will subsequently deliver better results for the organization.
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