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Companies today are more dynamic and complex in terms of their products and operations. Therefore in order to survive in the challenging modern business environment the management needs information on their organization as well as the industry at the touch of a fingertip. Having appropriate information systems for the business processes help companies to have clarity across all aspects of their business, allowing them to act quickly with increased insight, efficiency, and flexibility. With information systems companies can reduce costs, optimize performance, and gain the insight and agility needed to close the gap between strategy and execution.
The objectives of this study comprises of the evaluation of business processes and information systems that support these business processes in the organization selected – Singer (Sri Lanka) PLC, identification of areas where information systems have not been introduced yet and the suggested proposals to fill in these areas. The study describes in detail about the business and information process of Singer.
For this study, information was collected mainly through an in-depth analysis of the processes at Singer. In addition user manuals, articles by various scholars and books were referred in order to relate the Singer practices to the industry standards.
INTRODUCTION ABOUT THE COMPANY – SINGER (SRI LANKA) PLC
Singer Sri Lanka started its operation in 1872 in Sri Lanka and is a Company that has grown over the years into a benchmark entity in Sri Lanka in terms of popularity, modernity and reach. Singer today is synonymous with quality, wide reach, and wide product range across diverse lines and wide appeal to consumers across the entire spectrum of buying power.
Source: Singer (Sri Lanka) PLC Annual report – 2007
With its inception through the sewing machine, Singer’s product portfolio has diversified to encompass a highly successful multi-brand strategy combining products of top world marques with the company’s own products across a range of household, industrial and financial categories. Over the years Singer structure has strengthen immensely to incorporate with the strategies formulated to face the changers in the environment.
Singer Sri Lanka has only around 10 brands in early 2000 and mainly concentrated on market penetration by providing affordable products to the mass market. In order to bring down the pricing, the company has moved to strategic sourcing of its major brands through an intermediary which purchases for the entire south Asian region which affects economies of scale.
Singer has moved to differentiation and multi brand strategy to enter into a new era of retailing. In all categories, with different brands positioned to appeal to the different customer segments.
Singer trade name has changed to “SINGER Plus” from SINGER on 1st of January 2007 and the slogan to “MORE BRAND – MORE CHOICE”. It enables to increase the appeal to customers and the message of “choice” available in the stores. .
“Our journey into multi-branding commenced in 1996. With Singer as the parent retailing brand, we have acquired distribution rights for some leading brands in the world picked by a careful selective process. Among brands falling within our supervision are Whirlpool – No. 1 Home Maker in the World, TCL – largest manufacturer of Televisions worldwide, Hitachi – the Japanese leader in Electronics and two heritage brands Sisil and Panasonic. The recent appointment as National Distributor for Samsung, leading electronics brand in the world and Philips, another global heritage brand, exemplifies our diversity and we believe will significantly add to our future revenue earning potential”.
Source: Chairman’s Review – Singer (Sri Lanka) Limited Annual Report 2007
Singer has moved to multi channel strategy to cater to the different market segments. Singer has identified and divided its customer base into different categories based on their purchasing power, level of education, standard of living, brand loyalty, etc. different channels are there to cater for these different customer groups, which have shown in the figure 2.3.
Figure 2.3: Multi Channel Strategy
Source: Singer (Sri Lanka) PLC Annual report – 2007
LEVEL OF INFORMATION TECHNOLOGY USE AT SINGER (SRI LANKA) PLC
Singer (Sri Lanka) has already implemented the ERP system (Powered by IFS) and this is greatly help in numerous ways. It provides lots of benefit to the organization such as it makes available in real time data, providing tools for planning and monitoring various business processes, facilitating customer interaction, maintain the records of entire customer base, speedy attention in customer complaints, etc. Singer as a trading company always used to practice modern technology and try to be edge over the other competitors in the similar industry. They have many Information Technology (IT)/Information Systems (IS) systems that provide various value adding and support functionality through the business processes.
3.1 ERP System: Through ERP system Singer handle all the transactions and information regarding the manufacturing, logistics, distribution, shipping, invoicing, accounting, human resources, shop sales, market campaigns, bargain or auction sales, promotion activities, etc. So in practice Singer district managers first getting the orders from their relevant shop managers in product wise and then they pass it to the area managers. Then the area managers review that and giving the information to the sales department. Then with the involvement of product managers, sales manages and sales director they have further adjust those figures and release the forecast for the next 03 months period. This cycle happen every month in continuous basis. ERP system helps a lot to keep this wheel turning.
3.2 Inventory Management System: Managing inventory for more than 1000 Stock Keeping Units (SKU’s), delivering from 4 warehouses in separate location and to fulfill the requirement of more than 550 Shops Island wide is not an easy task. For that Singer have to have sophisticated inventory management system since over inventory results in tied up of money unnecessarily and shortage in inventory is directly resulting in loosing the customer as well. To over come both these issues Singer already implemented reliable Inventory Management System as main application software of ERP system.
3.3 Human Resource Information System: This system has installed with the Finger Scan System as well. Finger Scan Units will be installed at the required entry and exit points. The employees will point their fingers on these machines each time they enter or exit the work site. The machine stores this information in its memory and will transfer the same on to a PC as and when required. This system can provide summarized outputs such as Time In/Out reports, Absenteeism, Late Arrival, Attendance Summary, Over Time Report, Leave Report, Individual Employee Report and Integration to payroll, etc.
3.4 Financial Accounting Module: This is one of the key modules at Singer. It has control and monitoring features in receivables and collections management, dispute management, reconciliation, and auditing. Daily financial transactions can be tabulated at any given point of time and able to generate more useful results for the decision management purposes. Some of the results can be generated from this software are; Profit and Loss account, Balance Sheet, Cash Flow Statement, Variance Reports, Aged Analysis Reports, Non Moving Report, Obsolete Item List, Transfer Pricing report, etc.
3.5 Material Master Module: Raw Material stock at warehouses and stores are managed through this module. Authorized staff (eg: Production Managers) can request for goods (eg: Goods needed for forecasted production), and store keepers can release materials upon receiving necessary authorization. Any shortages in materials can be viewed from the purchasing department and they can order materials based on these requisitions. This module helps purchasing management to meet necessary re-order levels, and warehouse operations also have been smoothened.
3.6 Enterprise management and support: This is the most important and busiest module of ERP at Singer. This module handles day-to-day operation related matters such as purchase requests, purchase orders handling, payment processing, etc.
3.7 Sales System / Sales Force Automation System: Sales system at Singer is similar to key organizations in that nature. It would tracks all the sales done by the organization at the time of invoicing the product and keep on updating the system. This system is crucial in terms of operational efficiency and strategic value. IT department should ensure smooth operations of the sales system in order to avoid sales duplications.
3.8 Internet Access via a Company Lease Line: Singer has given internet facility to all executives via a separate SLT line leased by the company. This helps managers to update with latest tools and facilitate to get required information on time. Exchange server system is the controlling server of company email system. It provides both client based and web based email solutions to internal staff.
3.9 Black Berry Phones for All Directors: Timely decisions are vital factor for the success of any organization. Since the directors are involve with corporate level expansion activities most of the time they are out of the office and the large number of important mails are pile up in their PC’s waiting for a approval or quick decisions for further actions. The new CEO has identified this gap and decided to offer Black Berry phones for all directors to overcome this matter.
3.10 Lap Tops For All Managers (Entitle for Replacement Computers): All replacement due computers belongs to managers have replaced with Lap Tops to enable managers to do urgent office work even they are at home. More significantly this would help managers to answer for the important e-mails without any delay.
3.11 Sophisticated CNC Machines: All new machines purchased by the Singer factories are decided to go for sophisticated CNC machines, mostly imported from European countries and always compatible with the latest technology and the software available. As an example engineers are doing all the designs in their PC’s by using common design software like AutoCAD, Pro-Engineering, etc and directly transfer those data to the CNC machine as it is. Then these machines are able to convert it to machine coding and no need to do the manual programming again, which save a lots of time and money to the company.
3.12 Well Trained And Updated Live Ware: All level of staff starting from key managers to junior clerks, well trained for using the available systems and software and also promote to do the improvements by their own.
COMPETITIVE PRIORITIES OF SINGER (SRI LANKA) PLC
“A product or service should have key attributes to be competitive in the market place. These are known as the competitive priorities. The competitive priorities may change with the market segment. For example, customers in a rural area may be interested primarily in the cost of product while the customers in urban areas are interested in quality of the same product.” (Chandana, 2009, p.9)
Cost Or Price As A Competitive Priority
Type of competitive strategy with which “the organization aggressively seeks efficient facilities, pursues cost reductions, and uses tight cost controls to produce products more efficiently than competitors” (Daft, 2009, p.240)
Manufacturing plants should plan their systems in such a way that all resources such as material, labour and machines are efficiently used to bring down the cost significantly. Also company should make sure to keep sufficient margin to cover all other overhead before going to reduce the selling price to get more volumes.
Quality As A Competitive Priority
Quality should be there in every aspect including design quality, process quality, product quality, service quality, etc. While maintaining ISO 9001:2000 standards factories are make sure that every item produced up to the required or expected level in terms of both quality of conformance and quality of design. To continue that everybody was well trained and responsible to maintain the required quality standards in each working point as specified in the documents (work instruction lists).
In overall company’s point of view it’s also a crucial factor to maintain the balance approach between the price and quality of all the products. So to have a full range of products in each categories company decided to go with multi brand strategy, where the company doesn’t want to compromise quality and damage the brand image due to get the price advantage. This differentiation strategy is also a type of competitive priority with which “involves attempts to distinguish the firm’s products or services from others in the industry” (Daft, 2009, p.239)
Flexibility As A Competitive Priority
With the bath production operation system in factories they are able to produce variety of products, develop new products, able to do some product changes to fit the customer specifications and also quickly able to respond increasing and decreasing demand due to the seasonal sales pattern. Manufacturing system is also able to undertake bulk special orders at a competitive price and deliver within a shorter time period.
Company highly believes there should be a flexibility and variability in all categories. That is also another reason company has moved to differentiation and multi brand strategy to enter into a new era of retailing as explained earlier; in all categories, with different brands positioned to appeal to the different customer segments in terms of quality and the price.
Delivery: Speed And Dependability As A Competitive Priority
As a policy Singer is maintaining one month finished goods inventory in all SKU’s in general and 1.5 to 2 months finished goods inventory for identified fast moving items in the sub warehouse. Singer also has the island wide distribution network with more than 500 shops and goods are transporting everyday to all locations from the central warehouse. Shops are also permit to keep sufficient inventory in their stores and with that the factories and company can assure they can deliver products on time and most often customers can get the products without waiting.
Service As A Competitive Priority
Singer provide unmatched service to their customers by giving not just a product but with a full package which include super shopping environment, friendly customer care staff, product demonstration, discount schemes, easy payment schemes, free delivery to the door step, free installation, customer training, free services for selected items like A/C’s, extended warranty scheme, excellent after sales service, etc. In other words simply customer doesn’t have to worry about any other thing after purchasing the item.
MANAGEMENT INFORMATION SYSTEMS USED AT SINGER (SRI LANKA) TO GIVE A COMPETITIVE ADVANTAGE
ERP Implementation At Singer
In year 2005 ERP was a quite new concept for the Sri Lankan businesses, the majority have heard that ERP is a tool which can integrate the individual divisional business processes and give information about the entire organization and increase the efficiency. Usually Singer is well known company for try out new concepts in the industry in its nature.
The requirement of implementation came into the picture in the top to bottom approach, which is the normal case at Singer. Even though before the idea of ERP emerge there were no big issues in the existing processes and whatever the IS used, senior management started to see large loop holes in the existing systems compared to the capabilities of ERP. The introduction of the ERP to the existing setup required comprehensive study, lot of changes and reengineering to the existing processes. Actually this can be considered as one of the major revolutions which Singer has gone through the short history which is less than two decades. The senior management view ERP as an IT system rather IS. The main reason was nobody wanted to understand the difference between IS & IT, or even nobody realized these are two different things and ERP implementation is an IS project not an IT alone. The best example of ignorance of IS aspect is throughout the revolutions of the organization structures at Singer they have not thought of IS managers, only about IT managers. There has not been a job description of an IS manager nor the IS functions inside IT manager. It is essential to look at any IT related changes to be done to the organization in an IS perspective. Since the senior management identified ERP implementation as an IT task, they did not thought it about on the IS perspective. Thus the ERP implementation team was formed as an IT team.
The attitude toward ERP from the middle management and rest of the organization was in the negative side at the initial phase. They visualize ERP as a tool which will be introduced by senior management with the support of IT team to find the mistakes and audit individuals on their deliverables. For an example warehouse managers saw ERP as a watch dog who can report the inefficiencies of the warehouse. He never understood ERP as a tool which can increase his efficiency. The problem is not with either the managers or ERP, it is due to the human nature. As human beings anybody does not like to change, there is an inherent resistance for change. Therefore it is the duty of the steering committee to make the environment and culture where employees are ready for change. This is nothing related IT, but it’s completely related to the IS. Simply the attitude should be changed slowly where employees will say “yes we need the change”.
One major reason for not doing proper change preparation was the strict timeline for the ERP implementation. Thus some of the key aspects of IS has been ignored. It is a known fact that sometimes we need to do the changes gradually, when the resistance is high. Therefore this could have been a good strategy if Singer ERP implementation was initially well planned and introduced as a gradual change. Even though the ERP implementation went with a rapid phase it was 50% successful at the first attempt because of the visionary leadership of the chairman Mr. Hemaka Amarasooriya.
The formation of the ERP implementation was done with the majority of IT personnel but with the presence of representatives of key divisions. At this stage most of the middle managers did not treat this seriously and they asked somebody from his/her division in the ERP team, but the member was frequently changed when divisional workload increases. Thus there were no dedicated representatives from key departments. On the other hand middle managers do not involve in reviewing the progress. Further in 2005 Singer did not have well defined and documented processes to handle the day to day work. The general working culture was heavily depending on the manager of the division. There were lots of situational decisions taken by the managers with the gut feeling and most of the time they worked fine.
Eventually what happened was the existing process was not thoroughly studied by the ERP team and they came up with an inappropriate reengineering plan to fit ERP into Singer processes. In a nutshell, this plan was not to customize the ERP into the Singer culture, but to customize Singer culture in such a way that it will fit ERP general template. For an example if we compare the finished goods delivery for a particular location, previously it was approved by the district managers or area managers. At that point they decide exact quantity to go there and make the delivery note for the ware house team. Then if the goods are available they will directly deliver them and acknowledge the originator. If the products are not available warehouse will contact the requester and ask for a modification with available types of products. Sometimes this make the things to get delayed but good situational decisions were possible. When this process was cutover to the ERP, the process was modified. The new request was to be selected among pre defined product sets. Therefore if any single product was short, system will not allow to select that template and choose an equivalent to unavailable product from the list. This became a big restriction for day to day operation, because in majority of the cases people were used to do customization according to the situation and send the goods to the shops. Eventually the efficiency achieved by integrating warehouse and material planning is of no use due to the restrictions which were not thought of at the planning stage. Even though the above discussed example is related to product delivery similar examples are spreaded across the company with the ERP implementation. The major reason for this was lack of the support given by experienced staff when the ERP implementation was planned.
The ERP implementation at Singer in year 2005 was an exercise of more than 2 years, but not fully bad experience; even there were highly impacted cases. The finance department got much enhancement for their day to day operations because almost the entire business was integrated compared to previous individual MIS run at individual departments. For an example the finance manager can get an entire view on the financial status online and drill down to micro detail for analysis purposes. Further the documentation work of the ware house material ordering departments were reduced immensely. Because prior to ERP the same information which was entered in different systems at different departments. Sometimes due to mistakes the same information recorded by two departments was not identical. Since ERP integrated all the departments via the processes, information was accurate and available online.
Even though ERP was took the cold start and kept on moving with day to day work, Singer did not stop the previous systems overnight. It was like a parallel operation of the previous systems and ERP. This was a very good decision, because otherwise there could have been a significant impact and delays due to the initial problems ERP faced. At the ground level running ERP had lot of operational issues because the existing systems were not studied properly and necessary reengineering was not done.
The next biggest problem was the real users of ERP were not feeding the accurate data in to the ERP system. This was mainly due to the culture which was established in the lower levels of the company. Majority was interested in doing the job properly, but hated the documentation work. Thus they entered some data for the sake of completion; this was severe because the initial ERP system was not equipped with proper data validation mechanisms. Again this was not a limitation of ERP; it was an issue of customization and implementation. For an example when issuing products for a new location (shop), there was a requirement to fill something in the location/shop name field. So the person who is issuing the delivery note just enters some word as the location/shop name. Therefore for the financial department it would be like junk information, because they cannot perform the assets capitalization at shop level. After few month of the operation this problem was noticed and resulted in doing an audit on the entire network on the shop level. Plenty of money was spent on this audit just to correct some mistake which were not anticipated at the beginning due to tight time schedule.
After running ERP for about six months all the people began to realize that ERP implementation have lot of problems than expected. The employees from the bottom was complaining and raising the voice that the ERP is not functioning properly and signs of failures of entire system were popping out, since ERP is the only integrated system running in Singer. For an example in first quarter of 2007 employees freely express their views to senior management on the problems of ERP. These motivated the senior management to take the bottom up approach and relook at the ERP again.
Eventually management took a serious call and formed cross functional teams (CFT) to find the problems in ERP and iron them out. This was initiated in second quarter of 2007 and given a time line of 12 months. More importantly real hard users of ERP was put into the CFTs and take out all the issues of the system. Then there was an ERP consultant in each CFT, who has to solve the issues with the agreement of the team. Finally the CFT has to certify and sign off there are no more identified issues in the ERP. This became a fruit full exercise due to following reasons,
Actual users became a part of the team who studied the issues in the system.
Each CFT was equipped with ERP consultant
IT department played the role of IS with the support of all the divisions
Senior management support and guidance
Last but not least attitude of the organization was to correct whatever issues with ERP and move forward to face the competition.
Finally after about 2 years of period Singer was able to make ERP a success. In any successful project there is plenty of room for improvement, thus that global rule applies to Singer ERP as well. For an example currently the ERP operates as an internal system, but the capability of ERP is far beyond.
The present supply chain should be extended to include the suppliers, distributors and business partners, though internet to guarantee a smoother process of ordering and purchasing of goods with minimum time-to-market, stock holdings, less problems. Singer should improve and use the present ERP system to access supplier’s and distributor’s stock databases on-line and in real time to check stock levels. There should be information integration, planning synchronization and work flow coordination to achieve this goal. With a fully fledged SCM and close cooperation with the each organization in the supply chain will add value, reduce costs, improve flexibility and increase responsiveness of Singer.
Information Systems In The Human Resource Department
One can ask why we need IS for the HR department, but actually IS can improve the HR department functions extensively in a large organization like Singer. Human Resource Management Information Management System is vital organization, where manual record keeping is an inefficient task. For an example let us recall the method of sending birthday greeting to employees. If the data was not available in the computer and it is in the personal files clerk or assistant should routinely check for the upcoming birthdays and trigger the sending of birth day card. But thank to computers every morning there is a pop up with the names of the birthday celebrities. At Singer, its HRIS basically performs three services,
Record keeping – parallel to the traditional method of keeping hardcopies in the personal file, all the information is fed to HR database. This database is shared in the intranet at different access security levels. For an example the basic information is shared among everybody, but personal and HR specific data are limited to selected HR personnel. Even though IT is used for record keeping it can be seen that the work is duplicated by keeping hard copies too. Thus it is recommended to limit the hardcopy based record keeping to the documents which have a legal requirement. Otherwise the IT use is not optimized in the aspect of record keeping.
Facilitating human resource operations – Thanks to the HRIS majority of the HR operations are computerized. For example staff recruitment, attendance and leave recording, linking up with payroll, performance appraisal, training management are done using the HR portal, and this saves a lot of time. HRIS is accessible to any staff in the company. Staff performs all their administrative requests via the HRIS portal and the relevant supervisor can approve or reject the relevant request from the system itself. There will be automatic email alerts sent to relevant parties by HRIS, if any task is pending to be performed by a person. Therefore HRIS is linked with the exchange server of the organization to facilitate this feature. Staff personnel file details are scanned and stored securely, in addition to the hard copies for back-up and easy retrieval purposes. Payroll system is connected to the HRIS to minimize intermediate human intervention. The human resource management can retrieve customized reports from HRIS such as, division wise staff attendance, overall working hours, division/ unit wise performance etc.
Reporting for management decision making – Since the entire aspects of HR is computerized, it is very easy to do data mining and come of with summaries which will ease the decision making with quantitative figures. The cost reduction Initiatives Company has implemented in the recent past has been taken with the support of HRIS data. Another important support HR got by means of IT was implementing the forced ranking performance appraisal. Since 2006 Singer was trying to implement the forced ranking in the annual performance evaluation. This was initiated to make sure the best performers will be filtered and top percentage will be rewarded. The majority of the company did not like this bell curve method because it can deteriorate the team culture, but the management wanted to implement this and the HR was trying hard. Somehow the exceptional performance of the company made HR to deviate from the forced bell curve. The major reason was the power and politics of the line managers. For an example the line manager who was doing the performance evaluation ranked everybody in his team with A+, for a year he has achieved targets exceptionally. After couple of rounds of discussions HR changes their mind and agree with the line manager. Therefore consecutive two years of failure on implementation of bell curve based ranking, HR decided to get the support of IT. IT modified the existing HRIS in such a way that a single manager cannot submit his evaluation on his team if he does not adhere to the bell curve. With this manager was not supposed to mark A+, A, B, C & D they had to give marks out of 100, but cannot give identical marks. Then the system will rank them accordingly. So one can give almost 99% to all employees, but system will rank using the differences in decimal places.
Eventually in 2008 HR was able to implemented to bell curve based ranking in reality without going for personal level arguments with managers, because they used the IS effectively.
IDENTIFICATION OF GAPS
The information systems (IS) at Singer can be identified from the functional perspective based on the major business functions of sales and marketing, manufacturing and production, finance and accounting and human resources. As illustrated by the following diagram, the IS serve the three different levels of the organization i.e. operational level, management level and strategic level.
IS at Operational Level
The operational level systems support operational managers in monitoring the daily activities and transactions of the business. At Singer, the sales and marketing function at operational level is supported by four information systems. The order processing, is mainly related to sales and billing at Singer. The material movement control under manufacturing and control is done using ERP System (e.g. Material Master and Plant Maintenance modules). ERP accounting system at Singer enhances the financing and accounting function by tracking the flow of funds in the firm through transactions such as paychecks, payments to vendors, securities reports and receipts. The operational management of Si
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