Kahuna Cleaning Supply Chapter 2 Background Kahuna Cleaning Supply is a family-run business based in New Haven, Connecticut. The cleaning company specializes...
Kahuna Cleaning Supply Chapter 2
Background
Kahuna
Cleaning Supply is a family-run business based in New Haven,
Connecticut. The cleaning company specializes in commercial cleaning
supplies and business support products for commercial, industrial, and
institutional clients in New England and Eastern New York. Kahuna
Cleaning Supply originated in response to the growth of the cities of
Bridgeport and New Haven from the suburban spread from New York City.
The business has grown to fourteen warehouse locations, each with
several delivery trucks depending on the volume of sales at each
location.
With
the stagnant population growth in Connecticut since 1980, Kahuna
Cleaning Supply made a concerted effort to expand their market into
other areas in the region, first in Connecticut, and then in the broader
New England region. The early efforts included increased advertising
and an increase in the sales force, with an emphasis on cold calls to
potential customers. This strategy proved to be a successful businesses
model in the 1990s and early 2000s that allowed them to grow, but
recently their growth has been flat. Getting new clients has been
difficult in the down economy and existing clients are shopping for
better prices.
In
2012, the next generation of Edwards joined the company with the
addition of Julia Edwards as the vice president of Kahuna Cleaning
Supply. Julia, a graduate of the business school at the University of
Connecticut, is full of ideas for bringing Kahuna Cleaning Supply into
the 21st century and expanding the customer base to the
national arena. She and her father, Charles Edwards, president of Kahuna
Cleaning Supply, have different ideas about the paths to follow to
ensure the fiscal health of the company. Although both agree that the
customer base needs expansion, they disagree on how large this expansion
should be. Julia also wants to put an information system in place that
can provide a seamless, efficient, and user-friendly environment for
their business, with a Web-based component for customers to place and
track orders.
Up
until now, the sales and office staff has been using a text-based point
of sales and warehouse management system for taking orders, putting
together shipping and delivery lists, and generating billing
information. Recently the financial department has moved to a software
package that handles accounts payable and accounts receivable. This new
package has expansion capabilities by purchasing additional modules from
the vendor. Charles understands spreadsheets, but anything demonstrated
to him beyond that has received a negative response because of his
limited comfort level with technology. He is also concerned about the
impact of an information system on his workforce, some of whom have been
at the company longer than he has, and most of whom have limited
knowledge of computers. Charles is in favor of adding additional
salespeople and expanding the market down the eastern seaboard.
Julia
wants to see Kahuna Cleaning Supply moving toward an online presence
and a national market. She is interested in exploring the possibility of
reducing the traditional sales force and introducing a Web presence
that provides information about products and allows potential customers
to use online tools to build supply quotes and orders. Her vision is for
large clients and janitorial service customers to use an online portal
for electronic data interchange (EDI) for orders to replenish their
inventory stock. She wants Kahuna Cleaning Supply to use EDI with its
suppliers, which will help the company use just-in-time inventory
methods and realize savings from manufacturers and improve efficiencies
in logistics.
Andrew
McClean, the director of sales, is concerned about the direction that
Julia is interested in exploring. He has been with the company for over
thirty years, and supports Charles Edwards’ ideas for increasing sales
by expanding the sales force and the geographical target area. He does
acknowledge that there is support from sales people for the introduction
of an information system, and that his hesitancy is influenced largely
by his discomfort with technology. He also acknowledges that customers
have expressed frustration with the time needed to get information about
prices and track orders because they have to go through their sales
representatives. Sales representatives establish close, personal
relationships with their clients, determine the profit margins charged
to clients, place orders, and provide most of the customer service.
Anna
McNally, the director of finance, would like to see a more integrated
solution for following orders from quotes through delivery and billing.
She points out that with the multiple solutions currently being used for
the various components of orders, errors can be introduced at several
points of the process, whenever information moves from one process to
another.
Martha
Seymour, the director of operations, is happy with the current
computerized order process, even though it was implemented many years
ago and has not been updated in several years. She is concerned with the
fact that orders, inventory, and new stock replenishments from
manufacturers do not always match up. Sales people sometimes sell more
product than what is currently on hand, and new stock shipments do not
arrive in time to get delivered to customers by their need by date. The
result of this has caused some customers to be unhappy due to the human
errors. Martha does not want to see a change in the delivery process
itself, but if the software they are using to synchronize the sales and
logistics system can be updated to allow for automatic linking between
sales, new stock orders, and delivery, she would be supportive.
Charles
and Julia have decided to bring in a systems analyst to evaluate their
business situation and whether or not implementing an IT solution for
some or all of their business needs make sense. Charles has decided that
he will have Julia be the main contact person for this because he does
not have the background he feels is necessary to make informed decisions
in a timely fashion. They hired Robert Hanover, a systems analyst who
does a lot of work for small scale commercial supply companies.
Julia,
Charles, Andrew, Anna, Martha, and Robert sit down to discuss the
business, and most notably the areas that Julia feels could benefit most
from an IT system.
Julia: Robert,
I think that the most important issue for our company is coming up with
a solution for the fragmented nature of the process that follows orders
from placement to delivery. We currently have different solutions in
place for quoting prices, taking orders, ordering stock, tracking the
orders through the delivery process, and billing the customer. Each one
of these sub-processes is separate and distinct, and much of the
information that follows an order from start to finish has to be entered
multiple times along the way. We have to come up with a solution that
is more efficient for both the company and the customer.
Andrew: Well,
you know that I am not technology-savvy, but I am hearing from my sales
force that we need to be doing something. Sales reps are frustrated
that customers can’t easily check on orders, or get estimates, without
working with the sales rep or someone at the home office. They are being
told that many other companies provide them with the capability to
check prices and check on orders themselves through some computer-based
system. Customers seem to be much more self-sufficient and in more of a
hurry now than they used to be. Our rep-dependent system is putting us
at a disadvantage.
Anna: I’m
quite happy with my new software that is handling accounts receivable
and accounts payable. My concern right now is that billing still is
being generated outside of this software and moving billing info over to
accounts receivable requires several steps to prepare and export the
information. Each step has the potential to introduce error because it
is dependent on human intervention. Why can’t we move this information
over using an automated process that removes the human element and,
therefore, the errors?
Martha: I’m
in the same boat as Anna. I’m quite happy with my sales and delivery
system, and I don’t want to see that changed. My concern is the link
between inventory and sales because of the potential for error to be
introduced. I know that the vendor who sold us the point of sales system
has called a couple of times about upgrades, but we have never pursued
this. Perhaps this might be the time to find out more within the context
of a new IS?
Charles: You
all know where I stand on this. We built this company with good people,
and I do not want to replace people with computers. Is that what would
happen if we brought in one of these information systems? I want this
company to continue to maintain strong, personal relationships with our
clients and take care of our employees; even if that means that we grow a
little less.
After
the meeting, Julia asked Robert to put together in writing his
impressions from the meeting. She is interested in formalizing the goals
of the company, planning out how to meet these goals, and addressing
some of the reservations that Charles and Andrew have about introducing
an IS at Kahuna Cleaning Supply. Robert begins to review his notes from
the meeting to prepare a presentation for Julia.
Tasks
1.
Does a strong business case exist for developing an information system
to support this cleaning supply business? Explain your answer.
2.
In a small- to medium-sized business, is it really important to use a
structured approach for information systems development? Why or why not?
3.
Based on the facts provided, draft a mission statement for Kahuna
Cleaning Supply. In your statement, consider all the stakeholders who
might be affected by Kahuna Cleaning Supply operations.
4. What internal and external factors might affect Kahuna Cleaning Supply business success?
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