Case Analysis: Atokowa - Iloka Benneth Chiemelie, Mozie Charles

0.1 EXECUTIVE SUMMARY

Operational management systems of organisations have been highlighted in recent years as the backbone for success or failure of many companies. This is because, the way a company undertakes its business activities is closely related to the way the company is viewed in the eyes of the public and thus influences sales.  

Atokowa™ is no exception and the operations and management system can easily be related to the company's success since inception. The founder initially started the business as a printing shop before it was revolutionized into a multi-million dollar business venture and further expanded by his son.  

The company is facing different problems in both the management and operations frontline. All the problems are directly linked to the ASIS system which was developed by Paul a former manager at the Melbourne branch to assist in financial and cost accounting issues such as book keeping of current stocks and updating of stocks based on sales and distribution. However, different departments discovered issues with its functions in relation to its inflexible nature and inability to handle other business functions besides book keeping.  

With these issues and more identified, it was inevitably clear that a solution is needed to bring Atokowa™ back to its glory years. Thus, report paper proposed solutions to the problems by stating that the operations manager should be replaced, and standards of operations set for all the operation process. It is also thought that CEO should step up and take full control of the business like his father did.

1.0 INTRODUCTION

To: Jonathan Atokowa

CEO of Atokowa™

From: Mozie Charles

Anglia Ruskin University

Report Letter in Relation to Atokowa™'S Performance in Australia

I recently conducted a research on the production process at Atokowa™'s stores in Australia, and while the overall performance of the company was amazing in relation to economic returns in recent years, they are numerous issues that were pointed out during the research which I think requires your attention.

The overall result of the issues can be linked to the ASIS system which was implemented by Paul under the approval of your management. The system is software developed basically for accounting and bookkeeping related activities, but the operation of Atokowa™ requires more than just the above. Thus, virtually all department managers have their own negative view of the system in relation to how it is slowing down performance. The system is lacking in functions such as updating sold stocks and notifying the warehousing on limited stocks. It is also not capable of manager customers and suppliers database and no adequate training has been provided for the areas where it is found useful.

Therefore, this report paper presents an overview of all these issues in relation to the departments concerned and how it affects productivity in this department. With the problems having been pointed out, I also provided numerous solutions for these problems in this research paper, of which most of them are proven academic and practical solutions that has been adopted in businesses across the globe. Overly, it must be brought to your notice that these issues facing Atokowa™ need to be resolved in order to ensure that the company continues to return high on its investments through improved productivity.

2.0 ANALYSIS OF THE CURRENT SYSTEM AND OPERATIONS MANAGEMENT

Following his takeover after his father's retirement, Jonathan proceeded to bring Paul Fairclough from the Melbourne store where he worked as manager to Sydney. Paul pushed for the implementation of the EPOS (electronic point of sale system) in order to enable more efficient tracking of stocks in Melbourne, and he move to Sydney was in line with Jonathan's plan for him to help in the management, design and implementation of a Microsoft Access Database Application that was known as ASIS- Atokowa Stock Information System. Based on the analyses above, the following frameworks as illustrated below were adopted to further elaborate on how the company has fared so far.

2.1 ATOKOWA™'S INPUT-PROCESS-OUTPUT FRAMEWORK

Figure (1): Atokowa™'s Input-Process-Output analyses for making French fries

Atokowa purchase their products from different suppliers as they offer both branded stationery and technology products. The company also offer lower cost items by smaller brands. Majority of their suppliers are located in China and Hong Kong and it implies that most of their products are imported.

The whole process begins with Ranjeev Patel who chooses the best supplier based on quality and price. Once the products arrive at the Melbourne port, they are then transported to Atokowa's warehouse. The containers are then virtually check and stocked according size, shape, and contents for easy identification.

The warehouse are operated on a first come in first serve bases, which implies that the first stock to go into the warehouse will be the first to be processed for sales. Following the decentralization of the decision making process, each store now has the capability to determine the chargeable price for each of their goods.

2.2 ATOKOWA™'S DECISION-MAKING HIERARCHY AND ROLES OF DEPARTMENTS

Figure (2): organisational chart of Atokowa™

The management system is structured in such a way that each departmental manager is responsible for operations within his department, and has full decision making power within their department. However, the entire departmental managers have to report for to the CEO. The hierarchy system within the department is as described below:

2.2.1 Store management – Pricing, stock decisions and returns – Jonathan Atokowa was previously in charge of the retail operations, with a high degree of control cantered at their Sydney headquarters. Its store manager were expected to always follow the set pricing standards and run the same price for the same products in all their branches throughout Australia.

Currently, the company operates a decentralized management system were each department manager has full power to make decisions on the price of goods sold in their stores, as a means of gaining full advantage of the market price to increase sales. Their overall sales can be illustrated below.

2.2.2 Customer service operations– Hayley Atokowa is the marketing and HRM manager of the company. She sets up training programs for store managers and considers it necessary to develop customer services skills in them. She considers quality services the key to success of the company.

2.2.3 Custom Print – the custom printing is the main foundation of the business that yielded creation of other services. It still plays an integral role in the company's profit as it is believed that about 90% of customers in the custom printing segment are businesses. The custom print section is managed by George Hargreaves.

2.2.4 Warehousing – the warehousing has been managed by Anton Humpreys since 2006 and he has the responsibility of managing incoming deliveries, organising the warehouse, managing the picking and packing process and coordinating the 3PL pickups. His role requires precise scheduling and coordination skills as the number of stocks keeping units at the company has reached the 1000s.

2.2.5 Purchasing and Suppliers – since the company deals on numerous products which are imported from different manufacturers, the decision to decide on what to be imported and from whom it is to be imported from will be a difficult task if bestowed on one person. The purchasing and supplier department is headed by Ranjeev Patel, who is also supported by Lillian Newnham (from the import side) and Tamara Wright (on the documentation and process side). Their stores are located in the cities of Australia as illustrated below.

Figure (3): Atokowa™'s stores in Australia.

2.2.6 Technology and IT – beside the original business, this is an area Jonathan lays much emphasis on, as he is the one who added technology to the company's business. The company incorporates technology in all areas of its business. The company also has a very attractive website that is meant to create customers loyalty by updating customers on their products through this website. The ASIS system also helped in accounting and book keeping purposes by assisting each department with updated stock information and customer request.  

2.3 ATOKOWA™'S 4V'S TYPOLOGY

Figure (4): 4V's typology of process at Atokowa™

The figure (3) above depicts the level of commitment needed in each of Atokowa's processing unite. There is a high volume of production, as a result of high demand and these results in repetitive activities. This high demand and production also gives rives to variety in the production system with different departments handling different sections. There is no much variation in the demand, except for unexpected seasonal increase, and the production process is not visible to the clients and market.

3.0 PROBLEM DEFINITION

3.1 SOFT SYSTEMS METHODOLOGY

The problem will be identified by adopting the 7 stages of Soft System Methodology as discussed below.

3.1.1 ENTERING THE PROBLEM SITUATION

The case study illustrated that since the retirement of Lachlan Atokowa, the company has been facing numerous coordination and organizing related problems as each department manager highlighted the need to maintain a system where everything is kept under the control of the department and the company as a whole, in order to ensure that their customers are not being taken away from them.  These problems can be further elaborated in the expressing the problem situation below.

3.1.2 THE PROBLEM SITUATION

3.1.2.1 Issues with the store management – it was highlighted that although the acceptance of the decentralized management system as proposed by Paul meant that different store managers are encouraged to charge customers based on knowledge of the local market price as a means of increasing or sustaining profit, the managers hesitate and stuck with the addition of 25% to the cost of goods to be sold as was introduced from the initial founder.  This highlights a case of incompetence within the management system, as it can be argued that their inability to sale their goods following new set guidelines are because of their lack of understanding of the local market they operate in. Thus, this is a big problem to the company as it will not be able to help them to maintain the market sustainability they want.

3.1.2.2 Operating issues with ASIS – the system was not designed to handle business accounts based on the known methods of settling each account monthly through a typical formalised invoice procedures, and determining the level of discount based on the quantity of business transactions with Atokowa. Therefore, the store managers were left with no option but to facilitate this task by adopting a horrendously complex manual paperwork system, which was described as being high time and effort consuming.  

3.1.2.3 Customer service operations issues – the customer service manager Hayley Atokowa highlighted the main problem with handling business customers as the excessive paperwork needed to conclude a deals as she believes the customers are being put off by these paper work.  He highlighted having told Paul many times to either update ASIS or invest in new technologies that are capable of handling accounts and also develop a website for online sales.

3.1.2.4 Issues with the Custom Print – the manager of the customer prints department, George Hargreaves, said that the company is missing some few tricks with the custom print department, as customer cannot place orders for printing at the retail outlets. They are only able to undertake limited photocopying.

3.1.2.5 Warehousing issues – the warehousing department faces numerous issues with over-stocking of obsolete or low selling products. While the manager accepts to having enough space for storing al the times, he said that over-stocking obsolete and low selling items are not good as it increases company lose as a result of depreciation.

3.1.2.6 Purchasing and Supply problems – the problems in this department as highlighted by the managers are basically from the ASIS operation. It is said that while the ASIS is efficient in managing the store, it is not a good tool for purchasing. This is because the department needs to sort through delivery request from all the areas in order to really understand products that are selling well. The manager accepted the fact that the purchase and supply departments always get status reports for stock, but he also conceded that the department is not able to accurately reconcile the reports with ASIS system as it is time consuming. This means that they made decisions based on gut feelings and assumptions. They also have the problem of brining all their finished goods in China to Shanghai for import to Australia, and thus they face the problem of consolidation

3.1.2.7 Issues with their products – John Shipton said that they are certain flaws in their products. He identified that why the desk chair manufacturer makes the products for a considerable prices, the customers are frequently returning this particular products due to high complaints on the wheels and the height adjustment. It resulted in the whole desk chairs being recalled and the contract terminated with the manufacturer, thus resulting in high loses to the company.

4.0 CATWOE ANALYSES OF THE PROBLEMS AT ATOKOWA™

4.1 Customers – the ASIS system is not capable of keeping detailed record of the customers as it is not designed for customer relationship management. And as the marketing manager highlighted, it is resulting in the company losing some of its customers to their competitors.

4.2 Actors – the management teams are to be blamed for the overall situation as their decentralized structure which involves each department manager making full decisions without reporting to anybody is resulting in some of the manager making unproductive decisions. Thus, the overall system needs to be reorganized in such a way that the business of each manager is dully monitored.

4.3 Transformation Process – the issues affects the whole process from the warehousing to the distribution and after sales. This is because; the system is not capable of detailing the stocks available, limited stocks that needs to be resupplied and customer purchases. Thus, the failure of the ASIS system can be linked back to problems faced by the departments in the sense that they were more productive before the implementation of the system.

4.4 World View – these inconsistencies will result in a bad image based on the unreliability they offer. This can be demonstrated with the wheel chair case were all the sold chairs were recalled after initial complains about the chair.

4.5 Owner – every person in the system have a role to play in order to build a more sustainable and reliable Atokowa™, but the CEO, Jonathan Atokowa has the greatest role to play as he has the ultimate decision making power. He should draft standards of operation for each department and upgrade the system to ensure that is capable of handling all their business processes.

4.6 Environmental Constraints – while the process of improvement can be highlighted, the implementation has constraints such as lack of required skills within the management. Most of the department managers lack the necessary analytical skills required to understand the ASIS system's operations and fully utilize its potentials as illustrated in the case of the warehouse manager who left the system to dusts and kept using the conventional method of gut feeling and written notes.

5.0 ATOKOWA™'S ENTERPRISE ANALYSES IN RELATION TO THEIR PROBLEMS

5.1 Creating and maintaining the business architecture – this is the primary issues at the business as current CEO has deviated from the main architecture of printing services into distribution of technological products. It influences both the company image and operation in the sense that it does not make any clear statement of the company's speciality and older workers who have been with the company for long will have difficulties in combining their experience of printing services with selling of technological products.

5.2 Conducting feasibility studies – the initial stage of their business operations to sale technological products didn't involve any feasibility studies as it was based on Jonathan's passion for technological products later than business sense. Paul's idea was tested fairly in his initial store, but the test didn't include the areas were the ASIS system is having problems.

5.3 Identifying new business opportunities – Jonathan discovered that expansion of the business based on gained brand image can yield more benefits than lost and it resulted in the addition of technological products in Atokowa™. This is a great business opportunity that has been utilized to gain more market shares and brand image.

5.4 Scoping and defining new business opportunities – while Jonathan was successful in identifying new business opportunities, the company applied little efforts to scope and define the opportunity and it later impeded progress as the company was supplied low quality products from their wheel chair distributors in China. 

5.5 Preparing the business case – as highlighted earlier, Atokowa™ is a family business that was formed with just one printing machine and Mr. Lachlan Atokowa didn't not prepare any business case and neither was it done by the successor who is also his eldest son. The business is run basically on gut feelings.

5.6 Conducting the initial risk assessment – the case study didn't not provide note on such context, and it implies that the management applied no effort to ensure that all the risks of all their new business ideas are analysed. This can be seen in the case of ASIS, where the program eventually turned to reduce productivity instead of improving it.

6.0 CONCEPTUAL MODELS OF HUMAN ACTIVITY SYSTEMS

Figure (5): Atokowa™"s conceptual model of human activity

From the figure (4) above, it can be illustrated how human mismanagements have affected the output in terms of quality, warehousing and sales. Tom Graham's absence can be viewed as the root of all the problems.

6.1 SECURITY SYSTEM OF ATOKOWA™ 

From the case study, it was illustrated that the company is run on mare gut feelings instead of set standards. In essence, the company does not have any security system to ensure that new business ideas are well tested before being adopted into the business. Such instances can be illustrated when selling of technological products was introduced in Atokowa™ by Jonathan. Prior to the launch of technological products into their business, Jonathan did not conduct any research to test the feasibility of the business. On the other hand, the ASIS system was oly tested to a small extent in their Melbourne store but was not in their other stores. This eventually resulted to majority of the issues being faced by Atokowa™

6.2 COMPARING THE MODELS WITH THE REAL WORLD

In comparison with real life human resource management, incompetency in organisational management system can lead to low productivity (De Saa´ Pe´rez and Garcı´a Falco´n, 2004). This is because humans are not easily controllable, and their personal emotions can affect their productivity and also that of their fellow workforce (Kidwell and Fish, 2007). Thus, inconsistency within the management and operations systems is expected to influence an organisation in a negative way.

7.0 SYSTEMS AND OPERATIONS MANAGEMENT RECOMMENDATIONS

7.1 QUALITY MANAGEMENT AND BUSINESS OPERATIONS IMPROVEMENT

Besides the flaws in the desk chair which resulted in termination of the contract with the manufacturer, all other problems were as a result of the unreliable ASIS system. While the system is considerable good in numerous areas such as sales and printing, they are numerous flaws with the system in the other departments. Other areas is the incompetency of the stores' management system as it can be argued that their inability to charge based on local prices is due to their unfamiliarity with the local market.

Thus, in order to resolve the above issues in order to ensure sustainable quality in the operation and management of Atokowa ™, it is recommended that the company should adopt Hayley Atokowa's suggestion of updating the ASIS system to be able to undertake all tasks related within the organisation, or invest in other efficient management technologies.

The issue of incompetency in the management system can be resolved by training the store managers in relation to their local market, costing and pricing strategies and decision making competencies. Through this means, they will better understand the market and make the right decision to enable consistency and sustainability within the management system and the company at large. This can be done by adopting the deming cycle

Figure (6): The Deming Cycle PDCA

Source as adapted from: ValueBasedManagement (2012)

The cycle involves planning what is to be done, doing it as planned, checking for inconsistencies and insufficiencies and acting to reduce such in both the present and for the future.

8.0 IMPLEMENTATION OF RECOMMENDATIONS

The CEO can be said to be lacking with the qualities and skills need in his position. The case study didn't mention any aspect of business undertaking that he has overseen since the retirement of his father. However, this issue will be a test of his capability, as the CEO is the person responsible for implementing such a move to replace the current ASIS with upgraded or new technology. This is because, he was the one who implemented the use in the initial stage and he has full decision making rights over other managers.

On the other hand, his sister Hayley Otakowa who is the customer services and human resource manager has the responsibility of training the store managers and providing them with an updated information in relation to the customers and markets they function in. this is true, as the main responsibility of the human resource department is to train its workforce in order to increase consistency, reliability and competency.

8.1 TIMEFRAME FOR IMPLEMENTATION

Figure (7): Gantt Chant of the implementation timeframe

The implementation is expected to last for 6 months, with the initial stage of conducting an internal research through interview with the managers to understand areas that need important in the company and defining the problem with set planning and design. Once the right software has been developed and implemented, October and November will be used to test the software and document the outcome of the implementation as a base for future enhancement.

9.0 BIBLIOGRAPHY

De Saa´ Pe´rez, P. and Garcı´a Falco´n, J.M. (2004), "The influence of human resource management in savings bank performance", Service Industries Journal, Vol. 24 No. 2, pp. 51-66.

Kidwell, R.E. and Fish, A.J. (2007), "High- performance human resource practices in Australian family businesses: preliminary evidence from the wine industry", International Entrepreneurship and Management Journal, Vol. 3 No. 1, pp. 1-14.

ValueBasedManagemnet.net (2012), "The Deming Cycle PDCA." Available at:http://www.valuebasedmanagement.net/methods_demingcycle.html[Accessed on: 30 – April – 2012].