Case Study 4
Detail of Major Contract

1. Original predicament

Inconsistent trends reported in the regular management information caused anxiety at Head Office and doubt over reliability of the information. Inability of management at the subsidiary to gauge the importance of the material requested and working practices that were out of tune with current requirements had caused friction between the parties. Ideas in one area about required action at the other and this had caused further conflict due to either their unsuitability or lack of necessary facilities needed to accomplish them. The company had been ignored by the group for many years, was consequently used to operating independently and had done so successfully for many years. Pressure was being exerted upon the subsidiary through no fault of its own but because other parts of the group had been left behind technologically. This was now being reflected by decreased group turnover and evaporation of profitability.

2. Suggested solutions

The existing systems in place at the subsidiary had evolved over a long period and at different times for different reasons. APS proposed a comprehensive review to ascertain the current needs of the business. Lack of proper records in the manufacturing area needed rectification by the design and implementation of a new comprehensive suite solution that tracked goods throughout the organisation. Emphasis upon mechanisation was needed throughout the new system to eliminate tedious pen pushing. It was also considered that as many parts as possible of the existing system ought to be included and incorporated into the new system. The new system had to be designed so that each operation within each of the factories could be measured to an agreed standard to ensure meaningful information would be delivered to the local Board. A selection process was needed to ascertain the staff best qualified to enter and control information within the new system. A high level of liaison was required between all departments and all levels of management especially in quality matters. Proper training was needed for the designated staff to ensure that the information was correctly entered on to the new system and that all control checks were completed satisfactorily. An adequate monitoring system was required so that Internal Audit were able to check the viability of each section of the system. Once drafted the system needed local Board clearance before submission to Head Office. To facilitate the extra workload APS proposed that additional computing capability was brought in to accommodate the increased volumes. Extra hardware was required in both the shopfloor and the offices. Due to the current state of group finances it was imperative that all capital expenditure was borne by the local unit and any extra running costs attributable to the new system were absorbed so as not to result in a detrimental effect upon profits.

3. Results

The main part of the APS proposals were authorised and minor adjustments made where required. However, due to the worsening group situation it was decided that only a minimum amount of capital expenditure would be allowed and this necessitated that the new system be mainly manual. This resulted in changed plans to incorporate even more of the existing systems than had been originally planned so as to reduce the manual loading. Some changes to existing programs were not possible due to their age but the majority were modified generally in line with requirements. Information from the new system not only verified local unit viability but also pinpointed a number of significant cost savings areas. The new system gave improved information to local management which resulted in greater impetus to growth when the opportunity was ripe.

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