Case Analysis (24 marks)

Home Renovation Warehouse

In the Greater Toronto Area (GTA) home renovation spending is expected to rise due to affordability issue related to purchasing a larger home. A study by CIBC reported in the Financial Post (http://business.financialpost.com/personal- finance/mortgages-real-estate/renovation-spending-expected-to-rise-in-2016-as- people-just-cant-afford-to-move) shows the following information on home renovations in Canada:

Home Renovation Warehouse is expanding due to the trend in home renovation spending hoping to capture the trend and move their company from a privately held company, owned by Stephan and Sylvie Gregoire, to a larger publically traded company. The currently have 35 locations spread across Canada but they have plans to expand into the US market as well as expand their presence across Canada.

Home Renovation Warehouse has issues that must be addressed prior to expanding.The consulting company they have hired to advise them on expansion plans requires them to have audited financial statements. In addition, they are using a periodic inventory system which is a

barrier to optimizing their procurement activities. There are many times in which the wrong products are ordered resulting in surpluses in inventory and stock outs for other inventory items. This tends to frustrate the customers and the stock outs require the company to purchase higher cost products and expediting fees. The consultants have recommended the company implement a new computer system that incorporates supply chain management functionality and a perpetual inventory management system.

The Purchasing Manager, Guylaine Dumont has not taken a vacation in several years. She is difficult to work with and the position responsible for the vendor bidding process has been vacant for 18 months. Three employees, hired into this position, have quit the company and Elaine La Fontaine has not ascertained the root cause of the issue. Guylaine is opposed to changing the inventory system as she says it is adequate for her purposes.

As the company will be competing with Home Depot and Lowes, the consultants have recommended they implement an on-line store where customers order products for either delivery to their home or take advantage of in-store pickup. Currently their stores do not have an appropriate physical design for in- store pickup so the current 35 stores require renovation to accommodate this new business process. The expertise to design this business process does not currently reside within the corporation. The Sales Manager is also not in favour of implementing new computer systems as this is not an area of expertise for him.

To support the expanding business it is recommended for the company to implement an ERP system however the owners are not familiar with the benefits of an ERP nor do they have knowledge of the steps they should take to implement as system of this nature. Sylvie Gregoire is in favour of implementing new computer systems as she views this as a necessary event to support the expansion plans.

Their current organization chart showing key positions is displayed below: