Case Study

The "North Wharf" board of Directors, along with the CEO of the company, have decided to implement an e-commerce strategy that will be used to maintain and grow market share and revenue. This strategy will also ensure that customer satisfaction is as per the company's strategic directions to: a

• Provide quality producton time every time.
• Address customer concerns/complaints on first contact in a timely and friendly manner.
• Ensure sales targets are met or exceeded.

The company has engaged you as an "External Consultant" to manage the operational planning activities that will need to be put in place before the e-commerce strategy can be implemented and the online business can commence.

E-Commerce strategy

• All products will be offered via an online store.
• All stock will be stored at existing stores in the different states at no additional cost
• The customers will cover delivery costs.
• Intellectual property protection.

The website of the company needs to be redeveloped so that it is functional with the online store.

The company also needs to buy the delivery vehicles. Based on the research, the company has decided that one delivery truck will be required for 50 sales a day. The company is expecting to make 500 sales a day. If the trucks are bought, then the company needs to recruit 10 drivers. Another alternative would be to sub-contract the deliveries to independent drivers who would use their trucks.

Following additional resources are for the expansion and to implement this new business strategy:

• 4 online sales and customer service people are required.
• Re-training of managers and team leaders required on implementation of e-commerce.
• Two forklifts are required.
• 2 warehouse staff required.
• Office space needs to be reconfigured.
• Need new hardware and software.

Existing staff will need to be trained to implement the changes that will occur in the company as none of the employees has previous online retail skills.

KPI's needs to be set up for the implementation of the e-learning strategy.

Following is the summary of the current human resources at the Melbourne office:

Amendments to existing budgets have been approved. The project must be implemented over the next 12 months.

• Employees:
• • 30 full-time and casual sales and customer service people, check-out staff, trained in the use of POS - integrated with ERP (enterprise resource planning) and CRM (customer relationship management) software system
  • Senior management team (five) + one store manager
  • Four sales team leaders
  • One delivery truck driver
  • One warehouse worker.

Additional scenario:

The project is in the implementation phase.

The following are some of the performance outcomes that management has asked you to consider, monitor and review with regards to the operational performance of the project.

Management has further highlighted the reasons for the downfall in each key performance indicator. These reports have been presented to management by the Sales and Marketing Manager.

As per the report, there are three teams. Each team has a team leader that reports to the Customer Service Manager. The under-performance is spread across all three teams.

1. Based on the performance measurements standards set up by the company, it was expected that the percentage of mistakes customer service employees were provided in response to the enquiries and preparation of order was going to be 1%. The outcomes from a recent performance report have shown the error rate (mistakes made) to be 10%.

Reasons:

• • • Staff not familiar with the product line, even after training
    • Staff do not understand the CRM (Customer Relationship Management) systems and ordering processes
    • Staff discussing potential intellectual property processes with potential customers
    • Staff do not understand the product line and are unable to locate the information
    • Poor communication lines
    • No job aids or support from management
    • No ongoing performance management as per company policy
    • Low staff morale: complaints of back pain and distractions in the environment.

1. It was expected that a customer complaint/enquiry would be resolved in 12 minutes. At the moment, the average time taken is 18 minutes.

Reasons:

• • • Many customers abort interaction due to the length of time for order completion
    • Some extra time is taken because of lack of skills and knowledge
    • Time is taken because of poor website maintenance and occasional downtime.

3. It was expected that the products would be delivered within 3 days from ordering. Currently, the average delivery time is two and a half days.

Reasons:

• • • Driver team leader is an exceptional motivator
    • Driver morale is high
    • Driver attendance of routine training and team briefings is at 100%.

1. Expected revenue to be generated by the end of the 6 months was to be $250,000 in sales, providing a profit of $80,000. The actual figure is $220,000, providing a profit of $40,000 for the quarter.

Reasons:

• • • Some lack of sales may be due to poor customer service
    • Sales may pick up as awareness of online options through marketing actions increases.

Based on the analysis of the data provided by management, you have identified that the Team Leaders and Customer Service Manager are not providing directions to the team.

Part A: Performance management

Your task.

Based on the information given in the scenario, you are required to develop a coaching plan for the Team Leaders and the Customer Service Manager. You are required to prepare a list of areas of under-performance using the "Performance Management Plan" template.

After identifying the areas of under-performance, you are then required to:

• Review Key result areas to assist them in achieving profits, productivity and targets by recommending solutions for each area of underperformance, set performance indicators to monitor, assess their performance, and rectify the problems. Complete the Performance Management Plan.

Part B: Budget analysis

Your task.

After the completion of 6 initial months, the Chief Financial Officer (CFO) of the company has provided you with the following financial information:

Income:	Forecasted	Actual
Sales	$250,000	$220,000	Barbecues and related equipment.
Investment income	$360,000	$360,000	Real estate investment income and rental of office space.
Cost of goods sold (COGS)	($150,000)	($140,000)	Cost of provision of goods, purchase of stock, distribution.
Gross profit	$460,000	$440,000	Gross profit.
Expenses:
Wages, salaries and on costs	$68,000	$78,000	Wages, salaries, superannuation, work cover insurance, payroll tax.
Consultancy fees	$20,000	$20,000	Project management: WHS management system; change management.
Communication expenses	$10,000	$10,000	Telephone, ISP costs, IT support.
Marketing	$10,000	$15,000	Cost of staff travel and associated costs for sales, etc.
Premises expenses	$150,000	$150,000	Rent, electricity, maintenance, cleaning.
Insurance	$20,000	$20,000	Liability insurance
Depreciation and amortisation	$13,000	$13,000	Computers and capital equipment that is depreciated.
Office supplies	$12,000	$12,000	Printing and stationery, postage, amenities.
Training	$17,000	$22,000	Sales training: leadership, WHS, ethical/legal training.
Total expenses	$380,000	400,000
Net profit	$80,000	$40,000	Net income before tax.

The actual outcomes were different from the expected outcomes. You arranged a meeting with the CFO to discuss the possible reasons as the CFO had the responsibility to track progress against the Key Performance Indicators (KPI's).

In discussion with the CFO, he outlined the following causes:

• Budget overrun cost exceeded by 1% more than expected. The reasons for the overruns were as follow:
• Order mistakes
• More time spent than average to handle customer queries.

Apart from these KPI's, he has also identified some risks that need to be treated with immediate action.

• Training program has not been able to provide adequate information to the employees. Thus, the employees are still lacking in customer service skills
• Website performance has not been up to the mark. Customer service has been disrupted due to website downtimes
• Sales for the first 6 months have not been able to achieve the target. The reason behind this is the changing customer needs and increasing market competition.

In this part of the assessment task, you are required to:

• Analyse and interpret budget and actual financial information to monitor and review profit and productivity performance
• Address the risks identified (given in the case study) using the "Contingency Plan" prepared as part of assessment task 2
• Complete the "Risk Update".

Part C: Implement variations in the operational plan

Additional scenario.

From the outcomes of the half-yearly report provided by the CFO, you have identified that the objectives for the next part of the implementation of the project are as follow:

• Redevelop website and acquire physical resources
• Recruit and train staff
• Achieve profit targets
• Adhere to budget
• Adhere to timelines.

Based on these objectives, the operational plan needs to be changed.

Your task.

In this part of the assessment task, youhave attended a meeting with the CFO and the General Manager and negotiated recommendations for the variations to the Operational Plan. During negotiations, you:

• Presented the previous operational plan
• Outlined the changes that have taken place
• Presentedhow these changes will impact the implementation of the e-commerce strategy
• Outlined the changes that need to be made to the Operational Plan.

At the end of the meeting, you gained the approval of the variations to the Operational Plan from the General Manager and the CFO.

You will now complete the Performance Management Plan.

Task 6 Template - Performance management plan Name/position (Student ID) Manager: Review period: Reference from Key result area Indicator of success/ By when Status report operational plan- performance by contingency plan Manager's comments: Signature: Date: Staff member's comments Signature\fTemplate 5 - Updated operational plan Strategies Timeframe KPI (Key Performance Person Other resources indicators) responsible