Scenario -- Workrite components

The following information was gained from an interview with Robin Nightingale, Managing Director of Workrite components. They provide electronic components to anyone who wishes to purchase from them. Their suppliers are manufacturers of new electronic components or specialist "refurbishers" who repair ("refurbish") malfunctioning (broken) electronic components so that they operate almost as new. Workrite components are one of the best known suppliers of electronic components in the UK, and while they have an excellent reputation for delivering on time, many customers complain that they are rarely able to deliver quickly when the customer needs stock urgently. Indeed, sales have shown to have been lost as a result of not being able to meet certain orders urgently.

Workrite components act as an intermediary (middle-man) between the manufacturers/refurbishers and customers.They now find that the Internet enables their customers to discover which companies refurbish electronic components and to buy directly from them thus bypassing Workrite components.Fortunately, manufacturers only sell to bulk buyers such as Workrite components so at least their capacity to buy and sell new electronic components is unaffected. However, there is a major recession on and Robin is seriously worried that demand for new electronic components will fall and there will be a significant shift to the use of refurbished components.

Most customer enquiries and requests for components come by telephone or email to front office admin staff who then allocate the requests to sales staff. The sales staff currently negotiate with both customers and suppliers. There is limited opportunity for negotiation with the manufacturers of new components as prices are usually fixed. Therefore, sales staff get most of their job satisfaction, and commission, by negotiating the lowest prices possible for refurbished components which can then be sold on to customers at a substantial profit. As customers bypass Workrite components for the purchase of refurbished components, sales staff are increasingly missing out on the opportunity to negotiate on price. Robin is concerned that the sales staff are becoming disillusioned with the way things are progressing in the company and that some are looking for alternative employment.

Robin knows that Workrite components is not gaining many new customers - most of their business is repeat orders from existing customers. She believes that the company should look into exploiting the emergence of new markets overseas, if only to give sales staff a new challenge. With the sales staff spending so much time on negotiating individual deals, little attention has been paid to gaining new customers.

Workrite components back-office admin staff are responsible for raising invoices, processing payments, despatching orders and producing management reports. Robin's main concern with this area is a lack of accurate and detailed management information. There is no automated system that analyses sales of different types of components or showing the performance of suppliers for example. This makes forward planning very difficult as trends in sales are not picked up quickly. As a result, the company's stock control system cannot respond to sudden changes in demand. In the past, they have tried to address this by keeping stock in their own stores but this has not proved cost effective as some items have not shifted whilst customers have requested items not in stock. Renting the space for these stores is also a significant overhead, averaging around 20,000 per annum.

Robin has come up with a radical option which research and enquiries suggests could be successful. Entitled project "Lock-in", the idea is based on key refurbishment companies agreeing to sell their stock only to Workrite components and in return Workrite components guarantee that they will not use other suppliers to purchase the components which the "Lock-in" companies can supply. Having said that, in reality, it will be very difficult to police such an arrangement. However, supplier interest in this deal only really emerges as a result of committing to automate key repetitive processes between the supplier and Workrite components i.e. component ordering and payment. It has been calculated that this could save the company around 50,000 per annum.

Robin's vision is that there will be a new system to handle the orders for components from "Lock-in" companies. She is keen that this should be internet-based so that she can have access when away on business and the "Lock-in" suppliers can have access to appropriate areas of the system. Orders will be handled by sales staff who will negotiate a price with the customer and then pass details of orders to front office admin staff who will enter details into the "Lock-in" computer system; this will trigger immediate notification to suppliers. The front office admin staff will be responsible for tracking progress of orders. Over time Robin believes that once suppliers have visibility of the pattern of orders, she can work with them to ensure that trends in demand are picked up quickly so that stock can be delivered "just in time". This should improve Workrite components' ability to meet urgent orders and reduce the need to hold stock in its own stores although the Operations director states that order patterns are far too erratic to enable forecasting to have any value. Another challenge for Robin is - will sufficient suppliers sign up to the deal so that Workrite's own customers are unable to locate particular components from alternative non "lock-in" suppliers? Despite the challenges, Robin has set up a project team but the Project Manager has already raised one question - how can just 2 business analysts be expected to deal with up to 34 potential lock-in suppliers?

For some of the front office admin staff, the new system will provide an opportunity to increase their level of responsibility and pay. Robin is not certain that she has sufficient admin staff of the right calibre for the new roles. Sales staff will no longer be involved in negotiating with suppliers for these orders.Robin does not want to lose the sales staff as they have valuable expertise, considerable experience and knowledge of the component market place so she is planning to redeploy some of their time to generating new customers and putting a greater emphasis on actively managing the relationship with existing key customers. She is also planning to re-negotiate their commission arrangements to avoid any potential reduction in pay

You are a member of a team performing a business analysis study for Workrite components with a view to recommending how it secures its business future.

Your job is to evaluate the "Lock-in" project and recommend how Workrite components should proceed.

1. Who are the major stakeholders impacted by the lock-in project? Using the stakeholder quadrant given in lecture 2 place each of your major stakeholders into the most appropriate slot on the quadrant and explain your reasoning. For all of your selected stakeholders decide on a set of appropriate actions (2 per stakeholder group) that you can take to maximise the chances of those stakeholder groups actively participating in your project.

2. List out 5 critical risks associated with this project and recommend what actions that you should take to minimise their impact. These risks should relate to the case study - avoid generic risks that may apply to any project (e.g. software may not work as required).

3. You know that the timescale for the project is short by 5 months (it needs to be a 15-month project rather than the 10 months allocated). What actions may you consider rectifying this situation? (10 marks)

4. Before you can start this project one of your tasks is to produce a cost benefit analysis which must include producing figures for payback and return on investment. Robin has estimated that upon completion of the new system that she anticipates increased annual sales of 120,000 per annum.