Order Management Reengineering At Heatway Case Solution

1. On the basis of the case provided, discuss how radical is the new design for the order management (PTP) process at Heatway, and explain its improvement objectives.

Ever since its formation, Heatway was involved in improving its business processes through new and advanced methods of conducting business. Back in 1995, two of company’s executive leaders agreed on a new process known as PTP (Proposal to Payment) that was said to bring about radical changes in order management strategies of the company thus leading to higher profits.

i. Benefits of the New Design

This was not only a new process, but it was a complete design based on reforms in organizational structure, architecture and information technology underlying the business. In fact, the proposal emphasized that the complete business philosophy was to be changed to the best interest of the organization. Moreover, the PTP process was designed through integrated connections of all parts of the company which means that there was clear coordination between engineering, sales, finance, inventory management as well as manufacturing (Davenport, Order Management Reengineering at Heatway, 2009).

This process was designed in such a way that it would bring continuous quality improvement rather than gradual changes in some parts of the business. It was integrated and included all sub-divisions such as heating, contracting, services and so on. Due to this reason, this process was termed as BPR (Business Process Reengineering) because it was supposed to bring one-time drastic but long-term beneficial changes in the form, structure and working of the organization in contrast to regular small changes (Davenport, Order Management Reengineering at Heatway, 2009).

ii. Business Process Reengineering

By definition, it refers to the process which involves fundamental and radical changes in overall business management strategy. It involves redesign and reconstruction of workflow systems that drive the basic operations of any organization in such a way to gain better potential and profits (Davenport, 2013). The purpose of BPR is to analyze the strengths and weaknesses of the company and then redesign things according to the nature of company’s operations so as to deliver high value customer services, to reduce operational costs and to create a distinctive edge over the competitors (Davenport, Process Innovation: Reengineering Work Through Information Technology, 2013). Through the implementation of PTP based upon reengineering, Heatway and many other firms in 1990s brought significant changes in their cost, time, quality, and the overall product development.

iii. Key Features and Role of Information Technology

The new process was designed in such a way that it guaranteed greater investment, revenues as well as an increased market share. Moreover, the role of information technology in PTP was much greater because advanced technology is also a concept of the reengineering processes. Shared databases were to be introduced to make information available to all 27 branches throughout the world. PTP could also make use of telecommunication systems that support centralization, as well as decentralization. Portable computers and wireless communication also form a part of information technology measures that make implementation of new designs much easier and quicker (Tsai, 2003). By making use of all of these processes, better key features were introduced in PTP processes that could make Heatway a much better organization in terms of efficiency and productivity.

iv. Analysis of Constraints

During the implementation of PTP, the company had to face various constraints that became a difficulty in reaching complete objectives of the plan. These constraints and issues are highlighted below:

• Financial: Right after the proposal was given, the leaders had to decide upon costs of PTP because initially it could be a huge burden on company resources. Arranging the right amount of money at the proper time was the big deal, and the leaders had to decide either some of the international divisions will have to be shut down for implementation or not.

• Internal Conflicts: The PTP also overlapped with some other divisions and manufacturing processes due to which customers could not be served well unless this internal contradiction were removed completely. A small team called Solution Design and Construction was formed to deal with these overlapping issues. 

• Initial failures: Right after the first-time implementation of PTP in Europe and USA, the company had to face some failures. They were caused mainly due to proper installation, development and maintenance of Heatway’s radiant system design by the contractors. Initial setup caused some leaks due to improper setup of connections. Moreover, while dealing with water and air hoses, the company kept using its old traditional formula instead of a revised one. This fact also became one of the initial installation problems for Heatway.

• Trouble between leaders: Another constraint was the trouble caused by two company leaders, Firestone, and Hemphill, regarding budget decisions. The latter demanded 35 million dollars for the complete project while the former agreed to spend only 15 million dollars. Thus, reaching a budget on which all of the stakeholders agreed was also a major problem. 

Apart from the above-mentioned problems, other issues included a consensus regarding how quickly the PTP process was to be implemented and what should be the ideal time to begin construction. The key managers involved in implementation kept on changing their commitments, and there were issues of reorganization of roles and processes (Davenport, Order Management Reengineering at Heatway, 2009). Despite the problems, the implementation process began through development of teams as described below:

v. Activities Involved in Implementation of the Project

In order to bring radical changes through the implementation of the project, two teams were created, and work was divided among them. The following table represents the team structure:

Both these teams were collectively responsible for bringing suitable change in quality and design of the PTP process and to manage it within available time, cost and resources (Davenport, Order Management Reengineering at Heatway, 2009).

A detailed analysis of PTP process in light of BPR concepts indicates that though the model had to face several constraints, yet the objectives were very clear and precise.   

2. On the basis of the case provided, critically explain barriers Heatway face to implementing its new order management process.

The new order management processes of SAP were planned to support the accounting, buying and selling procedures of the company. As mentioned in a book regarding SAP, it helps in forecasting demand and increases the efficiency of operations. This efficient management ensures that orders are completed and delivered on a timely basis (Victor & Sundaram, 2006). The case shows that HW was facing competition from the Japanese markets and they had to improve operations such as dealing with customer complaints, correct billing procedures and thus, in turn, guarantee customer satisfaction to avoid losing customers to the Japanese products. At the beginning of the case, it became clear that the budget allocated for this system was lower than what was calculated. It was also stated that the anticipated time period for this system was nine months and the deadline was given of six. The project team was divided into two; each had specific research objectives. However, despite the limited time, the team designated the responsibility to collect figures and analyze the current prevalent processes were behind schedule. The need for the new process resulted in time constraints, and market research took up a lot of time according to the case study and did not give aggregate figures. The energy which could have been used to increase the speed of the research process was not applied to get useful results.