Value Chain and IT Transformation at Desko B Case Solution

1. Problem Identification

A company can only provide high-quality offerings if its value creation process is integrated. In the case of Desko, there is no coherence and consistency among functions of various departments/functions. There are five departments/functions that are directly associated with the value creation process at Desko. These departments are customer service, credit, production, distribution/shipping, and invoicing. Following is the order process:

Each function has its own internal problems due to which the whole order process is delayed or hindered. The following table summarizes the problems of each function.

Apart from all aforesaid problems, it was also noted that the company heavily relied on its clerks. The whole process of invoicing was handled by clerks. There are three ways through which Desko can resolve its problems.

2. First Alternative

It cannot be denied that Desko has tried to integrate its order processing, but it has failed badly. The main aim of implementing an enterprise system in an organization is to improve efficiency via integration. ERP systems cost millions of dollars, and it demands extensively trained personnel to operate it; whereas, at Desko, clerks are operating advanced software like ERP. So, the company needs to train its employees, including clerks, to use an ERP system in an appropriate manner. Apart from that, the company also needs to get its ERP module fixed by its suppliers in order to avoid redundancy at customer service and credit department. It would require a large sum of money for training employees to use ERP in an efficient manner. Secondly, enhancing/fixing the ERP system would also require a large sum of money. This basic cost has to be incurred by the company in pursuit of regaining their customers. Moreover, it will be time-consuming to train employees. This alternative would not only help in improving the whole order process, but it would also help in boosting employees’ morale as the company would be investing in its human resources. This strategy would solve the majority of problems faced by the company and put it on the right track.

3. Second Alternative

The second alternative that the company can adopt requires lesser time and money than the previous alternative. The company can start fixing individual problems. The company can order clerks to re-check each and every order for getting an err-free order. The clerk could call the customer and re-check the pricing, product, and delivery order address. The clerks should maintain a diary for every mail/order received in order to counter check with the numbers of orders that are added in the system. The manual system should be completely abolished, and the upper management should order to rely on ERP for receiving orders. The account managers should block the order in case the ERP does not support order cancellation or they could send a memo to the production department. The customer service department should communicate with the credit department for order returns in order to avoid unjustified collectibles. The production process can be made flexible by reducing its reliance on the automated ERP system. For production planning, the company should adopt ERP so that everything stays connected from the beginning of order processing, till the end. The company can hire a new employee for managing all issues related to warehousing and inventory. The company should try to use other types of sales forecasting tools. The invoicing function should keep closely in touch with the credit and customs department. The aforesaid alternative would require current employees to do their job in a slightly different manner. It would resolve almost all problems quickly. The only prominent cost is hiring a new person for inventory management.