Case 1 HOW GENERAL MOTORS IS COLLABORATING ONLINE

The Problem

Designing a car is a complex and lengthy task. Take, for example, General Motors (GM). Each model created needs to go through a frontal crash test. So the company builds prototypes that cost about one million dollars for each car and tests how they react to frontal crash. GM crashes these cars, makes improvements, then makes new prototypes and crashes them again. There are other tests and more crashes. Even as late as the 1990s, GM crashed as many as 70 cars for each new model.

The information regarding a new design and its various tests, collected in these crashes and other tests, has to be shared among close to 20,000 designers and engineers in hundreds of divisions and departments at 14 GM design labs, some of which are located in different countries. In addition, communication and collaboration is needed with design engineers of the more than 1,000 key suppliers. All of these necessary communications slowed the design process and increased its cost. It took over four years to get a new model to the market.

The Solution

GM, like its competitors, has been transforming itself into an e-business. This gradual transformation has been going on since the mid-1990s, when Internet band width increased sufficiently to allow Web collaboration. The first task was to examine over 7,000 existing legacy IT systems, reducing them to about 3,000, and making them Web-enabled. The EC system is centered on a computer-aided design (CAD) program from EDS (a large IT company, subsidiary of GM). This system, known as Unigraphics, allows 3-D design documents to be shared online by both the internal and external designers and engineers, all of whom are hooked up with the EDS software. In addition. Collaborative and Web-conferencing software tools, including Microsoft’s NetMeeting and EDS’s eVis, were added to enhance teamwork. These tools have radically changed the vehicle-review process.

To see how GM now collaborates with a supplier, take as an example a needed cost reduction of a new seat frame made by Johnson Control GM electronically sends its specifications for the seat to the vendor’s product data system. Johnson Control’s collaboration systems (eMatrix) is integrated with EDS’s In graphics. This integration allows joint searching, designing. Tooling, and testing of the seat frame in real time, expediting the process and cutting costs by more than 10 percent.Another area of collaboration is that of crashing cars. Here designers need close collaboration with the test engineers. Using simulation, mathematical modeling, and a Web-based review process. GM is able now to electronically “Crash” cars rather than to do it physically.

The Results

Now it takes less than 18 months to bring a new car to market, compared to 4 or more years before, and at a much lower design cost. For example, 60 cars are now “Crashed” electronically, and only 10 are crashed physically. The shorter cycle time enables more new car models, providing GM with a competitive edge. All this has translated into profit. Despite the economic show down. GM’s revenues increased more than 6 percent in 2002. while its earnings in the second quarter of 2002 doubled that of 2001. 

Questions: 

1. Why did it take GM over four years to design a new car?

2. Who collaborated with whom to reduce the time-to-market?

3. How has IT helped to cut the time-to-market?   

 

Case 2 Intranets: Invest First, Analyze Later?

The traditional approach to information systems projects is to analyze potential costs and benefits before deciding whether to develop the system. However for moderate investments in promising new technologies that could offer major benefits. Organizations may decide to do the financial analyses after the project is over. A number of companies took this latter approach in regard to intranet projects initiated prior to 1997.

Judd’s

Located in Strasburg. Virginia, Judd’s is a conservative, family-owned printing company that prints Time magazine, among other publications. Richard Warren. VP for IS. Pointed out that Judd’s “usually waits for technology to prove itself…. But with the Internet the benefits seemed so great that our decision proved to be a no-brainer.” Judd’s first implemented internet technology for communications to meet needs expressed by customers. After this it started building intranet of the significance of these applications to the company is the bandwidth that supports them. Judd’s increased the bandwidth by a magnitude of about 900 percent in the 1990s without cost-benefit analysis.

Eli Lilly & Company

A very large pharmaceutical company with headquarters in Indianapolis, Eli Lilly has a proactive attitude toward new technologies. It began exploring the potential of the Internet in 1993. Managers soon realized that, by using intranets, they could reduce many of the problems associated with developing applications on a wide variety of hardware platforms and networking configurations. Because the benefits were so obvious, the regular financial justification process was waived for intranet application development projects. The IS group that helps user departments develop and maintain intranet applications increased its staff from three to ten employees in 15 months.

Needham Interactive

Needham, a Dallas advertising agency, has offices in various parts of the country. Needham discovered that, in developing presentations for bids on new accounts, employees found it helpful to use materials from other employees’ presentations on similar projects. Unfortunately, it was very difficult to locate and then transfer relevant ,materials in different locations and different formats. After doing research on alternatives, the company identified intranet technology as the best potential solution. Needham hired EDS to help develop the system. It started with one office in 1996 as a pilot site. Now part of DDB Needham, the company has a sophisticated corporate wide intranet and extranet in place. Although the investment was “substantial”, Needham did not do a detailed financial analysis before starting the project. David King, a managing partner explained. “the system will start paying for itself  the first time an employee wins a new account because he had easy access to a co-worker’s information.”

Cadence Design Systems

Cadence is a consulting firm located in San Jose, California. It wanted to increase the productivity of its sales personnel by improving internal communications and sales training. It considered Lotus Notes but decided against it because of the costs. With the help of a consultant, it developed an internet system. Because the company reengineered its sales training process to work with the new system, the project took somewhat longer than usual.International Data Corp., an IT research firm, helped cadence do an after-the-fact financial analysis. Initially the analysis calculated benefits based on employees meeting their full sales quotas. However, IDC later found that a more appropriate indicator was having new scales representatives meet half their quota. Startup costs were $280,000, average annual expenses were estimated at less than $400,000, and annual savings were projected at over $2.5 million. Barry Demak, director of sales, remarked, “we knew the economic justification…would be strong, but we were surprised the actual numbers were as high as they were.” 

Questions:

1. Where and under what circumstances is the “invest first, analyze later” approach appropriate? where and when is it inappropriate? Give specific examples of technologies and other circumstances.

2. How long do you think the “invest first , analyze later” approach will be appropriate for intranet projects? When (and why) will the emphasis shift to traditional project justification approaches? (Or has the shift already occurred?)

3. What are the risks of going into projects that have not received a through financial analysis? How can organization reduce these risks?

4. Based on the numbers provided for Cadence Design System’s intranet project, use a spread sheet to calculate the net present value of the project. Assume a 5-year life for the system.  

 

Case 3 Putting IT to Work at Home Depot   

Home Depot is the world’s largest home-improvement retailer, a global company that is expanding rapidly (about 200 new stories every year). With over 1500 stories (mostly in the United States and Canada, and now expanding to other countries) and about 50,000 kinds of products in each store, the company is heavily dependent on It, Especially since it started to sell online.

To align its business and IT operations, Home Depot created a business and information service model, known as the Special Projects Support Team (SPST). This team collaborates both with the ISD and business colleagues on new projects, addressing a wide range of strategic occur at the intersection of business process. The team is composed of highly skilled employees. Actually, there are several teams, each with a director and mix of employees, depending on the project. For example, system developers, system administrators, security experts, and project managers can be on a team. The teams exist until the completion of a project; then they are dissolved and the members are assigned to new teams. All teams report to the SPST director, who reports to a VP of technology.To ensure collaboration among end users, the ISD and the SPST created structured (formal) relationships. The basic idea is to combine organizational structure and process flow, which is designed to do the following:

• Achieve consensus across departmental boundaries with regard to strategic initiatives.
• Prioritize strategic initiatives.
• Bridge the gap between business concept an detailed specifications.
• Result in the lowest possible operational costs.
• Achieve consistently high acceptance levels by the end-user community.
• Comply with evolving legal guidelines.
• Define key financial elements (cost-benefit analysis, ROI, etc.).
• Identify and render key feedback points for project metrics.
• Support very high rates of change.
• Support the creation of multiple, simultaneous threads of work across disparate time     lines.
• Promote known, predictable, and manageable work flow events, event sequences, and change management processes.
• Accommodate the highest possible levels of operational stability.
• Leverage the extensive code base, and leverage function and component reuse.
• Leverage Home Depot’s extensive infrastructure and IS resource base.

Online File W 15.11 shows how this kind of organization works for home depot’s e-commerce activites. There is a special EC steering committee which is connected to the CIO (who is a senior VP), to the Vp for marketing and advertising, and to the VP for merchandising (merchandising deals with procurement). The SPST is closely tied to the ISD, to marketing, and to merchandising. The data centre is shared with non-EC activities.

The SPST migrated to an e-commerce team in Aughust 2000 in order to construct a Website supporting a national catalog of products, which was completed in April 2001. (This catalog contains over 400,000 products from 11,000 vendors.) This project requires the collaboration of virtually every department in Home depot (e.g., in the figure). Also contracted services were involved. (the figure in online file W15.11 shows the work flow process.)

Since 2001, SPST has been continuously busy with Ec Intivatives, including improving the growing Home Depot online store. The cross departmental nature of the SPSt explains why it is an ideal structure to support the dyanamic, ever-changing work of the EC-related projects. The structure also consider the skills, strengtyhs, and the weeknesses of the It employees. The company offer both the online and offline training aimed at improving those skills. Home Depot is consistently ranked among the best places to work for IT employees.

Questions: 

1. Explain why the team based structure at Home Depot is so successful.

2. The structure means that the SPST reports to both marketing and technology. This is known as a matrix structure. What are the potential advantages and problems?

3. How is collaboration facilitated by IT in this case?

4. Why is the process flow important in this case?

 

Case 4 Dartmouth College Goes Wireless

Dartmouth College, one of the oldest in United States (founded in 1769), was one of the first to embrace the wireless revolution. Operating and maintain a campuswide information system with wires is very difficult. Since there are 161 buildings with more than 1,000 rooms on campus. In 2000, the college introduced a campuswide wireless network that includes more than 500 Wi-Fi (wireless fidelity: see chapter 6) systems. By the end of 2002, the entire campus became a fully wireless, always connected community – a microcosm that provides a peek at what neighborhood and organizational life may look like for the general population in just a few years.

To transform a wired campus to a wireless one requires lots of money. A computer science professor who initiated the idea at Dartmouth in 1999 decided to solicit the help of alumni working at cisco systems. These alumni arranged for a donation of the initial system, and cisco then provided more equipment at a discount. (Cisco and other companies now make similar donations to many collages and universities, writing off the difference between the retail and the discount prices for an income tax benefit.)

As a pioneer in campuswide wireless, Dartmouth has made many innovative usuages of the system, some of which are the following:

• Students are developing new applications for the Wi-Fi. For eample, one student has applied for a patent on a personal-security device that pinpoints the location of the campus emergency services to one’s mobile device.
• Students no longer have to remember campus phone numbers, as their mobile devices have all the numbers and can be accessed any where on campus.
• Students primarily use laptop computers on the network. However, an increasing number of Internet-enabled PDAs and cell phones are used as well. The use of regular cell phones is on the decline on campus.
• An extensive messaging system is used by the students, who send SMSs (Short Message Services) to each other. Messages reach the recipients in a split second, any time, anywhere, as long as they are sent and received within the network’s coverage area.
• Usage of the Wi-Fi system is not confined just to messages, students can submit their class work by using the network, as well as watch streaming video and listen to Internet radio.
• An analysis of wireless traffic on campus showed how the new network is changing and shaping campus behavior patterns. For example, students log on in short bursts, about 16 minutes at a time, probably checking their messages. They tend to plan themselves in a few favourite spots (dorms, TV room, student centre, and on a shaded bench on the green) where they use their computers, and they rarely connect beyond those places.
• The student invented special complex wireless games that they play online.
• One student has written some code that calculates how far away a networked PDA user is from his or her next appointment, and then automatically adjusts the PDA’s reminder alarm schedule accordingly.
• Professors are using wireless-based teaching methods. For example, students armed with Handspring visor PDA’s equipped with Internet access cards, can evaluate material presented in class and can vote on a multiple-choice questionnaire relating to the presented material. Tabulated results are shown in seconds, promoting discussions. According to faculty, the system “makes students want to give answers,” thus significantly increasing participation.
• Faculty and students developed a special voice-over-IP application for PDAs and iPAQs that uses live two-way voice-over-IP chat.

Questions:

1. In what ways is the Wi-Fi technology changing the Dartmouth students?

2. Some says that the wireless system will become part of the background of everybody’s life – that the mobile devices are just an afterthought. Explain.

3. Is the system contributing to improved learning, or just adding entertainment that may reduce the time available for studying? Debate your point of view with students who hold a different opinion.

4. What are the major benefits of the wireless system over the previous wire line one? Do you think wire line systems will disappear from campus one day? (Do some research on the topic.)

CASE – 1   Dartmouth College Goes Wireless

Dartmouth College, one of the oldest in the United States (founded in 1769), was one of the first to embrace the wireless revolution. Operating and maintaining a campuswide information system with wires is difficult, since there are 161 buildings with more than 1,000 rooms on campus. In 2000, the college introduced a campuswide wireless network that includes more than 500 Wi-Fi (wireless fidelity) systems. By the end of 2002, the entire campus became a fully wireless, always-connected community—a microcosm that provides a peek at what neighborhood and organizational life may look like for the general population in just a few years.

To transform a wired campus to a wireless one requires lots of money. A computer science professor who initiated the idea at Dartmouth in 1999 decided to solicit the help of alumni working at Cisco Systems. These alumni arranged for a donation of the initial system, and Cisco then provided more equipment at a discount. (Cisco and other companies now make similar donations to many colleges and universities, writing off the difference between the retail and the discount prices for an income tax benefit.)

As a pioneer in campuswide wireless, Dartmouth has made many innovative usages of the system, some of which are the following:

• Students are continuously developing new applications for the Wi-Fi. For example, one student has applied for a patent on a personal-security device that pinpoints the location of campus emergency services to one’s mobile device.
• Students no longer have to remember campus phone numbers, as their mobile devices have all the numbers and can be accessed anywhere on campus.
• Students primarily use laptop computers in the network. However, an increasing number of Internet-enabled PDAs and cell phones are used as well. The use of regular cell phones is on the decline on the campus.
• An extensive messaging system is used by the students, who send SMSs (Short Message Services) to each other. Messages reach the recipients in a split second, any time, anywhere, as long as they are sent and received within the network’s coverage area.
• Usage of the Wi-Fi system is not confined just to messages. Students can submit their classwork by using the network, as well as by watching streaming video and listening to Internet radio.
• An analysis of wireless traffic on campus showed how the new network is changing and shaping campus behaviour patterns. For example, students log on in short burst, about 16 minutes at a time, probably checking their messages. They tend to plant themselves in a few favorite spots (dorms, TV room, student center, and on a shaded bench on the green) where they use their computers, and they rarely connect beyond those places.
• Some students invented special complex wireless games that they play online.
• One student has written a code that calculates how far away a networked PDA user is from his or her next appointment, and then automatically adjusts the PDA’s reminder alarm schedule accordingly.
• Professors are using wireless-based teaching methods. For example, students can evaluate material presented in class and can vote online on a multiple-choice questionnaire relating to the presented material. Tabulated results are shown in seconds, promoting discussions. According to faculty, the system “makes students want to give answer,” thus significantly increasing participation.
• Faculty and students developed a special voice-over-IP application for PDAs and iPAQs that uses live two-say voice-over-IP chat

Questions

1. In what ways is the Wi-Fi technology changing the life of Dartmouth students? Relate your answer to the concept of the digital society.

2. Some say that the wireless system will become part of the background of everybody’s life—that the mobile devices are just an afterthought. Explain.

3. Is the system contributing to improved learning, or just adding entertainment that may reduce the time available for studying? Debate your point of view with students who hold a different opinion.

4. What are the major benefits of the wireless system over the previous wireline one? Do you think wireline systems will disappear from campuses one day? (Do some research on the topic.)

 

CASE – 2      E-Commerce Supports Field Employees at Maybelline

The Business Problem

Maybelline is a leader in color cosmetics products (eye shadow, mascara, etc.), selling them in more than 70 countries worldwide (maybelline.com). The company uses hundreds of salespeople (field merchandising representatives, or “reps”), who visit drugstores, discount stores, supermarkets, and cosmetics specialty stores, in an attempt to close deals. This method of selling has proved to be fairly effective, and it is used by hundreds of other manufacturers such as Kodak, Nabisco, and Procter & Gamble. Sales managers from any company need to know, as quickly as possible, when a deal is closed or if there is any problem with the customer.

Information technology has been used extensively to support sales reps and their managers. Until 2000, Maybelline, as well as many other large consumer product manufacturers, equipped reps with an interactive voice response (VR) system, by means of which they were to enter, every evening, information about their daily activities. This solution required that the reps collect data with paper-based surveys completed for every store they visited each day. For example, the reps noted how each product was displayed, how much stock was available, how items were promoted, etc. In addition to the company’s products the reps surveyed the competitors’ products as well. In the evening, the reps translated the data collected into answers to the voice response system which asked them routine questions. The reps answered by pressing the appropriate telephone keys.

The IVR system was not the perfect way to transmit sales data. For one thing, the IVR system consolidated information, delivering it to top management as a hard copy. However, unfortunately, these reports sometimes reached top management days or weeks too late, missing important changes in trends and the opportunities to act on them in time. Frequently, the reps themselves were late in reporting, thus further delaying the needed information.

Even if the reps did report on time, information was inflexible, since all reports were menu-driven. With the voice system the reps answered only the specific questions that applied to a situation. To do so, they had to wade through over 50 questions, skipping the irrelevant ones. This was a waste of time. In addition, some of the material that needed to be reported had no matching menu questions. Considering a success in the 1990s, the system was unable to meet the needs of the twenty-first century. It was cumbersome to set up and operate and was also prone to input errors.

The Mobile Solution

Maybelline replaced the IVR by equipping its reps with a mobile system, called Merchandising Sales Portfolio (MSP), from Thinque Corp. (thinque.com, now part of meicpg.com). It runs on handheld, pen-based PDAs, which have hand-writing recognition capability (from NEC), powered by Microsoft’s CE operating system. The system enables reps to enter their information by hand-writing their reports directly at the clients’ sites. From the handheld device, data can be uploaded to a Microsoft SQL Server database at headquarters every evening. A secured Internet connection links to the corporate intranet (a synchronization process). The new system also enables district managers to electronically send daily schedules and other important information to each rep.

The system also replaced some of the functions of the EDI (electronic data interchange) system, the pride of the 1990s. For example, the reps’ report include inventory-scanned data from retail stores. These are processed quickly by an order management system, and passed whenever needed to the shipping department for inventory replenishment.

In addition to routine information, the new system is used for decision support. It is not enough to speed information along the supply chain; managers need to know the reasons why certain products are selling well, or not so well, in every location. They need to know what the conditions are at retail stores affecting the sales of each product, and they need to know it in a timely manner. The new system offers those capabilities.

The Results

The system provided managers at Maybelline headquarters with an interactive link with the mobile field force. Corporate planners and decision makers can now respond much more quickly to situations that need attention. The solution is helping the company forge stronger ties with its retailers, and it considerably reduces the amount of after-hours time that the reps spend on data transfer to headquarters (from 30-50 minutes per day to seconds).

The new system also performs market analysis that enables managers to optimize merchandising and customer service efforts. It also enables Maybelline to use a more sophisticated interactive voice response unit—to capture data for special situations. Moreover, it provides browser-based reporting tools that enable managers, regardless of where they are, to view retail information within hours of its capture. Using the error-checking and validation feature in the MSP system, reps make significantly fewer data entry errors.

Finally, the quality of life of Maybelline reps has been greatly improved. Not only do they save 30 to 40 minutes per day, buy also their stress level has been significantly reduced. As a result, employee turnover has declined appreciably, saving money for the company.

Questions

1. IVR systems are still popular. What advantages do they have over even older systems in which the reps mailed or faxed reports?

2. Summarize the advantages of the new system over the IVR one.

3. Draw the flow of information in the system.

4. The existing technology enables transmission of data any time an employee can access the Internet with a wireline. Technically, the system can be enhanced so that the data can be sent wirelessly from any location as soon as they are entered. Would you recommend a wireless system to Maybelline? Why or why not?

 

CASE – 3   Precision Buying, Merchandising, and Marketing At Sears

The Problem

Sears, Roebuck and Company, the largest department store chain and the third-largest retailer in the United States, was caught by surprise in the 1980s as shoppers defected to specialty stores and discount mass merchandisers, causing the firm to lose market share rapidly. In an attempt to change the situation, Sears used several response strategies, ranging from introducing its own specialty stores (such as Sears Hardware) to restructuring its mall-based stores. Recently, Sears has moved to selling on the Web. It discontinued its over 100-year old paper catalog. Accomplishing the transformation and restructuring required the retooling of its information systems.

Sears had 18 data centers, one in each of 10 geographical regions as well as one each for marketing, finance, and other departments. The first problem was created when the reorganization effort produced only seven geographical regions. Frequent mismatches between accounting and sales figures and information scattered among numerous databases users to query multiple systems, even when they needed an answer to a simple query. Furthermore, users found that data that were already summarized made it difficult to conduct analysis at the desired level of detail. Finally, errors were virtually inevitable when calculations were based on data from several sources.

The Solution

To solve these problems, Sears constructed a single sales information data warehouse. The replaced the 18 old databases which were packed with redundant, conflicting, and sometimes obsolete data. The new data warehouse is a simple repository of relevant decision-making data such as authoritative data for key performance indicators, sales inventories, and profit margins. Sears, known for embracing IT on a dramatic scale, completed the data warehouse and its IT reengineering efforts in under one year—a perfect IT turnaround story.

Using an NCR enterprise server, the initial 1.7 terabyte (1.7 trillion bytes) data warehouse is part of a project dubbed the Strategic Performance Reporting System (SPRS). By 2003, the data warehouse had grown to over 70 terabytes. SPRS includes comprehensive sales data; information on inventory in stores, in transit, and at distribution centers; and cost per item. This has enabled Sears to track sales by individual items (skus) in each of its 1,950 stores (including 810 mall-based stores) in the United States and 1,600 international stores and catalog outlets. Thus, daily margin by item per store can be easily computed, for example. Furthermore, Sears now fine-tunes its buying, merchandising, and marketing strategies with previously unattainable precision.

SPRS is open to all authorized employees, who now can view each day’s sales from a multidimensional perspective (by region, district, store, product line, and individual item). Users can specify any starting and ending dates for special sales reports, and all data can be accessed via a highly user-friendly graphical interface. Sears managers can now monitor the precise impact of advertising, weather, and other factors on sales of specific items. This means that Sears merchandise buyers and other specialists can examine and adjust, if needed inventory quantities, merchandising, and order placement, along with myriad other variables, almost immediately, so they can respond quickly to environmental changes. SPRS users can also group together widely divergent kinds of products, for example, tracking sales of items marked as “gifts under $25.” Advertising staffers can follow so-called “great items,” drawn from vastly different departments, that are splashed on the covers of promotional circulars. SPRS enables extensive data mining, but only on sku- and location-related analysis.

In 1998 Sears created a large customer database, dubbed LCI (Leveraging Customer Information), which contained customer-related sale information (which was not available on SPRS). The LCI enables hourly records of transactions, for example, guiding hourly promotion (such as 15% discounts for early-bird shoppers).

In the holiday season of 2001, Sears decided to replace its regular 10% discount promotion by offering deep discount during early shopping hours. The new promotion, which was based on SPRS, failed, and only when LCI was used was the problem corrected. This motivated Sears to combine LCI and SPRS in a single platform, which enables sophisticated analysis (in 2002).

By 2001, Sears also had the following Web initiatives: an e-commerce home improvement center, a B2B supply exchange for the retail industry, a toy catalog (wishbook.com), an e-procurement system, and much more. All of these Web-marketing initiatives feed data into the data warehouse, and their planning and control are based on accessing the data warehouse.

The Result

The ability to monitor sales by item per store enables Sears to create a sharp local market focus. For example, Sears keeps different shades of paint colors in different cities to meet local demands. Therefore, sales and market share have improved. Also, Web-based data monitoring of sales at LCI helps Sears to plan marketing and Web advertising.

At its inception, the data warehouse hand been used daily over 3,000 buyers, replenishers, marketers, strategic planner, logistics and finance analysts, and store managers. By 2004, there were over 6,000 users, since users found the system very beneficial. Response time to queries has dropped from days to minutes for typical requests. Overall, the strategic impact of the SPRS-LCI data warehouse is that it offers Sears employees a tool for making better decisions, and Sears retailing profits have climbed more than 20 percent annually since SPRS was implemented.

Questions

1. What were the drivers of SPRS?

2. How did the data warehouse solve Sears’s problems?

3. Why was it beneficial to integrate the customers’ data-base with SPRS?

4. How could RFID change Sears’s operations?

 

CASE – 4   Dollar General Uses Integrated Software

Dollar General (dollargeneral.com) operates more than 6,000 general stores in the United States, fiercely competing with Wal-Mart, Target, and thousands of other stores in the sale of food, apparel, home-cleaning products, health and beauty aids, and more. The chain doubled in size between 1996 and 2002 and has had some problems in addition to the stiff competition, due to its rapid expansion. For example, moving into new states means different sales taxes, and these need to be closely monitored for changes. Personal management also became more difficult with the organization’s growth. an increased number of purchasing orders exacerbated problems in the accounts payable department, which was using manual matching of purchasing orders, invoices, and what was actually received in the “receiving” department before bills were paid.

The IT department was flooded with request to generate long reports on topics ranging from asset management to general ledgers. It became clear that a better information system was needed. Dollar General started by evaluating information requirements that would be able to solve the above and other problems that cut into the company’s profit.

A major factor in deciding which software to buy was the integration requirement among the existing information systems of the various functional areas, especially the financial applications. This led to the selection of the Financials suite (from Lawson Software). The company started to implement applications one at the time. Before 1998, the company installed the suite’s asset management, payroll, and some HR applications which allow the tens of thousands of employees to monitor and self-update their benefits, 401k contributions, and personal data (resulting in big savings to the HR department). After 1998, the accounts payable and general ledger modules of Lawson Software were activated. The accounting modules allow employees to route, extract, and analyze data in the accounting/finance area with little reliance on IT personnel. During 2001-2003, Dollar General moved into the sales and procurement areas, thus adding the marketing and operation activities to the integrated system.

Here are a few examples of how various parts of the new system work: All sales data from the point-of-sale scanners of some 6,000 stores are pulled each night, together with financial data, discounts, etc., into the business intelligence application for financial and marketing analysis. Employee payroll data, from each store, are pulled once a week. This provides synergy with the sales audit system (from STS Software). All sales data are processed nightly by the STS System, broken into hourly journal entries, processed and summarized, and then entered into the Lawson’s general ledger module.

The original infrastructure was mainframe based (IBM AS 400). By 2002, the 800 largest suppliers of Dollar General were submitting their bills on the EDI. This allowed instantaneous processing in the accounts payable module. By 2003, service providers, such as utilities, were added to the system. To do all this the system was migrated in 2001 from the old legacy system to the Unix operating system, and then to a Web-based infrastructure, mainly in order to add Web-based functionalities and tools.

A development tool embedded in Lawson’s Financials allowed users to customize applications without touching the computer programming code. This included applications that are not contained in the Lawson system. For example, an employee-bonus applications was not available at Lawson, but was added to Financial’s payroll module to accommodate Dollar General’s bonus system. A customized application that allowed additions and changes in dozens of geographical areas also solved the organization’s state sales-tax collection and reporting problem.

The system is very scalable, so there is not problem in adding stores, vendors, applications, or functionalities. In 2003, the system was completely converted to Web-based, enabling authorized vendors, for example, to log on the Internet and view the status of their invoices by themselves. Also the Internet/EDI enables small vendors to use the system. (An EDI is too expensive for small vendors, but the EDI/Internet is affordable.) Also, the employment can update personal data from any Web-enabled desktop in the store or at home. Future plans call for adding an e-purchasing (procurement) module using a desktop purchasing model.

Questions

1. Explain why the old, nonintegrated functional system created problems for the company. Be specific.

2. The new system cost several millions dollars. Why, in your opinion, was it necessary to install it?

3. Lawson Software Smart Notification Software (lawson.com) is being considered by Dollar General. Find information about the software and write an opinion for adopting or rejection.

4. Another new product of Lawson is Service Automation. Would you recommend it to Dollar General? Why or why not?

 

CASE – 5   Singapore and Malaysia Airlines Intelligent System

The problem

Airlines fly around the globe, mostly with their native crew. Singapore Airlines and Malaysia Airlines are relatively small airlines, but they serve dozens of different countries. If a crewmember is ill on route, there is a problem of quickly finding a replacement. This is just one example why crew scheduling may be complex, especially when it is subject to regulatory constraints, contract agreements and crew preferences. Disturbances such as   weather conditions, maintenance problems, etc, also make crew management difficult.

The Solution

Singapore Airlines uses Web-based intelligent systems including expert systems and neural computing to manage the company’s flight crew scheduling and handle disruptions to the crew rosters. The Integrated Crew Management System (ICMS) project, implemented in Singapore since 1997, consists of three modules: one roster assignment module for cockpit crew, one for the cabin crew, and a crew tracking module. The first two modules automate the tracking and scheduling of the flight crew’s timetable. The second module tracks the positions of the crew and includes an intelligent system that handles crew patterns disruptions.

For example, crews are rearranged if one member falls ill while in a foreign port; the system will find a backup in order to prevent understaffing on the scheduled flight. The intelligent system then determines the best way to reschedule the different crew members’ rosters to accommodate the sick person. When a potentially disruptive situation occurs, the intelligent system automatically draws upon the knowledge stored in the database and advises the best course of action. This might mean repositioning the crew or calling in backup staff. The crew tracking system includes a crew disruption handling module that provides decision support capabilities in real time.

A similar Web-based system is used by Malaysia Airlines, as of summer 2003, to optimize flight crew utilization. Also called ICMS, it leverages optimization software from ilog.com. Its Crew Pairing Optimization (CPO) module utilizes Ilog Cplex and Ilog Solver optimization components to ensure compliance with airline regulations, trade union agreements, and company policies, to minimize the costs associated with crew accommodations and transportation and to efficiently plan and optimize staff utilization and activities associated with long-term planning and daily operations. The Crew Duty Assignment (CDA) module provides automatic assignment of duties to all flight crews. The system considers work rules, regulatory requirements, and crew requests to produce an optimal monthly crew roster.

The Results

Despite the difficult economic times, both airless are competing successfully in the region, and their balance sheets are better than most other airlines.

Questions

1. Why do airlines need optimization systems for crew scheduling?

2. What role can experts’ knowledge play in this case?

3. What are the similarities between the systems in Singapore and Malaysia?

4. The airlines use ADSs for their pricing strategy (pricing and yield optimization). Can they use an ADS for crew management? Why or why not?