Implementing New Technology to Drive Business
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The U.S. furniture industry is currently facing a serious dilemma. With the economy in dire straits and the housing and job market crisis, there is little room for business expansion. These events have currently left La-Z-Boy Incorporated hanging in the balance. Competition is no longer restricted to sales; La-Z-Boy must now implement new technologies and use savvy business strategies in order to sustain profitability. The era of paper documentation has since been traded in for software tools that allow information to be shared in more feasible and cost saving ways. Moreover, the accessibility and frequency of available information is compulsory to provide upper management with suitable data that will allow them to construct reports of profitability and implement change initiatives effectively. With that in mind, the organization must now ascertain which applications are more in line with the structure of the company, assisting in achieving organizational goals, as well as determining which will supply the best return of investment (ROI) in coming years. With this diagnosis, I intend to review the company’s prior processes, their current implementation as a means to illustrate the current advancements and their effects on the organizational culture.
For more than twenty years, La-Z-Boy has utilized a program called CICS for many of the financial and manufacturing controls. CICS has various subsystems that are all integrated under one main logon screen that allows you to field through to other areas to obtain needed information. . For example, IABT is used to locate data that has been received into COPICS from the shipping/receiving department, PCIC is used to view the standards costs of materials and compare years and fabric types and BMIE/BMII allows you to view the bill of material structure to ensure that every part of the bill flows properly to calculate the standard costs. Millennium is one of the main subsystems in CICS that allows the retrieval of current and historical data for accounts payable and general ledger. Intellect is a query based systems that are managed by the IT department in order to retrieve information for sales forecasts, actual sales, cost of goods sold, sales to retail, etc through data tables.
The main issue with the setup of CICS is due to their being so many different sub-systems that are unique, training must be provided to utilize each and every single one. There is no central area where all information can be obtained; furthermore, senior management must heavily rely on plant controllers and accountants to provide up-to-date numbers every hour on the hour because they do not have the necessary training or the capacity to run queries and manipulate data to their liking. Too much time is being spent to produce the final product, extensive journal entries are being loaded manually which often leads to human error as well as the additional consumption of time. Due to these factors, senior management is unable to retrieve the information they require until these processes are complete, which often lasts anywhere from 1.5 days to 2.5 days beyond their scheduled deadline.
In addition to the technology constraints, the down turn of the automotive industry and the rising costs of raw materials in all areas of manufacturing, La-Z-Boy has found themselves in a peculiar situation. Due to the decline of hiring corporations, the average American family is not spending much money on quality furniture; instead they turn to the value centers that offer more for a lot less, in cost and quality that is. The past two years have resulted in losses between 10 and 20% every quarter; majority of the manufacturing plants have either been restructured or closed, moving business to other plants or overseas where the cost of production is drastically less. The credit crunch, the troubled housing market, lower consumer confidence, cautionary discretionary spending, you name it, they have all impacted the consumers desire to spend money on furniture purchases (Steverman, 2007). Unable to compete on a cost-basis, companies are closing down their domestic operations and jobs are being lost (Bryson, 2003).
This graph represents the sales and production volume reported from December 2007 to February 2008
Realizing that a change was necessary, the idea to review the IT infrastructure as a means to discovering approaches that could be used advantageously in order to turn profitability, promote more efficient business practices, and provide more accurate data that can be easily and more frequently extracted by end users. As the text states, drastic times call for drastic measures; uncertain economic conditions in the past several years have caused organizations to rethink how to grow and be profitable.
. To compete effectively and drive a profitable business, companies require a return on their technology investments. Since the inception of Enterprise Resource Planning (ERP) applications back-office business end users have tried a plethora of corporate strategies to ensure accurate, timely, real-time access to financial information. Executives have to make critical business decisions everyday, and they want to make them with full confidence in their financial reporting and analysis procedures (Global Software, 2005). Many business systems make it difficult to create and share high volumes of high quality documentation. They often resort to manual forms or end up developing reports and documents using menial development tools that have no structure and vary for each report. Due to the fact that much of the reporting at La-Z-Boy is manually created, the assurance that information will be reported accurately and timely is skewed. Enterprise application software is application software that performs business functions such as accounting, production scheduling, customer information management, bank account maintenance, etc. It is very useful in businesses where common information is necessary for all department functions. J.D. Edwards Enterprise One is an ERP system comprised of three basic areas of expertise, functional-business, programmer-developer and technical-CNC-system administration. Depending upon the user’s level of expertise in reference to Enterprise One or E1, the level of functionality can vary. “An enterprise resource planning (ERP) system and its implementation represents a substantial organizational change. Top management involvement has been cited as a critical factor in the success, as well as, failure of ERP implementation.” (Martin 2007) Traditional software was focused on providing connectivity; usually involving several enterprise applications services that allow one or more machines to interact across a network. The idea of having all