Introduction
The need to adopt strong strategic initiatives is the natural follow-up to the analysis undertaken on Medical Devices Contract Manufacturing (MDCM), to unearth systemic failures in the company’s operations. The need for the development of strategic measures to solve the supply chain bottlenecks come from the desire to turn around the financial performance of MDCM.
The process for doing this requires the identification of relevant IT projects that have the best chance of solving MDCM’s problems, followed by an evaluation of the projects to assess their suitability to the company in terms of the impact they will have as solutions to the problem, and whether the company can implement them within its resources. A sequenced list showing the most optimal project will be the output of the evaluation process after the identification of the relevant projects.
IT Projects Appropriate for MDCM
The previous report contained a number of strategic and tactical initiatives required to turn around the operations of the company. The basic elements in these measures focused on improvements in the supply chain, improvement in information sharing between departments and consolidation of operations in various sections of the company.
The most significant element of the strategies that came out in the analysis was the need to utilize IT systems to smooth out the operations of the company. The specific tasks identified included the use of an information platform to streamline marketing by making it possible to develop and execute a consistent marketing strategy across different subsidiaries operating in different markets.
Secondly, the report identified the need to streamline the supply chain to ensure that there was an effective procurement regime to reduce productions costs and to reduce the turnaround time. Thirdly, the report identified the need to increase the innovative edge of the company by increasing the number and the quality of new products.
In addition, the company needs to find ways of raising the entry barriers for the fresh and upcoming competition. Another need the report identified was the need to revamp R&D activities at the company to bolster its product range and to improve its standing among competitors.
A number of specific IT based projects that can help the company to achieve its strategic objectives. The projects include the implementation of an enterprise resource planning system, creation of a company intranet, consolidation of datacenters and networks, standardization of server hardware, improvement of group support systems, creation of a customer self service portal, and the implementation of a new supply chain management software.
In order to decide on the most appropriate set of projects to work on, there is need to revisit the basic problems bedeviling the company and their impact on the business. The first problem in the company is the high cost of production in most of its manufacturing plants because of a poor supply chain.
There is a very weak order processing system, both for inputs to the company’s plants and outputs to clients. Secondly, there is need to improve information flow to all employees to ensure that they can make decision quick enough. Currently, information flow is a major impediment to the work of section managers.
Thirdly, the company is under increasing threat from new entrants to the market, and smaller operators with better efficiencies in their operations. Most of these problems have brought greater internal costs that hamper the efficient operations of the company.
The appropriate set of solutions, based on the company’s strategic objectives, should solve as many of these problems as possible. The solution needs to be easy to deploy and maintain in the long term. The perfect solution will also rely on existing technologies, or will require minimum investment in proprietary technologies. Table 1 below shows how the specific projects discussed above measure up against this criterion.
Table 1: Analysis of the projects based on their impact on the strategic objectives
The analysis above shows that the most beneficial projects in an overall sense are creation of a company intranet, consolidation of data centers and networks, improvement of group support systems and the implementation of a supply chain management software. However, the best portfolio of projects will be the ones that create the most value for the company across various criteria.
This means that the best way to approach this problem is to identify the best collection of projects that answer the problems of the company in the most effective and complete fashion, and which at the same time ranks well under ease of deployment and maintenance.
There are two optimum options for reducing the cost of production in the company. The first one is the use of enterprise resource planning while the second one is the implementation of supply chain management software. The two options promise to increase the efficiency of the supply chain.
They are both capable of improving the business processes at the company by providing a way to approach the bottlenecks in the supply chain. The important issue to determine is the overall benefits that the company will derive if it implements either of the systems. The enterprise resource-planning project will allocate the resources of the firm in the most efficient manner while the supply chain management project, will ensure that there is a smooth flow of supplies leading to reduced production prices.
In the matter of improving information flow to the employees, the highest ranked projects are the creation of a company intranet and the consolidation of data centers. An intranet will ensure that there is a proprietary link in the entire company such that managers and decision makers can access information they need from another part of the company without undue delay.
This can improve the quality of decisions and the speed of implementation of business projects. Consolidation of data centers on the other hand will also centralize information. This will make it possible for managers to access the information they need using the legacy systems in use now.
The advantage of this system is that it will use most of the current infrastructure thereby reducing the need for fresh IT investments. In the long term, there would be need to improve the methods of access but as things stand, it is the best solution for making information available.
Evaluation of Projects
The above analysis notwithstanding, there is further need to analyze the projects using the portfolio application matrix. The matrix features two main criteria. The first criterion is the ability to succeed or the degree of risk inherent in the project while the second one is the value the project brings to the business. Each of the two scales goes from zero to one hundred. Table 2 below shows that values obtained from analyzing these two criteria against the projects listed for this strategic initiative.
Table 2: Estimated values for the different projects in the product matrix
The next step after determining the percentage of each of the variables for each project the next task is comparing the values obtained for each of these projects against the portfolio application matrix.
Table 3: Portfolio application matrix
The matrix assigns the projects to four possible areas as shown in figure three below. Most of the projects lay in the top left section of the graph. The table shows that most of the projects have a high-risk status but they also promise the highest value for the business. There is only one project in the first quadrant that has moderate risk and moderate returns for the company. This is the standardization of the hardware server.
The implementation of supply chain management software will yield the highest level of reward from among the projects, with a matrix score of 87%. This, on the other hand, has a success rate of just 53% showing that it is among the riskiest projects proposed. In this sense, the company has to make a decision on whether this is the best project to implement based on these characteristics. The company’s supply chain is the weakest link in the entire business systems.
There are delays in delivery of raw materials, and significant delays in the supply of finished products to the clients. These facts support the findings on the matrix. The opportunity available to reduce the risks associated with implementing new supply chain management software is breakdown of the project into smaller parts to reduce the risk of implementing a whole system.
The second significant project from the portfolio examined is the development of a customer service portal. The project scored highly on customer service. It can help the company to reduce the losses it takes because of poor customer service. It means that both old and new customers will have a better experience with the company, making it a key element of the projects.
The case study revealed the likelihood that the company’s loss of clients came about because of poor customer service among other factors. It is interesting to note that element did not make it to the final list of projects proposed for further development in the initial analysis.
It however came through as one that would be easy to implement hence it can form part of the projects that build momentum for the exercise. However, failure to implement it will not be a significant setback provided the rest of the issues that constitute customer service receive attention.
Enterprise resource planning is also an important project given that it has a relatively high reward ratio as per the project matrix. This is a project with some risk to it because of its scope. It can also benefit from risk reduction measures such as breaking it down into phases to reduce the risk elements.
If there is a glaring lack of institutional systems at the company, then it is the lack of an enterprise resource planning system. The presence of this system would have reduced the probability of making losses by a large margin. Enterprise resource planning systems help an enterprise to allocate its resources, human, financial, and technical, in the most efficient way. It has a real potential of reducing the problems currently affecting the performance of the company.
The issue of standardization of server hardware is an opportunity to develop a robust system and can be the source of competitive advantages in the future.
Currently, it is possible to use the existing hardware but it will call for the development of different software solutions for each unique platform that runs the common protocols. Standard hardware should make it easy to implement new protocols in all the servers hence it will give the company an increased opportunity to adapt to changes.
Sequence of Executing the Initiatives
In the end analysis, the projects that should make it to the final list include the supply chain management software. Since the value of this system reduces the overall new benefits that the company can derive from instituting an enterprise resource planning system, its implementation should be on priority basis at the expense of the enterprise resource planning system.
Secondly, the implementation of group support systems will improve the cooperation between departments, which is also the same effect that creation of a company intranet will yield. Since there are systems that can support this initiative, it makes sense to develop those systems as part of the first efforts aiming to deal with the strategic issues. There is some potential benefit in implementing a customer service portal, but its significance reduces with the implementation of the two systems above.
Conclusion
The role of management in the planning and investing in IT products is critical. However, there is a significant risk of failure to respond to issue in time leading to the nature of problems discussed in the case study. IT has a special place in supporting the strategic goals of any organization.
It is imperative to align IT resources with the overall strategy of the company. Furthermore, IT has the capacity to enhance the competitive advantage of a company that invests in systems that increase the efficiency of operations. That said it is important to determine IT priorities with the help of the IT department because of their capacity to weigh the relative weight of the investment decisions, and the potential impact of IT on the operations of the project.