Section 2. Enterprise Systems.
(1) Value chain model developed by Michael Porter (Porter, 1985), it included two parts: primary activities and support activities. For primary activities, there were five activities included Inbound Logistics, Operations, Outbound Logistics, Marketing and Sales and Services. All activities were sequentially adding value to the profit margin. For support activities, it included a firm’s infrastructure: Human Resources Management, Technology Development and Procurement. All those activities were inter-supportive and sustained to primary activities. In Restoration case, they bought in raw material and storage for making furniture, hardware and home accessories (inbound logistics). Then, turning raw materials into finished goods (operation) and ready for packaging, storing or shipping to consumers (outbound logistics) by displaying in 103 retail stores across USA and Canada. Marketing and Sales would create demand by different promotion channels such as eCataglogue and mail-order catalogue. At last, reached the Services stage that included providing after-sale service such as maintenance or warranty services, but Restoration has not provided this kind of service.
For competitive forces model, it also developed by Michael Porter (Porter, 1985). It included five forces in market to analysis a company’s competitiveness. The five forces included the threat of new competitors; bargaining power of suppliers; bargaining power of buyers; threat of substitute products or services and the rivalry among existing firms in the industry. Referred to Restoration, their existing competitors included Pottery Barn, Pier 1 and Williams Sonoma. The bargaining power of Restoration of suppliers was weak as they relied on a single vendor with no contracts to protect their benefits and restrict the risk. As the loss of the bargaining power with vendors, then the product price would keep in high and lower the company competitiveness from competitors.
By the end of 2003, the revenue dropped unexpectedly and Restoration decided to upgrade management skill, cut off poor selling products and closing shops with poor performance but no improvement to the IT infrastructure.
(2) Restoration Hardware business was start from merchandise furniture, hardware and home accessories in classic American style. Its revenue was direct-to-customer ventures by selling their products through several channels: 103 retail chain stores across USA and Canada; print mail-order catalog and company’s website “RestorationHardware.com”. The revenue was mainly come from mail-order catalog and web site operations with 51% and 52% respectively in 2003. On the other hand, Restoration employed 3,500 employees in which only 1,400 were full time staff, they saved the expenses in employees benefit. In order to increase the on-line shoppers, Restoration has invested in improving its e-commerce software to maximize the capacity. In addition, Restoration intended to improve the search engine to be more user-friendly by bought in a One Step natural language and navigation software from iPhrase Technologies. Moreover, Restoration has also bought in Scene7’s eCatalog solution to develop an advanced image-viewing features and colorizer feature to give consumer a comprehensive product details.
(3) In view of management and organization, Restoration did not have a comprehensive business plan to provide a full picture of company mission and expectation since most of the top executives were from merchandising background who lack of management skill. In every year, it should have a year plan to forecast the sales trend in coming year and indicate an action plan in order to achieve the goal. In the operation with suppliers / vendors, it was necessary to have a contract and purchase order to list out all terms and conditions, product cost, quantity, delivery time etc to protect both parties when dealing business. Furthermore, Restoration did not have a proper financial control in handling funds, investment and operation expenditure. In technology part, Restoration has input several software from time to time to improve and upgrade the e-commerce business channel to be effectiveness and increase the market share and sales. Unfortunately, the large portion of IT investment without planning and in a short period of time, it lowered the company’s revenue and affected the investment in other operation expenses such as inventory control.
(4) Restoration has no ability to keep its inventory in line according to consumer needs as they did not have a plan to upgrade the logistic software and improve the supply chain control system. In retail business, a “Just-in-time” inventory control played an important role to satisfy consumer needs, reduce the inventory cost and to strengthen the company competitiveness.
(5) First of all, Restoration has to upgrade their aging information technology infrastructure.
Adding debit card purchase service to facilitate the payment procedure. Thirdly, to link all retail shops and warehouse of inventory status to reduce manpower, resources and time saving in stock checking. To forecast the consumer trend in making appropriate arrangement of stock control. To evaluate and cooperate with one software company for IT infrastructure system improvement as they could fully understand to provide service what the company actually needs, avoid wasting manpower and reduce cost. The system should gather all sales, inventory and pricing data for related parties in analyse, forecast and control purpose.
Credit:ivythesis.typepad.com
0 comments:
Post a Comment