Don’s Lumber Company on the Hudson River is one of the oldest retail lumberyards in New York State. It features a large selection of materials for flooring, decks, moldings, windows, siding, and roofing. The prices of lumber and other building materials are constantly changing. When a customer inquires about the price of pre-finished wood flooring, sales representatives consult a manual price sheet and then call the supplier for the most recent price. The supplier, in turn, uses a manual price sheet, which has been updated each day. Often, the supplier must call back Don’s sales reps because the company does not have the newest pricing information immediately on hand. Assess the business impact of this situation, describe how this process could be improved with information technology, and identify the decisions that would have to be made to implement a solution. Who would make those decisions?
–> Don’s Lumber Company on the Hudson River features a large selection of materials for flooring, decks, moldings, windows, siding, and roofing. The prices of lumber and other building materials are constantly changing.
When a customer asks about the price of pre-finished wood flooring, sales representatives consult a manual price sheet and then call the supplier for the most recent price. The supplier, in turn, uses a manual price sheet, which has been updated each day. Often, the supplier must call back Don’s sales reps because the company does not have the newest pricing information immediately on hand.
The business impacts of this situation are as follows:
- Don’s Lumber Company is operating the business less efficiently because they have to call the supplier for price and get a response sometime later.
- The supplier manages the price list daily but the way is inconvenient and it can lead the task to error occurrence.
- Time of customers, Lumber Companies, and Suppliers are consumed for less business revenue-generating tasks.
- They need to develop some advanced technology to track the changing price.
This situation can be improved by the following process with information technology:
- The company could improve its operation by adopting technology that is capable of explaining price information.
- They could practice network communication to regulate the price. If the information kept is accessible to customers and the Lumber Company, then the time of both customers and lumber company staff could be saved.
- When information is stored digitally, they enjoy the technology that keeps history and can analyze the price-changing trend.
- The initial investment seems high, but in the long run, it becomes cheaper and more efficient. Ultimately, it can help to increase customer and supplier intimacy.
The decisions that would have to be made to implement a solution are as follows:
- Don’s Lumber and the supplier can share effective ideas of what will be an easy way to conduct the low-graded task more effectively and with a lot of interest.
- Similarly, implementing a technical solution doesn’t mean investing in high money. There are many free software solutions for Enterprise Resource Planning, and they can implement at a lower price.
- Businesses can get more revenue if the customers are happy. So, they must focus on Customer Relationship Management (CRM).
- Such a solution may not fit the requirement so they might need a tailored application.
- There are many options like – using a cloud-based service, an internal reporting system, and an online collaborating system to enhance the team-based operating system.
- Similarly, they have to decide how they would wish to train the staff too.
Hence, Don’s Lumber Company should make a flexible system that can easily communicate a changing price to all internal and external members. Then, it helps to reduce errors in the pricing model and the business can run smoothly.
Henry’s Hardware is a small family business in Sacramento, California. The owners must use every square foot of store space as profitably as possible. They have never kept detailed inventory or sales records. As soon as a shipment of goods arrives, the items are immediately placed on store shelves. Invoices from suppliers are only kept for tax purposes. When an item is sold, the item number and price are rung up at the cash register. The owners use their own judgment in identifying items that need to be reordered. What is the business impact of this situation? How could information systems help the owners run their businesses? What data should these systems capture? What decisions could the systems improve?
–> Henry’s Hardware is a small family business, where they store products and sold them to the retailer. Generally, they are the wholesaler. They use all the space of store shelves to store the goods.
They keep invoices only for tax purposes. They didn’t keep complete records of sales and order the products as per the judgment of the owner.
The impacts of this situation are as follows:
- There would be a waste of valuable capital invested as the business process is not controlled or monitored.
- A lack of functional processes would hinder the growth of the business.
- There would be unnecessary excess or lack of stocks in the store.
- Unable to use sales data from previous periods to determine the amount to reorder the next period.
- The owners cannot always make the right decisions.
Information systems can help the owners run their businesses in the following ways:
- When inventory reaches a specific level, the systems inform the manager about the need for reordering.
- It will help to balance the stock and will be impossible to run out of stock.
- Also, unnecessary stock can be avoided.
- With the help of product identification, the products become easy to track.
The data that should be captured by these systems are as follows:
- The number of goods that are stored in the store.
- The data on sales and sales in a different location.
- The demand for consumers and supplies of suppliers.
- Quantity of reorder level.
- Daily transactions of sales and purchases in an accounting book, etc.
The decisions which will be improved by the systems are as follows:
- Decisions for the quantity of Reorder Level (ROL).
- Help to determine Economic Order Quantity (EOQ).
- Determine the required level for the purchase of individual goods.
- Identify the transactions daily.
- Help to balance the stock keeping, etc.
Hence, the data management system is very much important to an organization to maintain healthy storekeeping.
By implementing a suitable database management system or using an online data warehouse, a company can run in a very much efficient manner and can balance the optimal quantity for transactions in their business.
Laudon, K. C., & Laudon, J. P. (2012). Management Information Systems: Managing the Digital Firm (12th ed.). Pearson Education.