CASE ORGANISATION: Peter’s Hardware Stores (PHS)
Peter owns PHS with six stores in Australia, selling a range of hardware and timber products including paint, power tools, hand tools, gardening materials, building and plumbing materials. He has been in this business for more than 20 years selling hardware and timber products and related products. Peter is proud of his business selling quality products and offering expert advice provided by his staff. Peter has seen a big drop in overall sales in the last three years. There was fierce competition from major hardware chains. Staff reported problems related to lack of communication and common goals between different departments. There were customer complaints on delays in fulfilling orders due to bottlenecks too.
As each store stocks more than 45,000 products, it has become a big challenge to identify the products in demand and the required stock levels for each product at his stores. Peter has been using a manual system to record stock levels. All this time, Peter didn’t think about improving his information system to support his business due to inadequate IT knowledge. He did not realise the benefits of information systems until he recently attended a seminar about cloud-based Enterprise Resource Planning (ERP) systems, which explained the benefits businesses can reap with information technology.
PHS has two types of customers, Business customers and Walk-in customers. Business customers are given a 20% discount on every purchase. Whereas, walk-in customers are offered a 10% voucher on future purchases. Regardless of the type, the customer’s first & last name, address (no, street, city, state and post code), contact numbers (phone, fax, mobile), customer type and email addresses are noted. In addition to these details, offered voucher codes, business or walk-in customer ID and discount percentage for business customers are noted.
PHS customers generally place orders over the phone or visit the store to place orders for different products. In exceptional circumstances customers will be allowed to fax in or mail the orders. PHS gained the reputation of maintaining a huge variety and big brands. Although PHS was able to supply the goods within a reasonable amount of time in the past, there are problems in achieving that in recent years. Every order includes details such as customer, order id, order date, and the products required. Furthermore, there are more and more complaints on the time for transferring products between different sites and delivery to customers.
According to PHS, they wish to record details of all the hardware and timber products (product ID, product name, month and year of manufacture, manufacturer, warranty details, quantity in stock, price) they sell along with the manufacturers details (manufacturer id, manufacturer name, local contact name, address, street, city, post code, contact numbers, email id and manufacturer web address). At the moment PHS has warehouses in four different locations where all their products are stocked. Peter believes that there is no need to stock every product in every warehouse unless they are in high demand. He also wishes to record warehouse details such as warehouse id and shelf details in the proposed system, as this information would help to locate products in different warehouses.
Business customers may place orders several times each month as the need arises. PHS sends an invoice to customers once in every month for all the orders placed. Invoices are usually prepared and sent out on the first working day of every month and include details such as id, date and payable amount. Customers are expected to pay the invoice within 30 working days. Customers can make the payment by cash, credit card, cheque, etc. Once the payment is received, the customer is sent a receipt. The receipt identifies the invoice for which payment has been received, date of payment and total amount paid.
Peter is keen to use the technology and adopt an ERP system with the help of ERP consultancy firm (you). He believes that a computerised system will not only help him to record the transactions easily, but also help him to make better decisions by generating reports to understand which customers have placed orders each month, list of customers living in different suburbs and other states, more profitable customers (customers who purchased most products), which customers didn’t place any orders in the last week/month/year, popular products, average monthly orders, etc. He will be happy to hear from you on other benefits too.
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