BOARD PLANNING FOR ELECTRONIC COMMERCE

THE FOUNDATION FOR TOMORROW

PART ONE: SURVEY OF EXECUTIVE PLANNING

  • Planning is the formulation of strategies, tactics, and operations to implement a currently desired environment at a future time.
  • Planning is now oriented but future driven.
  • Planners want the future environment now but must first implement the plan to obtain the new environment.
  • Depending on who does the planning, plans are strategic, tactical, and operational.Any plan can be long range or short range. Many executives confuse long range planning with strategic planning.
  • Strategic Planning may be short range planning.
  • Tactical planning may be long range planning.
  • Newkirk's Law #12: "The higher you are on the management ladder, the more you should plan."
  • Planning is critical to the success of a company because of the knowledge obtained through the process.
  • Planning, when properly executed, makes an executive very knowledgeable about the organization.
  • Due to the complexities and the interdependencies of modern business processes, planning for Electronic Commerce (EC) is counter-intuitive. Where complex processes are involved, rules of common sense do not apply.
  • EC planning increases the complexity and interdependency of corporate planning among all managers.
  • Planning for EC means that planning is required at the strategic, tactical, and operational levels - both in the long range and short range.
  • Commitment to EC means that the company must plan to implement:
    1. Timely, accurate, paperless information flows;
    2. Smooth, continual product flow matched to consumption.
  • Keeping the commitment requires the design and implementation of complex Information Technologies.
  • Lacking a commitment to strategic planning, such high levels of technical and business process complexity means that this year's system will be next year's problem.
  • To avoid next year's problem, remember the following planning guidelines:
    1. All corporate projects must be satisfactorily completed;
    2. Applying the 80/20 rule to projects is an important fallacy of today's business environment. In an EC environment, a job partly done, even if 80%, is not worth doing.
    3. The Hollywood Planning Paradigm does not apply to EC environments.
    4. The better the planning process, the less the dependency on forecasting systems.
  • During any planning exercise, always ask the following questions:
    1. Is the need real?
    2. Can the need be met?
    3. Is it worth it?
  • When engaging in a planning exercise for EC, avoid the following Mistakes of Planning:
    1. PREOCCUPATION with short-term problems. It is tempting to deal with short term problems rather than with long term problems because they are more tangible and lend themselves to more immediate solutions.
    2. TENDENCY TO EXTRAPOLATE the past into the future. This is the most common planning error made by executives. The source of this problem is the lack of adequate data. Sometimes future oriented data is unavailable but not as often as claimed. In most ways, adequate ways exist to develop meaningful plans for the future without being constrained by the past.
    3. PERPETUAL OPTIMISM. This is a common trap in the planning exercise. The executive so wants things to be better that he/she ignores the signs in the environment and history - optimistically forecasts improvement next year without committing to a realistic plan as a solution to wider problems.
    4. FAILURE TO DEAL WITH ALTERNATIVES. Planning is often based on a single premise. Alternatives must be considered in respect to the most likely, optimistic, and pessimistic scenario in turn.
    5. THE GRAND SOLUTION. The one big step to solve all problems and to move the company in new directions - the quick fix, the sure thing. The error, of course, is that whenever so much hangs on a Grand Solution, numerous outcomes and options are should be carefully tested. Grand Solutions occur whenever an executive refuses to consider alternatives. Grand Solutions, when they do not succeed, produce grand failures. - Careful planning can help sidestep these traps. Key Planning questions that must be answered by any serious planning exercise include:
          • What are the factors which affect the final success of EC?
          • What do other EC groups do? How does their efficiency and reliability compare with ours? How does our activity compare in terms of quality?
          • What are the trends in the marketplace that may influence how we train the corporate users of I/T?
          • What assumptions is the planning committee making about the future of the EC implementation plan and their impact on the human resources of the company?
          • What specific actions has members of the planning committee taken (what plans have you made) to deal with possible future developments in this business activity of EC implementation?
  • When the planning committee answers these questions, it should have a clear idea of the effectiveness of its EC planning program.
  • To remain on the reliability path, however, the planning committee should test any of its policy formulations by working through the decision table in the handout.
  • Planning defines who you work for, and who works for you.
  • Planning defines who you report to.

PART TWO: THE MIS ECR PLAN OF ACTION

1.0 ASSUMPTIONS Every MIS Plan of Action rests on a foundation of core business assumptions. The assumptions guiding the development of the 1994 MIS Plan of Action include:

  • The Company is committed to Electronic Commerce.
  • As a business oriented enterprise engaged in the manufacture, sales, and distribution of consumer goods to customers for their consumers, the company sees Information Technology as an enabler of the processes of business rather than as a driver of the business.
  • The company is committed to providing an environment that enables its core business processes to facilitate the movement and management of information between the customer and manufacturing operations.

2.0 DEFINITION of EC is a business strategy conceived to provide the efficient movement and management of information (IM&M) in a correct and timely manner between the consumer and the manufacturer.

  • At the company, EC in respect to its technological requirements, means that MIS will provide an Electronic Commerce (EC) oriented environment via pathways enabled by Information Technology that empowers the business processes to provide efficient IM&M.

3.0 THE OPERATING PRINCIPLES OF I/S Based on directives from Executive Management regarding business objectives, I/S Plans of Action for 2007 and beyond are based on the following Principles of Operation:

  • All I/S Plans are designed to enable the business objectives;
  • I/S is committed to EC;
  • I/S will engage in Enterprise Architecture Planning to meet the dual commitment to the business objectives and EAP;
  • I/S will engage in the EAP to target the business processes to be enabled by I/T;
  • I/S will engage in EAP to bind the technology solutions to the business processes;
  • I/S will engage in EAP to define the technological implementation of EC.

4.0 THE BUSINESS OBJECTIVES OF THE COMPANY Executive Management established the following business objectives to define the constraints delimiting management action and operational planning. As established in 2007, the Strategic Objective Questionnaire, the Major Management Objectives are:

  • Improve Customer Service/Customer Satisfaction;
  • Increase Production Efficiency/Reduce Costs;
  • Improve Quality By Improving Corporate Wide Business Processes Such As Workmanship Functions and Vendor Relationships;
  • Improve Distribution Channel Performance;
  • Increase Administrative Efficiency/Reduce Costs;
  • Improve Human Resource Utilization;
  • Increase Market Share;
  • Improve Pricing Management;
  • Enhance Product Planning Process;
  • Comply With Regulatory Constraints;
  • Enhance Organizational Planning Process;
  • Improve Corporate Communications;

5.0 THE ECR BUSINESS PROCESSES

  • Improve Customer Service
    • Improve Order Entry
    • Improve Order Verification
    • Improve Invoice Reconciliation and Pricing
    • Reduce Order Lead Time
  • Improve Productivity While Reducing Costs
    • Improve Production Planning
    • Improve Material Tracking and Handling
    • Employ DSS as a business process
    • Introduce JIT as a production process
  • Improve Product Quality
    • Implement ISO9000 Standards
    • Establish Quality Benchmarks
    • Implement Quality Assurance DSS Business Process
    • Establish a Quality Education Program
  • Improve Distribution
    • Improve Receiving and Shipping Operations
    • Improve Warehousing Operations
    • Improve Fleet Operations via Benchmarking
    • Improve Third Party Logistics
  • Reduce the Cost of Administration
    • Improve Administration Operations
    • Improve Document Processing Capabilities
    • Reduce the Cost of Administrative Supplies
    • Improve the Budgeting Process
  • Improve the Utilization of Human Resources
    • Improve the HRM Strategic Planning Process
    • Improve the Efficiency of Human Resources
    • Optimize HRM Headcount
    • Reduce Staff Turnover

6.0 IMPROVE CUSTOMER SERVICE

  • Improve Order Entry
    • Convert to EDI operations to reduce:
      • errors;
      • time of processing;
      • information lag;
      • costs;
      • and number of employees.
    • Retrofit existing applications
    • Redesign existing business processes
    • Train CSR on new business processes
  • Improve Order Verification
    • Convert to EDI
    • Implement VMR Technology
    • Develop Order Reconciliation Applications
    • Redesign existing business processes
    • Train users
  • Improve Invoice Reconciliation and Pricing
    • Convert to EDI
    • Implement AIR Technology
    • Balance Customer/SB Databases
    • Develop interface applications
    • Redesign business processes
  • Reduce Order Lead Time
    • Convert to EDI
    • Implement VMR
    • Redesign business processes
    • Optimize (Improve and enhance) Broker Pathways

7.0 CONCERNS OF SENIOR MANAGEMENT When chartering an EC strategy for the company, Senior Management must consider not only the commitment and cost requirements of EC but also the corporate implications. The concerns of Senior Management in chartering EC include:

  • Executive Time Constraints: Throughout the life of the EC Program, Senior Managers must dedicate approximately 2 hours a week on EC for planning, reviewing, and decision making.
  • Corporate Implications: The implications of EC for the company include:
    • reduced staff via redesigned business processes;
    • long term lower costs of operations through the elimination of redundant work;
    • reduced errors in the workflow via integrated Quality Assurance and the implementation of ISO9000 standards in MIS;
    • improved decision making through the increased access of timely information, and
    • increased business opportunity via conformance to the systems requirements of major customers.
  • HRM Requirements: The current level of MIS staffing and the associated project load means that EC will require additional human resources. Depending on the approach selected, EC will require the following human resources both on a full and part time basis:
    • EC Program Manager;
    • Senior Management Consultant;
    • Project and Quality Assurance Manager;
    • Business Process Analyst;
    • Technical Services Support Analyst for database, communications, and networking support;
    • Software Programmer/Applications Analyst;
    • Systems Designer and Integrator;
    • Documentation and Librarian Specialist;
    • Client as the Information Provider, and
    • Executive Sponsor.
  • EC Costs: The Costs Burden for full EC implementation can be shared by each department on a quarter-by-quarter basis. For the initial phase of EC introduction, the company should commit to Vendor Managed Replenishment (VMR) and Automatic Invoice Reconciliation (AIR). After the companybecomes EDI ready, conversion to AIR can occur in six months with five Human Resources at an approximate cost of $800,000. (CAVEAT: As a prerequisite to EDI readiness, the company must prepare the appropriate MIS environment via redesigned applications, improved quality standards, balanced databases, and expanded networks as a foundation to achieve business process integration with targeted customers. The approximate cost to implement the appropriate MIS environment is an estimated $1,200,000.)
  • Commitments Required: To be successful, Executive Management must commit to:
    • development resources;
    • EC plan of action to MIS and line management;
    • release EC Project to functional managers;
    • authorize first official use of the first segment of EC;
    • authorize first actual use of the first segment of EC;
    • perform actual qualification of the first segment of EC.
  • Implementation Schedule: EC should commence in the first quarter of 1994 with the initiation of DSD via AIR and VMR while continuing to convert to EDI with additional customers.
  • Benefits in Opportunity: Adoption of EC via EDI/DSD will permit the company to integrate business operations with customers and obtain the benefits available via closer business ties and the potential increase in earnings.
  • Benefits in Costs: Following an initial period of intensive project development in which the cost of MIS will increase, the company will attain the benefits of cost reduction resulting from both an increase in productivity and a decrease in staff. As EC extends into all areas of corporate operations, the company should expect a decrease in costs from 40% to 60%.

8.0 CONCERNS OF MIDDLE MANAGEMENT

  • Budgetary Effects:
  • Departmental Benefits:
  • Time Requirements:
  • Staff Requirements:
  • Effects on Staff:
  • Effects on Job Classifications
  • Effects on Span of Contro:
  • Effects on Workflow:

9.0 CONCERNS OF I/S MANAGEMENT

  • Impact on I/S.
  • Benefits to I/S.
  • Impact on Corporate Clients.
  • EC Timetable of Activities.
  • Impact on Operations.
  • Impact on Applications.
  • Qualifications of MIS Staff.
  • Standards and Procedures.

10.0 EXECUTIVE TIPS FOR SUCCESS

  1. Network
  2. Find a mentor - or become one
  3. Upgrade your skills - or learn new ones
  4. Get organized
  5. Look at your priorities
  6. Be around positive people
  7. Have outside interests
  8. Have some humor
  9. Count your blessings
  10. Give of yourself

"It is not the crook in modern business that we fear,

but the honest man who does not know what he is doing."

Owen D. Young

PLANNING EVALUATION TABLE

  • IS IT REAL?
    • Is the need real?
      • Is there a need/want?
      • Can the personnel be trained?
      • Will the personnel be trained?
    • Is the plan real?
      • Is there a program idea?
      • Can it be developed?
      • Will it meet the need?
  • CAN WE DO IT?
    • Can our plan be competitive?
      • On design/performance features?
      • On promotion to personnel?
      • Is the price right?
      • Is the timing right?
      • In employee presentation?
    • Can our plan be efficient?
      • In complete distribution of plan?
      • In management acceptance?
      • In other considerations?
  • IS IT WORTH IT?
    • Will it be profitable?
      • Can we afford it?
      • Is the R.O.I. adequate?
      • Is the capital risk acceptable?
    • Does it satisfy other company needs?
      • Does it support company objectives?
      • Are external relations improved?
      • Is there an overriding factor?