Question:

Learning Outcomes:

Discuss the impact of management policies, structures and personal behaviour on the success of an organisation
Discuss the impact of cultural and social norms on information systems management. Critically assess ways in which to maximise the benefits from outsourcing and build relationships.
Evaluate the planning of, and activities arising from, procurement and outsourcing across cultures to understand how to build robust outsourcing partnerships.

Answer:

1.0 Introduction

There are a number of issues with the company that has significantly damaged the market competitiveness of the company. Moreover, these issues continue to persist in spite of the fact that the company has developed certain mitigation plans. However, the CEO of the company has figured out a final plan that will supposedly solve all the issues and reduce his own workload. In this plan, he has suggested outsourcing of the supply department. For this, he expects partnership with another specialist company that will only deal with the procurement of necessary materials needed to complete the jobs of the company. According to the details provided in the case study, it is clear that the company is facing some serious issues that is pulling down the company in the competition ladder of the market and reducing the company’s viability. These issues have to be solved immediately in order to maintain viability of the company. The current plans of the company to solve the issues is not working effectively and moreover, it lengthens the service time and reduces service quality. In order to solve all the problems, the CEO of the company has decided to outsource the procurement department.

In this report, the issues of the existing services have been analyzed and the benefits and issues of outsourcing have been discussed.

2.0 Case Study Analysis

2.1 Issues

Based on the analysis of the case study, it has been found that there are a lot of issues with the services of the company. Although the management team has developed a number of plans for solving the issues, it takes significant amount of time for complete solution of the issues. As a result, there is a growing dissatisfaction of the customers that has also reduced the market competitiveness of the company. The issues associated with the company’s services are as follows.

Procurement Issue – This is one of the main persisting issues in the company’s services. The company mainly operates through the survey of the customers’ requirements and then procuring suitable resources to meet these requirements. However, in many cases, it has been seen that the requirements could not be met due to procurement of wrong resources. This occurs mainly due to wrong supply of materials from the suppliers. Again, happens due to unethical business ideas of the supplier. In most of these cases, the workers choose suppliers on their own for the profit of some commissions who then provide wrong or low quality materials.

Wrong Requirement Analysis Issue – Another major issue of the company’s services is wrong requirement analysis. Before providing the services, the company send some surveyors to talk to the customer and survey the requirements for the job. Then the surveyor reports to the management team who then procures materials and send workers to complete the job. However, it has been seen that in many cases, the surveyors submitted wrong list of requirements. This occurs from inaccurate survey or inability to understand all the requirements correctly. As a result, the company cannot complete the job in time.

Job Completion Issue – This issue arises from the previous two issues discussed. For solving the issues, the company has certain work plans that are lengthy and hence, increases job completion time significantly. In this case, if there has been a case of wrong material supply, the company first analyses the reason for the same. If it is due to supplier’s error, the company communicates with the supplier to provide the right materials. If it is the surveyor’s fault, the company again sends a few personnel for another round of survey for accurate requirement analysis. After these are done, the job is resumed and the completed with significant extra time.

2.2 Organizational Behaviour

In this section, current organizational style and thoughts about the style is depicted with CEO approach and team working process. Furthermore, the problems are revealed so that need for improvement aspects could be identified for success. Need for improvement aspects can help in sorting out outsourcing organization need and importance for this particular business model. Additionally, the issues are prioritized for their elimination with outsourcing expertise and specialist organization.

Thoughts about Current Organizational Style: Current organizational style is making the head of individual department autonomous with setting targets. The CEO provides every team and department leader suitable right to control the members as per their targets. CEO approaches individual team leaders and sets the target as coordinated from the team or department heads. In general, CEO prefers to recruit self-confident and determined team leaders for resolving problems on their own. In fact, CEO fancies about problem solving from the head of the department while CEO can lead easier life. The CEO is reluctant of solving problems and issues from personal viewpoint; rather CEO is dependent over team and department leaders. Moreover, CEO agreed to consult with specialized organization for resolving further issues that could not be solved by the internal teams and departments.

Outsourcing organization for mitigating further issue, this choice is expected to reduce the fault rate up to 80-85% than usual in Double Value Glazing (DVG). In current scenario of 3 individual teams such as admin team, surveying sales team, and fitting team; in 20% cases, the sales orders have certain issues. Either these issues could not be solved or problem cause could not be identified from current scenario. Therefore, in an overall, current organizational behavior is dependent over three individual team leaders and their decision-making abilities.

Need for Improvements and Application of Handy’s Business Model: There are several improvement aspects in current scenario that should be considered for gaining success in every occasion. The improvement aspects that are emphasized with Handy’s framework of organizational culture.

Power Culture: Admin team should maintain daily reports regarding client requirements, order-specific information, color and sizes of window and door, supply of materials, and others. Orders should be handled with more efficiency and in form of autonomous system such as ERP or SAP implementation. Admin team is responsible for order management, remedial actions due to certain faults, scheduling re-visits, and order completion.

Task Culture: Surveying sales team should be attentive to every detail from client side, so that lesser faults occurrence in windows, and doors specification. Current process includes two steps as surveying client requirements for windows and doors that is conducted by sales team and fitting made-up doors and windows by fitter team.

Person Culture: Fitting team should have all raw materials and detailed specification of windows and doors beforehand so that they can deliver the products for fitting. Three individual teams as admin team, sales team, and fitter team run current scenario of DVG.

Role Culture: Improvement in skills is required for the admin team personnel, admin team should be competent enough to take management decisions for handling complexities in team. In short, sales team interacts with client for requirements, fitter team completes the job, and admin team controls and maintains flawlessness in order and customer management.

2.3 Outsourcing Supplier Selection Approach and Issues

Due to outsourcing supplier selection, there might be some certain issues encountered in the current scenario of DVG. Outsourcing supplier organization should be a segment of current surveying sales team and communication between them should be necessarily sound. In this case study, approach of external supplier organization selection, the issues may arise are discussed underneath along with essential decisions to eliminate them. Some suitable reasons are justified as well to portray efficient process management.

Lack of Detailed Communication: Detailed and needful communication is required between all the existing teams and outsourcing supplier organization. In this case study, Outsourcing supplier organization can function properly with appropriate requirements, color, sizes, and other attributes of materials. Therefore, pre-requisite to suitable supply of material is appropriate performance from surveying sales team. Sales team should have necessary information about requirements, color, sizes, and other attributes of materials; so that suppliers can provide such materials within shorter time. Furthermore, in this particular case of material changes, the admin team should inform the supplier organization. Fitter team should seek exact supply time so that they can proceed as well. Therefore, continuous information sharing and communication relay is required between supplier and other teams.

Order Delay: There is a tendency of order delay while coordination with external supplier organization takes place. In this case study, earlier in the scenario of DVG process, admin team was responsible for supplying particular materials and precise elements to the fitting team. Surveying team was responsible for requirement identification, analysis and informing admin team about the order details. Fitting team was responsible for completing the task as per supplied materials. In this case study, the process was conducted under three major team; whereas with external supplier organization help, the process is expected to be lengthy and time-consuming. The surveying team will inform the requirements to external supplier organization for materials; admin team would wait for confirmation from supplier organization, fitting team will wait for supply to come. Further, in case of faulty materials, the changes would take more time resulting in order completion delay. Therefore, while external supplier organization is attended in the process, the entire requirement analysis process should be made autonomous.

Increase in Expenditure: Increase in expenditure is expected due to some unwanted issues such as delay in material shipping, costly material provider selection, workload increment, and fitting cost. In this case study, expense can be increased in mentioned scenarios that are expected not to happen in normal situation. Therefore, in unwanted situations, the CEO interference is required for additional funding and investment. CEO should be aware about these particular situations so that funding can be provided in shorter notice and time.

Material Quality, Cost, and Precision: Material quality, cost, and precision should be essentially exact with surveying analyzed requirements. In this case study, problem in material quality and precision can enhance number of re-visits. Increase in material cost minimizes client interest in payment due to expensive services. Therefore, material quality and precision attribute affects DVG performance as a service and business.

2.4 Questions Regarding Invitation to Tender

Following table presents the questions that are essential for ‘Invitation to Tender’ document preparation. Questions will be necessary for evaluation and assessment of tender performance, experience, contract management abilities, proposed methodology for contract management.

Table 1: Four Questions for ‘Invitation to Tender’

(Source: Created by author)

Justification for Questions

Question 1: The project is quite lengthy and required suitable expertise of the tenders, therefore, relevant experience of the tenders are required to be informed.

Question 2: The project is completely dependent over service delivery and requirements should be met in order to complete the project. This question is hence justified.

Question 3: Tender service should be methodology based for systematic approach towards project completion; the conducting organization should be aware about the methodology.

Question 4: The contract should be handled with quality and technical skills of the team members including managerial staff in the tender team. Project should be completed with high standard and therefore, this question is justified.

2.5 Benefits

As discussed previously, there are a number of issues with the company that has significantly damaged the market competitiveness of the company. Moreover, these issues continue to persist in spite of the fact that the company has developed certain mitigation plans. However, the CEO of the company has figured out a final plan that will supposedly solve all the issues and reduce his own workload. In this plan, he has suggested outsourcing of the supply department. For this, he expects partnership with another specialist company that will only deal with the procurement of necessary materials needed to complete the jobs of the company. If this plan materializes, the following benefits can be obtained from the outsourcing project.

Procurement – The main benefit the company can gain from the outsourcing project is the procurement of sufficient and correct materials. The CEO of the company expects to find a company who will receive the requirements report from the survey team and procure all the necessary materials and resources. It has been seen that the requirements could not be met due to procurement of wrong resources. This occurs mainly due to wrong supply of materials from the suppliers. Again, some of the workers also procure materials from their own sources in order to gain commissions resulting in supply of poor quality of materials. If the outsourcing project is successful, this issue will no longer occur and the correct materials can be received in appropriate time limit.

Backup Survey Team – In the case when the job is not completed in time due to insufficiency of materials or use of wrong materials, the company has the policy of forming another survey team for second survey in the customer’s home. This results in loss of manpower as well as significant amount of funds. If the outsourcing project is successful, the outsourced company can provide the backup survey team for a second survey and correction of the list of materials. This will save the company manpower, funds and time.

Reduction of Service Time – Due to all the existing operation plans of the company, the service time is reduced significantly. Moreover, if the issues discussed occur at a certain point, the service time increases even further. In the current system, the company operates with three teams – admin team, survey team and fitting team. The admin team receives order and sends the survey team to the customer’s home for requirement analysis. The survey team submits the list of requirements to the admin team who then procures the materials and then the fitting team uses the materials for the job at the customer’s home. All these processes take up a huge amount of time. Using outsourcing services, this time can be reduced significantly and the success rate will also increase by a large margin.

Reduction of Work Load – The outsourcing project will also help reduction of the workload of the company. In fact, the main objective of the CEO is to reduce his own workload by outsourcing the supply department. It can be seen that the outsourcing will also reduce significant workload of the total structure of the company. Firstly, there will be no extra personnel required for procurement of the materials. Secondly, there will be no backup survey team. Finally, the procurement will be completely be controlled by the outsourced company. As a result, the work load of the company personnel will be significantly reduced.

Focus on Core Areas – By outsourcing the side areas, the company can focus on core areas of operation that will help them reach organizational excellence in terms of business and operations.

2.6 Discussion and Assumptions

2.6.1 Discussions

According to the details provided in the case study, it is clear that the company is facing some serious issues that is pulling down the company in the competition ladder of the market and reducing the company’s viability. These issues have to be solved immediately in order to maintain viability of the company. The current plans of the company to solve the issues is not working effectively and moreover, it lengthens the service time and reduces service quality. In order to solve all the problems, the CEO of the company has decided to outsource the procurement department. Based on the analysis, it has been seen that the company can gain sufficient benefits from the outsourcing. However, it will also increase the operational costs of the company as it will have to pay significant amount funds to the outsourced company. Hence, this project should only be approved if it seems feasible for the company.

2.6.2 Assumptions

For the analysis results published in this report, the following points have been assumed.

• It has been assumed that outsourcing will be sufficient for solving all the problems and issues discussed.
• It has been assumed that there will be no discrepancy of services from the outsourced company.
• It has been assumed that the outsourcing project will be feasible for the company.
• It has been assumed that outsourcing will help the company to gain back market competitiveness and be viable.
• It has been assumed that outsourcing will significantly reduce the workload of the company personnel.

3.0 Conclusion

In this report, the issues of the existing services have been analyzed and the benefits and issues of outsourcing have been discussed. The current plans of the company to solve the issues is not working effectively and moreover, it lengthens the service time and reduces service quality. In order to solve all the problems, the CEO of the company has decided to outsource the procurement department. Based on the analysis, it has been seen that the company can gain sufficient benefits from the outsourcing. However, it will also increase the operational costs of the company as it will have to pay significant amount funds to the outsourced company. Hence, this project should only be approved if it seems feasible for the company. The main benefit the company can gain from the outsourcing project is the procurement of sufficient and correct materials. The CEO of the company expects to find a company who will receive the requirements report from the survey team and procure all the necessary materials and resources. In the case when the job is not completed in time due to insufficiency of materials or use of wrong materials, the company has the policy of forming another survey team for second survey in the customer’s home. This results in loss of manpower as well as significant amount of funds.

The outsourcing project will also help reduction of the workload of the company. In fact, the main objective of the CEO is to reduce his own workload by outsourcing the supply department. It can be seen that the outsourcing will also reduce significant workload of the total structure of the company. For appropriate utilization of external supply of materials, there should be recommendations for the best practice regarding the benefits of outsourcing. Firstly, there will be no extra personnel required for procurement of the materials. Secondly, there will be no backup survey team. Finally, the procurement will be completely be controlled by the outsourced company. As a result, the work load of the company personnel will be significantly reduced.

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