Value Chain and IT Transformation at Desko Harvard Case Solution & Analysis

Problem statement:

Desko was facing issues related to the process order and as a result of this; the customers of the company were canceling their business with Desko. The major reason behind these cancellations was the unacceptable delays that are directly linked with the order process. In fact, multiple errors and long delays made on customer orders were no longer exceptions.

The order process:

The order process at Desko is based on various activities and procedures that include customer service, credit, production, distribution, shipping and finally invoicing. As of now, the company needs to focus on business process reengineering as it is based on designing and restructuring the business flow and process of a company.

Customer service:

  • Customer service is based on providing provision and facilitating clients on an initial basis. The basic pillar for customer service is ERP system of the company that help in processing the customer information like customer account number, order number, receipt date, product ordered and so on.
  • Companies often use ERP systems for the applications integrations. The basic purpose of ERP is to collect, store, manage and interpret data from many business activities including manufacturing, production, costing, inventory management and shipping.
  • However, the ERP system at Desko is not up to the mark as the managers sometimes need to carry out product reservations manually as well that leads to more human error.
  • The errors related to ERP in customer service department include various errors like errors in prices, product code, delivery address, and purchase order duplication. Because of these errors in ERP, the overall process suffers because of the inefficiency in business.
  • Orders are often misplaced while it has been allocating to the account manager. Other than that, one major deficiency in the current ERP system is that it failed to include the dates related to cancellation of orders.
  • The ERP system currently installed at Desko is inefficient in terms of order related activities as it supports a maximum of two delivery points per customer.
  • The process under this step is based on checking the creditworthiness of the clients with respect to the orders and their payments.
  • With the help of ERP system, orders that failed to meet the company’s requirement has been blocked and then checked by the clerk.
  • In the credit process, collection of debts and dues are also included that specifies the orders that needs to be collected.
  • The item which does not meet the customer requirements has replaced by the company but it requires creation of second invoice.
  • However, the process related to collection of replaced orders is inefficient as it is dependent on the favorable routes for the company and this in turn increases the time.
  • An error occurred here in ERP as the replaced orders may appear on the list of past dues and often generates requests that are based on unjustified requests.
  • Production at the company is also controlled by the ERP system and based on two major activities that are MTO and MTS.
  • A traditional production strategy used by businesses to match production with consumer demand forecasts. The make-to-stock (MTS) method forecasts demand to determine how much stock should be produced. If demand for the product can be accurately forecasted, the MTS strategy can be an efficient choice.
  • Production planning related to MTS manufacturing also have many issues and inefficiencies. The major one is the flexibility as the system failed to accept the major changes.
  • In addition to this, there is lack of consistency in using software as the planners are using different software for the sales forecast.
  • Moreover, the system can not include the latest trend into the consideration.
  • MTO is a manufacturing process in which a manufacturing start only after a customer’s order is received.
  • Manufacturing after receiving customer's orders means to start a pull-type supply chain operation because manufacturing is performed when demand is confirmed, i.e. being pulled by demand.
  • The distribution for the American and Canadian customers is different at Desko.
  • For the Canadian customers, the company has to bear a transportation cost wait for the cost to be equal to 10% of the actual cost. The wait brings delays in order processing and that sometimes make customers annoyed and leads to cancellation of orders.



Distribution and shipping:

On the contrary, distribution is relatively easier and efficient in the US.........................

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