Information Systems: Marston Tools Plc - Case Study Example

Information Systems: Marston Tools plc Student’s Name: Instructor’s Name: Course Code & Name: Date of Submission Abstract This analysis is a case study of Marston Tools plc which engages in the production and distribution of hand tools like hammers, pliers, saws and screwdrivers in its wide portfolio of almost 200 products designed for both home and export market. The study analyses some of the problems emanating from intensified competition from manufacturers oversees as well as the fundamental importance of information systems in elevating the level of effectiveness in different operations. Keywords: Information system, Competitive advantage, Efficiency Table of Contents Abstract 2 Table of Contents 3 Marston Tools plc.: Information systems towards competitiveness and efficiency 4 Threat of established rivals 6 Bargaining power of suppliers 7 Inbound logistics 8 Outbound logistics 9 Marketing and sales 9 Proposed solution 10 SWOT Analysis 11 Limitations 11 Design, acquisition and implementation 12 Conclusion and recommendations 13 References 14 Marston Tools plc.: Information systems towards competitiveness and efficiency Kling, Kraemer, Allen, Bakos, Gurbaxani and King (1992) argued that manufacturing is an area where a vision of extensive coordination through computerization has been articulated. In this regard, computer integrated manufacturing (CIM) is often advanced as a subsequent stage for the enhancing efficiencies and performance in manufacturing through the minimization of intra-organizational coordination costs. Marston Tools plc is confronted by immense challenges that have hampered the performance, efficiency and competitiveness of the firm. Problem analysis This analysis will focus on the five forces analysis developed by Porter (1980). This entails three forces from horizontal competition (external): threat of new entrants, threat of substitute products and threat of established rivals as well as vertical competition (internal): bargaining power of customers and bargaining power of suppliers. Threat of new entrants The advent of new tools manufacturing corporations in the market poses a major threat to the viability of Marston Tools plc. competitive advantage in the market. This external competition has predominantly been coming from firms in Eastern Europe which have been materializing on the advantage of lower labor and materials cost in their respective localities when juxtaposed with Western Europe. Most notably, China has been in the forefront of these advancements. Keidel (2005) noted that the large labor force in China, respectable literacy levels and work ethic, when supplemented with continuing elevated levels of capital investment mean there will be an expansion of the global production of low skilled labor-intensive goods and services at a high and accelerating pace in coming decades. Against this background, there have been a major trend of manufacturers from other countries greatly penetrating the global market, and offering low prices for high quality products which is influenced by the low cost of production in their home countries. Despite the fact that the sole reason why Marston Tools plc has been able to survive these trends is founded on its well-established reputation of quality thus making consumers be ready to pay a little bit extra to get the presumed added value, this trend is uncertain in the foreseeable future, mostly with most competitors willing to offer quality products at the lowest price possible. Threat of substitute products Increased manufacturing of substitute products in the market has also played a major role in threatening the production of tools by Marston Tools plc. This has been instigated by advanced technological knowhow which has not only diversified the range of alternative tools produced but also heightened the consumers’ choice in terms of substitute products at a lower price. Brandes, Lejour, Verweij and van der Zee (2007) determined that the pace of technological change seems to have accelerated, in view of globalization and elevated competition at the international scale. In this regard, most of the substitute tools are rolled into the market at a much lower price than the primary products offered by Marston Tools plc. This has an adverse effect on the demand for the products from the corporation mostly in new markets. In addition, the heightening financial crisis in many households is prompting consumers to seek alternative tools in the market which are characterized by not only lower prices but also high quality. Threat of established rivals This is not a major threat confronting Marston Tools plc. since the firm has been in the market for a long time and managed to establish a concrete consumer base which has been integral in its continued existence amid the collapse of other competing companies. As previously mentioned, Marston Tools plc has a well-established reputation of quality products and thus the consumers are willing to pay more in order to gain this perceived added value. Nonetheless, the existence of other well-established and dominant corporations in tools production poses substantial threat to the competitive advantage of Marston Tools plc both in the short and long-term. This will be more manifest if these other established rivals manage to undertake more advanced production models, for instance, the embrace of advanced information systems which will be key in elevating their efficiency in terms of delivery, marketing and the overall manufacturing processes. Bargaining power of customers This is greatly influenced by the changing purchasing trends and preferences by the consumers who are endowed with wide varieties in terms of products choice. IBM Corporation (2004) identified two major trends that have influenced the shift in the purchasing models. These are consumer diversification and consumer polarization. Wai-man (1994) noted that in the contemporary market, there have been changes in the consumer demands which have tended to incline on exigency for faster response, shorter life cycle and diversified products variety. This has been coupled with the expectation for better-quality goods for lower prices. Against this background, the consumers are constantly seeking for manufacturers who not only supply them with quality products but also meet other secondary demands mentioned above. This is a major impediment confronting Marston Tools plc and the eventual embrace of more advanced IS will be a key determinant in disentangling some of these problems as will be discussed in the subsequent sections. Bargaining power of suppliers Due to the high demand of raw materials in the tools producing firms, the suppliers are bound to gain more bargaining power in terms of pricing, delivery schedules and the type of materials which will eventually be supplied. This is a principle problem facing Marston Tools plc and its successful solution will depend on the capacity by the firm to source its raw materials from multiple suppliers, elevating its margin of choices. Advanced integrated information systems (IS); the ideal solution There have been diverse researches to date at the intersection of operations improvement and advanced manufacturing technologies (AMT). These researches have concentrated on AMT that provide direct assistance in the physical transformation of materials, such as machine tools (Hirschhorn & Mokray, 1992), flexible manufacturing systems (Jaikumar, 1986) and automated process control equipment (Zuboff, 1988). All these researches have rationalized the investment of corporations in efficient manufacturing systems which at the core of developing more advanced information systems at Marston Tools plc. There are major merits that are embedded in the development of effective information systems in the above company aimed at addressing the problems analyzed in the preceding section. This analysis will center on the value chain developed by Porter (1985). Stabell and Fjeldstad (1998) determined that Porter’s value chain is presently the accepted language for both representing and analyzing the logic of firm-level value creation. This analysis will center on five generic primary activity categories of the value chain that are key in the manufacturing process of Marston Tools plc and the eventual rolling out of the products to the target market which will be enhanced through the adoption of more advanced IS. Porter (1985, 1990) determined that the overall value creating logic of the value chain with its generic categories of activities is valid in all industries. Inbound logistics Stabell and Fjeldstad (1998) perceived these as activities associated with receiving, storing and disseminating inputs to the product. More advanced IS will be vital in enhancing the inbound logistics in the firm, most notably in the procurement and management departments. This is based on the fact that these departments will be endowed with elevated efficiency in tracking and keeping accurate records on the receipt of raw materials, warehousing and the eventual release of these inputs to other departments engaged in the actual production. The advanced IS will also improve the quality of record keeping of suppliers and their prices, supplying dates which will help in curtailing both delays in purchasing and last minute procurement which is characterized by inflated pricing. Operations According to Stabell and Fjeldstad (1998), these are activities which are associated with the transformation of the inputs into the final product. The advanced IS will find paramount utility in this area in terms of enhancing departmental coordination and flow of communication. In this regard, more advanced IS at Marston Tools plc will improve the level of coordination between various departments of production ranging from engineering to human resource which will generate more efficiency in the production operations. In addition, the advanced IS will be integral in improving the level of information flow between these departments and the overall management structure. This is supported by McAfee (2002) who noted that the functionality which is provided by an integrated information system is particularly intended to connect business processes together to enhance visibility and information flow. Outbound logistics These can be perceived as the activities which are associated with the collection, storage and physical distribution of the products to the buyers (Stabell & Fjeldstad, 1998). Advanced IS will be key in keeping records of the collection and storage facilities as well as the distribution channels of the products to the buyers. Marketing and sales These are activities associated with the provision of a means through which the buyers can purchase the product and prompting them to do so. The advanced IS will be key in the identification of the areas necessitating advertisements and promotions as well as the discount rates for various products. Services These are activities associated with the provision of services which will improve or maintain the value of the products. A more advanced IS at Marston Tools plc will be endowed with a feedback mechanism which will be fundamental in assessing the consumers’ demands and preferences. In this regard, the firm will be empowered in providing diverse services like door-to-door delivery and consumer information which will enhance the value of its products. Proposed solution The proposed solution to the IS predicament confronting Marston Tools plc is the integration of a transaction information system and corporative information system. Both of these systems have distinct features and their successful integration will integral in the generation of an efficient production management information system. A transaction information system is designed to process routine transactions accurately and efficiently. Grladinovic, Oblak and Hitka (2007) noted that this system has its own institutional frames in regard to positive legal provisions, and thus should satisfy all legal standards in its functions. This IS constitutes several subsystems which includes financial, production plant and long-term fixed assets bookkeeping, VAT-calculation, salaries and staff files calculation and commerce (including invoicing). The second cog in the development of a comprehensive IS is the corporative information system. This one is created in accordance with the need of the management for diverse forms of information while putting into consideration all particular business features (Grladinovic, Oblak & Hitka, 2007) and should thus incorporate the operations specific to Marston Tools plc. The rudimentary purpose of this IS is to enable the management of Marston Tools plc to accurately and swiftly plan and monitor business results and business success indices, assess deviations in planned business results and business success indices and finally analyze the causes and corollaries of these deviations. According to Grladinovic, Oblak and Hitka (2007) this IS is incapable of independent function and therefore its activity should be combined with the transaction IS in order to constitute a concrete database. It is worth noting that there are differences in market supply in terms of computer programs for both corporative and transaction ISs. The basic reason for these differences is founded on the high cost associated with the construction of integrated systems and also based on the fact that they don’t find similar applicability in all different firms. SWOT Analysis This can basically be understood as the Strength, Weakness, Opportunity and Threat analysis of a business (Valentin, 2005). The major strength in Marston Tools plc is the well-established reputation of delivering quality products to consumers. In this regard, the firm can exploit the opportunity prompted by advances in technology to better its products and make its market share more robust and secure. Nonetheless, the firm has a major weakness in terms of products pricing and unreliable delivery schedules when juxtaposed with the rivals. This weakness has been further exposed by the advent of new entrants in the market and development of substitute products posing major threats. Limitations The limitations to the new integrated IS are two-fold. Firstly, there is the cost-effectiveness of the new technology whereby the financial resources in the firm can fail to match the acquisition and eventual implementation of the new IS. Secondly, the human capital in the firm can fail to comply with the fundamentals of using the new IS. This can necessitate hiring more technologically competent human resource which will add more financial strain to the firm. Design, acquisition and implementation Flynn (1994) noted that how a particular company structures and manages it’s IS greatly determines the success or failure of the organization’s future in the global economy. There are several steps that Marston Tools plc ought to undertake in order to achieve a highly efficient IS. Firstly, the firm needs to have a deep understanding of its needs. This is based on the fact that different information systems have different utilities in diverse firms, for instance, an IS that is ideal in a retail shop may not be applicable in an industry due to variance in operations. Secondly, Marston Tools plc ought to identify the rudimentary shortcomings of the current IS in regard to effectiveness and efficiency. This will be founded on the capacity of present IS in harmonizing the different activities of the firm analyzed in the preceding section. At this point, the gaps will be identified and the firm will decide on the ideal integrated IS which will fill in these gaps. This should be coupled with precise predictions of the prospective changes in future operations. This process should be holistic, engaging input from all the concerned departments. Thirdly, Marston Tools plc ought to identify the most efficient designers of both the transaction and the corporative IS systems after weighing the company’s resource capability. This will be followed by eventual acquisition of the preferred IS systems, succeeded by their integration to constitute a comprehensive tools production management IS. The next step is capacity building in the firm where human resource will be empowered with the capacity to use the new advanced IS. Trainings and workshops ought to be conducted to the entire HR aimed at equipping the employees with the necessary knowledge and skills to use the IS. The final step is implementation of the advanced IS in the value chain of the company which should be succeeded by effective monitoring and evaluation (M&E) about the functionality of the IS. Conclusion and recommendations It is apparent that interplay between diverse factors has led to massive problems confronting Marston Tools plc in terms of internal efficiency and the overall competitiveness in the market. These challenges can basically be perceived to as a result of extensive globalization which has seen increased number of entrants into the market and a wide range of substitute products. In addition, the changing consumer demands which have elevated their bargaining power have played a big role in shifting the forces of demand and supply in the market. Increased bargaining power of the suppliers has also been identified as a major impediment confronting Marston Tools plc. Most of these problems can be solved through the instigation of a comprehensive information system. This IS ought to cover all the processes in the value chain ranging from inbound logistics, operations, outbound logistics, marketing and sales and also services. It will thus be key in heightening the level of efficiency in each distinct process as well as elevating overall coordination. The most ideal production management IS at Marston Tools plc can be achieved through a comprehensive integration of the transaction and corporative information systems. The designing, acquisition and eventual implementation of the desired IS should engage involvement from all the departments at Marston Tools plc. Nonetheless, some limitations in regard to cost and human capital in the firm ought to be put into consideration in the entire process. This IS will be integral in elevating the level of efficiency in the firm as well as competitiveness of the firm in the market. References Brandes, F., Lejour, A., Verweij, G. & van der Zee, F., 2007, The Future of Manufacturing in Europe, European Commission, Brussels. Flynn, JA., 1994, ‘Global Information Systems: Problems, Solutions and How to manage them’, Journal of Information Systems Education, pp. 142-147. Grladinovic, T., Oblak, L., & Hitka, M., 2007, Production management information system in wood processing and furniture manufacture. Available from: . (28th April, 2012). Hirschhorn, L. & Mokray, J., 1992, ‘Automation and Competency Requirements in Manufacturing: A Case Study’ in Technology and the Future of Work. Ed. P.S Adler, Oxford University Press, New York. IBM Corporation, 2004, The Consumer Driven Supply Chain: Meeting the needs of today’s demanding consumers, IBM, New York. Jaikumar, R., 1986, ‘Postindustrial Manufacturing’, Harvard Business Review November, p. 69- 76. Keidel, A., 2005, China’s G8 Impact. Available from: . (28th April, 2012). Kling, R., Kraemer, KL., Allen, J., Bakos, Y., Gurbaxani, V. and King, J., 1992, Information Systems in Manufacturing Coordination: Economic and Social Perspectives, CRITO, Irvine. McAfee, A. 2002, ‘The impact of enterprise technology adoption on operations performance: An empirical investigation’ Production Operation Management, vol. 11, no. 1, pp. 33–53. Porter, M.,1980, Competitive Strategy: Techniques for Analyzing Industries and Competitors, Free Press, New York. Porter, M., 1990, The Competitive Advantage of Nations, Free Press, New York. Stabell CB, & Fjeldstad, OD., 1998, Configuring Value for Competitive Advantage: On Chains, Shops, and Networks’, Strategic Management Journal, vol. 19, pp. 413-437. Valentin, EK., 2005, ‘Away With SWOT Analysis: Use Defensive/Offensive Evaluation Instead’, The Journal of Applied Business Research, vol. 21, no. 2, pp. 91-105. Wai-man, W., 1994, The role of information system in manufacturing industries, The University of Queensland, Brisbane. Zuboff, S., 1988, In the Age of the Smart Machine: The Future of Work and Power, Basic Books, New York. Read More