CASE STUDY 2 E-Commerce for a Small Supermarket

26 Sep No Comments

CASE STUDY 2 E-Commerce for a Small Supermarket

Matt and Grace own a small supermarket in a rural town with a large and growing elderly population. Because of their remote location, they don’t have any

competition from the large chain stores. A small private liberal arts college,

with about 1,500 students, is also located in the town.

“I think we need a website for our store,”Matt tells Grace.

“Why?”asks Grace.

“Everybody has one. It’s the wave of the future,”responds Matt.

“I’m still not clear, Matt. What would be on our website?”Grace asks.

“Well, for one thing we could have a picture of our market with me and you

standing in front of it,”says Matt.

“What else?”asks Grace.

Matt answers,“Ah, maybe people could look up stuff and order it through the

website. Yeah, those college kids would think that’s great; they’re into using computers all the time. That will increase our business. They’ll buy food from our

store rather than the pizza and burgers they always eat or get delivered from

Sam’s Sub Shop. And those people who live in the senior citizens’apartments

would use it, too. I heard they’re teaching them how to use computers. And

maybe we can even set up a delivery service.”

“Hold on,”says Grace.“Those college students get pizza and subs from Sam’s

at all hours of the night, long after we’re closed. And I think the senior citizens

enjoy getting out. They have a van that brings some of them here each day to

shop, and they really don’t buy much anyway. And how will they pay for what

they order through the website? I’m all for keeping up with things, but I’m not

sure this makes sense for our little supermarket, Matt. What would we be trying

to accomplish with a website?”

“I just explained it to you, Grace. It’s the way all businesses are going. We

either keep up with things or we’ll be out of business,”replies Matt.

“Does this have anything to do with that Chamber of Commerce meeting you

went to in Big Falls last week, where you said they had some consultant talking

about e-business or something?”asks Grace.

“Yeah, maybe,”Matt says.“I think I’ll give him a call and tell him to stop by

and tell him what I want.”

“How much is all this going to cost us, Matt?”asks Grace.“I think we need to

think about this some more. You know we are probably going to have to pave

the parking lot this summer.”

Matt answers,“Don’t worry. It’ll all work out. Trust me. Our business will

increase so much, it’ll pay for itself in no time. Besides, it can’t cost that much;

this consultant probably does these kinds of projects all the time.”

Gido, Jack; Clements, James P. (2014-02-05). Successful Project Management (Page 31). Cengage Learning. Kindle Edition.

Siri Maley

Chapter 2: Case Study 1. Questions 1-4.

1. How should Jennifer go about making her decision?

First, Jennifer needs to immediately identify and deal with her own biases in each project. She’s impatient with Julie, which, while apparently valid, can cloud judgment. Her own history goes against Tyler’s position, so she needs to examine the real reasons behind her stance on the production layout and employee teams. Joe’s appeal may have struck a similar chord when he brought up her father—she needs to understand and control that reaction. She’s also against Jeff’s department with the same sort of characteristic abstraction, and that needs to stop. In particular, she seems to be writing the system off as ‘all right’. This is a meaningless position, and needs to be corrected. She may be correct in some or all cases, but she doesn’t know that yet.

Simultaneously, she needs to refocus all of her managers on the bigger picture, the good of the company. They can legitimately disagree on how to help, but if Joe is any indication, they’re way too cutthroat for their own good.

In tandem with that soul searching and discussion, Jennifer he needs to start leading the project selection process. It sound as if they haven’t agreed upon what they actually want for the business, e.g. prioritizing faster sales, higher volume, more products, or faster/better customer service. Step two would then be to have the manager list out all the assumptions for each project. Once they’ve agreed on all their assumptions, which I think is an agreement they can come to, they should brainstorm research options. Some of that $2 million should be allocated towards researching the projects’ potentials as necessary. I break all of these steps in #2 and #3. The penultimate step is then to have an open, positive discussion about all the research results. Check your biases at the door. Jennifer should use all of this input to make her final decision. This final call is her decision, and she takes the responsibility for it—but she also needs to make it clear that their input does matter. If there are people willing to tell Tyler that she’d dismiss his project based on her personal history, then she really needs to straighten this part out. This process is the only way to make an informed decision that preserves, or more accurately, builds the relationship among the CEO and managers.

2. What kind of additional data or information should she collect?

First, it sounds as if she and the managers haven’t agreed upon what they actually want for the business, e.g. prioritizing faster sales, higher volume, more products, or faster/better customer service. This will be a difficult agreement to reach, and honestly should have been done before she sent them to ruminate on specific projects—now everyone’s going to be fighting for their own project’s priority even more than they would have otherwise. But better late than never. This discussion must be based on data: they should have the information they need to statistically track with priority has had what effect on their bottom line, lagged over different time periods. It also needs to be augmented by reports on customer service, which seems to just be out in the ether right now. The analysis should also be structured comparatively, both to historical choices and to their current competitors. And who are their actual competitors? Julie seems worried about very large pharma companies, which would seem like an unrealistic projection for a business in which the CEO is pushing for contracting out their database work. They need to benchmark their potential/actual competitors and define what risks they’re willing to take within their niche. All of these issues should inform the criteria upon which they’ll judge projects. Also, though Jennifer has the final say and they may not all agree, they shouldn’t think that another person’s position is unsubstantiated.

Step two is to have each manager list out all the assumptions they are making on their project. For instance:

Step two-and-a-half is to have every other manager list the assumptions of the other projects. I wouldn’t do this out loud at first; they don’t seem like the play very nicely together. But that competitiveness may be just what they all need to see the rest of their assumptions.

  1. Julie’s taking a very big R&D leap, not only that the money will help and the drug will be developed, but that they’ll be early enough to market and at a low enough price for it to matter. Given that they’re apparently already behind and that, even ignoring Tyler’s complaints, they’re significantly smaller on the manufacturing side than those larger companies, this seems incredibly unlikely.
  2. Tyler is assuming that he actually understand about plant inefficiencies after just six months. I’m not saying he’s wrong that it’s inefficient; he seems to make a pretty good point. But he may well be wrong that he can fix it, particularly for the cost he’s anticipating. He should research this quantitatively and pull the assumptions out of this. Employee teams are great, but he can’t just hand the entire issue to them whole cloth. Has he even asked them what they think about the prospect?
  3. Jeff’s position isn’t entirely clear: he seems to be pushing for something substantive but is being interpreted as faddish. He should examine his assumptions about the capacity of his staff if he’s going to need to hire a separate engineer just to upgrade.
  4. Finally, Joe is talking like a good salesman. Does he actually have evidence that more salespeople would mean more sales? Are they saturated at their niche level? What if they did get Julie’s new drug, or Tyler’s higher volume?

Once they’ve agreed on all their assumptions, which I think is an agreement they can come to, they should brainstorm research options. This should be a collaborative and constructive discussion on how to turn as many assumptions into datasets as possible, for the good of the whole company. This should inform what kind of research needs to happen and how much of the $2 million they should spend on it. I’d expect things like:

3. What exactly should Jennifer require the others to submit in the way of proposals?

  1. Julie needs to have the entire R&D team examine their current bottlenecks. Other than bringing in a ringer, how will money help? Also, it’d be good to know how hiring an outside expert has turned out historically.
  2. Tyler needs to spec out redesign and construction costs for a range of scopes. He may not know what needs to change yet specifically, but he should have some idea of how much restructuring a plant will cost. Historical models would also be good here, though with an eye towards serious UI and technology changes. There are probably studies on the effectiveness of employee teams too, and he should be doing surveys within his plant teams to examine their differing views.
  3. Jeff’s research is pretty straightforward. This technology already exists, so basically all of the throughput, failure rate, and maintenance stats should be available from multiple sources. He’ll need a few grains of salt to examine that and similar information on contracting out their accounting, but the information should be available.
  4. Joe’s probably going to need some travel. He should be heading to his regional sales HQs and having candid conversations with his managers and staff. What exactly would new hires be doing, and what’s the range of potential payoffs?

First, they should submit their answers to question #2. In particular, their ideas should be structured around what good it will do for the company, as supported by that evidence. This should cover ‘understanding the need’, ‘benefits to the customer’ and ‘proposed approach or solution’.

Then they really need to get into the meat of their projects. What deliverable schedules are they proposing? What are their major tasks to accomplish them, and how and to whom are they going to be distributed? Why? Particularly, what experience do those people have, e.g. in upgrading computers, retraining operators and maintainers, and redoing intra-company logistics? (This is Jeff’s case.) Also, what facilities are they expecting to need? For Tyler, not only what does he need for the testing and redesign, but how will it affect workflow during restructuring? How much is all of this going to cost? Several people are looking to hire more employees, while some have open-ended needs for materials and equipment. What’re the risks? What schedule and budget margins are they asking for?

4. What do you think Jennifer should do with the $2,000,000? In explaining your answer, address the concerns and positions of Julie, Tyler, Jeff, and Joe.

If I had to make this choice without more information, I would mothball Julie’s project and put the money in the bank. It’s not worth the risk to do any of them without finding out more. Making up my own research data, I would mothball Julie’s project and retask the scientists but put them on 20% time. They’re apparently pretty smart if they’ve managed to keep the wheels on this thing so long, but there’s something about the structure of the R&D that doesn’t smell right. They’re beating their heads against the wall. 20% time is a great headache cure.

I wouldn’t give Tyler much money yet. But I’d give him enough to empower employees to identify issues, and to fix small ones in-house. I think he does have a good point, but it’s too early to jump. They should formally observe a least a full year of plant operations before deciding what to change. Maybe they can improve it, but with capital investments the last thing you want to do is get the improvement wrong.

I’m on board with Jeff if the data comes back strong. It’s a pretty straightforward request, and should be provable. I’m a little thrown by the need to hire someone from outside, though, so I’m not convinced that the research is going to come back in his favor. If it does though—they have the sales volume to warrant it, would retain more clients, would get fewer customer complaints—let’s do it.

I’d wait on Joe. (Also, I might give him a pretty stern talking to about management ethics, but that’s another story.) They don’t seem like their treading water just yet if they pulled in $2 million extra last year by surprise. (How did they do that anyway? They should look into that.) They’re on a growth spurt it seems, and product growth will help there, hopefully between the 20% time and the service upgrades. Keep an eye on it though. If they can drive costs down or increase their product line enough to saturate their sales base, by all means, take the money. It’ll be in the bank waiting, at least for now.

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