Enterprise Resource Planning&Business Process Re-EngineeringStarbucks

Question: Describe about the Enterprise Resource Planning and Business Process Re-engineering . Answer: Introduction Starbucks is a company that is best known for its coffee all across the globe. Starbucks Coffee Company in Australia served its first coffee in the year 2000 and has been growing since then. The company has a number of different units and outlets all across Australia and has done some massive improvements in its business processes to achieve better quality and customer satisfaction. The company is an early adopter of the emerging technologies to offer advanced and improved services to its customers and also streamline all of the internal processes (Lee, 2016). ERP Implementation in Starbucks Australia The ERP implementation in Starbucks, Australia has seen many phases and changes with the growth of the company and increase in the number of stores and staff engaged with the same (Wallace and Kremzar, 2016). With its opening in July, 2000, Starbucks saw a rapid growth all across Australia and it became extremely troublesome for the then financial controller, Danielle Baigent-Garvey to handle the operations with ease and without any flaws. It was estimated by Danielle that the existing system at that time was not competent enough to deal with all the changes and it was decided to implement a new and improved ERP software package in the company. Microsoft Dynamic GP was selected by Danielle and team and the same was implemented across all the units of Starbucks, Australia by September, 2002. The process was done in a quick manner and the phases such as testing, implementation and training ran in parallel with each other. The package included finance management, purchasing, fixed assets, extensive reporting, cash management and many other ERP features. In addition to Microsoft Dynamic GP, Starbucks also implemented Microsoft's Service Management and Professional Advantage's Webhouse software in its architecture in order to manage the servicing requirements and add business intelligence capabilities. These packages together made the ERP software for the company. There are a number of benefits that were provided to Starbucks with the implementation of ERP in its operations and structure. The software provided an integrated package to the company to link all the processes and operations with each other. The interface that was offered by the software allowed the executives and the officials to have an extremely easy and simple to implement solution to accomplish all of their reporting and analysis activities. It also allowed the resources to remove and redundancy and duplicity in the processes by eliminating the human errors and automating the entire system. The time that was required to enter or update information in the system was also very less as compared to the time that was being spent in the manual activities. It resulted in the improvement of the productivity and efficiency of the resources. The package also allowed reporting activities to be done with a lot of customization and automatic generations as well. The resources were also able to add value to the business by being able to understand the processes in a better manner and were also able to carry out significant operations with much ease. Budgeting and associated activities were also streamlined to a great degree as the resources clearly understood what expenses were made and where were they exhausted. There was also easy data management and data backup possible with the help of such package which allowed the strong database for any of the future reference It became easy for the auditors to have exact details at the time of auditing and reporting (Advantage, 2016). In order to improve the ERP operations, Starbucks, Australia also adopted other software and packages such as Esker DeliveryWare. The software was implemented to improve the delivery and management of information particularly associated with the financial operations. The software offered a solution for the immediate and future needs of the company (Dayeian, 2016). The three major areas that were targeted with the installation and implementation of the software included purchasing, reporting and bulletins. There were a number of benefits that were offered to the company with the implementation of this software which are as listed below: A long terms solution which was flexible as well as scalable in nature that was proficient enough to adapt with the changes in the technology and requirements A strong maintenance plan and support was provided along with the software in order to manage the post production activities Starbucks has a lot many policies towards the environment and the software allowed the achievement of the same with the reduction in use of paper and print The software also allowed easy and fast communication with the suppliers and ensures better supplier management. Problems in Existing ERP System In spite of a number of changes that have been done in the ERP system of Starbucks, Australia, there are still a number of loopholes that exist in the current system. The first and the foremost are the security risks and issues. There is a problem with the security mechanism that is implemented in the current system as it is not designed to control and manage the newer security risks that are now probable. There are a number of threats and attacks that have been launched by the attackers which cannot be dealt with the existing system. The existing system also cannot handle the data requirements of the present era. It is not equipped with the advanced data analytics and business intelligence techniques to manage the Big Data. The same results in a number of issues for the management and resources and also results in the compromises on the quality of service. Abridged Feasibility Analysis Introduction Purpose The purpose of the feasibility analysis is to determine the need of the improvements in the ERP implementation in Starbucks, Australia. Target Audience The target audience of this feasibility study includes the board members of the company along with the department heads and Project Managers. Justification Problem Statement The demand for coffee is increasing with an increase in the population and Starbucks is present in Australia since past 16 years. With a known name and strong reputation in the market, it is essential for the company to have a stronger ERP system to organize and manage all of the business needs and operations (Petersen, 2016). Organizational Impact The improved solution will allow Starbucks to manage all of its processes easily and will also be able to coordinate a number of different activities. Processes associated with human resources, accounts and operations will be managed with much ease and the overall organization and control will improve to a great extent (Eresourceerp, 2016). Solution Solution Statement The new and improved ERP System for Starbucks will comprise of advanced features of Big Data and Business Intelligence that will provide a solution to the existing issues in the current system (Vuksic and Spremic, 2016). Anticipated Improvements Improved Visibility The new solution will allow Starbucks to control their working capital requirements to a great degree and will also enable it to manage all of its operations so that there is a complete clarity on the operations to perform (Tenkorang and Helo, 2016). Security The new system will also allow better security with the aid of advanced security mechanism that is offered with new solutions and packages that will be implemented in Starbucks. Reduced Operating Costs There will be a huge difference in the existing costs and the one that will be required during and after the implementation of the new system. Production, marketing and control cost will come down to a great degree. Customer Service Customer is the king for any business and organization and the same is the case with Starbucks. New ERP system will allow the improvement in the customer service and satisfaction levels. Project Management Approach The implementation of ERP is an extensive project that involves a number of different activities and thus it is essential to manage the project with ease and accuracy. There are two different project management approaches that have been suggested which can be followed by Starbucks during the project timeline. PRINCE2 Projects IN Controlled Environments (PRINCE2) is undertaking administration strategy that is procedure arranged and can be custom-made to various task situations. It has a plainly characterized structure that contains points of interest of parts, duties, procedures and standards of venture administration that can be effortlessly learnt and connected by and by (Skogmar, 2015). The technique has a reasonable structure for administration that incorporates comprehension of connections between undertaking board and program supervisors. This technique likewise ensures business support of a task by concentrating all choices on an undertaking business case that ought to stay feasible all through the venture. Project Life Cycle (PLC) includes all around characterized venture organizes right from the earliest starting point till the end of the task. Stages, for example, initiation, arranging, conveyance and conclusion shape a vital piece of PLC. PRINCE2 strategy and its techniques are greatly near the phases of PLC. It starts with the task start that decides the targets and objectives of the venture alongside the undertaking brief and dangers estimation. Arranging, coordinating and controlling stages characterize the strategies that should be adjusted for effective task administration which at long last prompts the undertaking conveyance and conclusion (Advantagelearning, 2016). PMBOK It is an aide arranged by PMI for Its Project Management Body of Knowledge and it portrays 47 venture administration forms with each having certain inputs, certain devices and coming about yields. These procedures are separated in the aide into 10 information zones of task administration teach that incorporate extension, cost, time, quality, joining, correspondence, hazard, HR, acquisition and partners. PMBOK control unmistakably characterizes what a task administrator is required to do. PMBOK likewise holds fast to the phases of PLC yet has its own arrangement of techniques which are named as stages. The principal stage in PMBOK technique is the start stage which incorporates the attainability investigation of the task. Next is the arranging stage which incorporates scope definition, action arranging, and partner distinguishing proof, asset portion, spending estimation, plan estimation and danger appraisal. It is then trailed by the execution stage which includes the exercises that are connected for the advancement of the task according to the prerequisites. There might be various difficulties that may show up in this stage and the same are taken care of by the strategies characterized in PMBOK to deal with the same. Next stage is the control stage. There might be various changes that may emerge as far as usage and asset exercises. These progressions are overseen and viably controlled in this period of PMBOK (Vargas, 2015). Cost Benefit Analysis Fiscal Year 0 1 2 3 4 5 6 7 8 9 Undiscounted Flows One time cost Recurring Cost Recurring Cost Recurring Cost Recurring Cost Recurring Cost Recurring Cost Recurring Cost Recurring Cost Recurring Cost Costs -$100,000 -$30,000 -$30,000 -$30,000 -$30,000 -$30,000 -$30,000 -$30,000 -$30,000 -$30,000 Benefits $0 $45,000 $45,000 $45,000 $45,000 $45,000 $45,000 $45,000 $45,000 $45,000 Net Cash Flow -$100,000 $15,000 $15,000 $15,000 $15,000 $15,000 $15,000 $15,000 $15,000 $15,000 Discount Factors Discount Rate 6.0% Base Year 0 Year Index 0 1 2 3 4 5 6 7 8 9 Discount Factor 1.0000 0.9434 0.8900 0.8396 0.7921 0.7473 0.7050 0.6651 0.6274 0.5919 Discounted Flows Costs -$100,000 -$28,302 -$26,700 -$25,189 -$23,763 -$22,418 -$21,149 -$19,952 -$18,822 -$17,757 Benefits $0 $42,453 $40,050 $37,783 $35,644 $33,627 $31,723 $29,928 $28,234 $26,635 Net -$100,000 $14,151 $13,350 $12,594 $11,881 $11,209 $10,574 $9,976 $9,411 $8,878 Cumulative -$100,000 -$85,849 -$72,499 -$59,905 -$48,023 -$36,815 -$26,240 -$16,264 -$6,853 $2,025 Net Present Value $2,025 Internal Rate of Return 6% A cost benefit analysis has been done on the project with a onetime cost of AUD 100,000 and a recurring cost of 30,000. A benefit of AUD 45,000 has also been considered and the discount rate that has been applied is 6% (Dreze, 2016). Risk Identification There are a number of risks that have been identified in the implementation of ERP Systems in Starbucks, Australia. Risk ID Risk Likelihood Impact Reasons Risk Ranking Risk Level (1 is high on severity and priority and 5 is lowest) RS1 Schedule Risks Medium High There is a lot of complexity that is involved with the implementation of the ERP Systems which is mostly not easily understood by the teams (Erm, 2013) Critical 1 RS2 Budget Overrun Medium High With the inability to determine the exact nature of operations required, there may be a lot of re-work done by the team which may involve more expenses (Riami, 2016) Critical 1 RS3 Data Management Risks Medium Medium There will be a number of parties that will be involved in the implementation of ERP. There will also be data conversion and validation procedures which may face data management risks (Merit, 2015) High 2 RS4 Security Risks High High-Medium There are a number of threats and attacks that may be executed by the attackers or the internal resource as well (Pascal, 2016) High 2 RS5 Technical Risks Low Medium Technology is at an ever changing pace and there may be chances of the occurrence of the same during the project Medium 3 Risks associated with the ERP Implementation at Starbucks, Australia Business Process Redesigning (BPR) Starbucks is a company that is providing excellent coffee to the customers in Australia since past 16 years. Although the company has a reputed name in the market, there are other competitors in the market that are providing amazing coffee at much lower costs. There are also new and improved business processes and systems that are being followed among the fellow competitors. This is the reason that Starbucks must involve redesigning of the business processes from the acquiring of the raw materials to the final delivery (Cooke, 2016). The processes that require redesigning at Starbucks include the way the information technology is utilized in the company. There are operations such as resource planning and management along with the Enterprise Resource Planning that do not make use of the latest technology and software packages. Lean management is also missing from the value chain which can be implemented right from the procurement of the raw materials to the final delivery of the products. It will allow the business operators to curtail the wastages that occur during the procurement of the raw materials. Flow of information internally in the organization can also be redesigned with a better communication plan and matrix utilization to streamline all of the activities. The Starbucks frameworks change by presenting lean administration with the supplementary assistance from stream of data can be made into a viable apparatus for the general development of the association, particularly in holding its expansive client base and getting new ones. The framework which is verging on idiot proof in nature is a deliberate activity on some portion of all level of workers and partners in the store network. This upgrade mitigates a large portion of the trepidation that would have emerged had Starbucks lost a decent number of its clients to its rivals. The danger of losing business is in actuality extraordinarily abridged and Starbucks can anticipate a complete turnaround in its productivity and offer worth after the framework is made operational (Ukessays, 2016). Advantages for Starbucks, Australia ERP implementation and Business Process Redesigning will result in a number of advantages for the company which has been listed below. There will be a number of operational advantages such as reduction in the costs, reduction in the cycle time and productivity improvement. There will also be a lot many improvements in the quality which will lead to better customer management and satisfaction as well. A number of managerial benefits will also be seen in terms of resource management and performance improvement. Strategic alignment will also improve with the implementation of latest ERP systems and redesigning of the business process with increased support for business growth and alliance. There will also be many organizational benefits with these processes such as improved work patterns and increased employee satisfaction (Cheng, 2016). Disadvantages for Starbucks, Australia There are a few disadvantages that may appear with the implementation of the ERP Systems and redesigning of the business processes. There will be many changes in the existing processes that may not go well with the resources of the company as it takes time to adapt to a change. This may lead to reduction in the productivity. The cost of investment will also be necessary which will be an additional expense. The project will require the presence of the experts and the absence of same may result in serious issues. There may also be complexities in the usage of the same and the same would demand trainings for the employees to make them understand the features and functionalities of the new system. Changes that can be implemented There are a number of changes that can be implemented in Starbucks, Australia in terms of ERP and related operations. The existing system is not designed as per the latest technology and hence, the same can be changed and replaced with the new and advanced system. There are also changes necessary in the flow of information that takes place internally in the organization and the processes that are associated with the same need to be changed as well. There is a concept of lean management missing from the supply chain activities that needs to be introduced as well. There are also changes that must be done to improve the security mechanism in the existing system in order to improve the information security and data privacy for Starbucks, Australia. Conclusion Starbucks, Australia is in operation since past 16 years and has been serving customer with great coffee since then. There are a number of stored of the company all across Australia and the demand has increased in the past few years. There is also a lot of competition in the market with a number of many new entries in the same business. Starbucks thus requires a few changes and updates in its existing system in terms of ERP implementation and Business Processes Redesigning. The existing ERP system is not upgraded as per the latest technology and has a number of security loopholes as well. A new ERP system must be implemented which will be incorporated with the latest security mechanism and data analytics and business intelligence features as well. The existing business processes associated with information flow, supply chain activities and information technology shall also be re-designed to improve the overall functional. The same will result in better quality of service and will als o enhance the level of customer satisfaction. References Advantage, P. (2016). Case Study: Retailer manages rapid growth with Microsoft Dynamics GP. [online] Pa.com.au. Available at: https://www.pa.com.au/client-stories/starbucks-australia/ [Accessed 30 Aug. 2016]. Advantagelearning, (2016). PRINCE2 2009 Methodology: Principles, Themes and Processes | Advantage Learning. [online] Advantagelearning.co.uk. 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