Company's Competitive Strategy and Value Thesis

Excerpt from Thesis :

Product Returns is a third process area that Imperial Tobacco has to contend with, specifically from its distributors and channel partners. Typically Tobacco products are returned if a specific lot of tobacco or packaging has been found to be defective. There have at times been product recalls as defined by governments. A third reason for product returns is when a product has been discontinued and Imperial is not willing to pay price protection to cover the distribution partners' inventory carrying costs until they are sold. The Product Returns process begins with the issuance of a Return Material Authorization (RMA) that specifically states how much of a given product is being returned and for what reason.

The RMA is then sent to the distributor who then ships back the tobacco products to Imperial. Once the products have arrived back at the company, if they are defective, they are sent to Quality Assurance for testing and analysis. Quality Assurance will then create a report defining the reasons and factors that contributed to the low quality. The products are then destroyed there were defective. Products returned due to a new product introduction replacing them and making them non-competitive are re-inspected by Quality Assurance. Second, they are re-sold in market exchanges, often in China, India or Latin America, where the price of the products still can produce a positive gross margin for Imperial. The use of PRM and CRM systems and their integration to Imperial's Enterprise Resource Planning (ERP) system are critical for the inventory positions of the products which had been sold into the channel to be accurately reflected in the company's systems. The distributors' and resellers' accounts are then credited for the returned merchandise.


Name of Organization Assessed - Imperial Tobacco Canada

Name of Person Preparing the Assessment

IT Business Practices

IT Planning

Is there a current, written, approved plan for it? Yes

Does the it plan support the overall business plans, strategies, goals, and objectives? Yes, it is defined as part of the strategic planning process

Are the goals and objectives for it well-known and understood (e.g., by professional staff)? Yes; the it plan concentrates on supply chain performance primarily

Are opportunities for using it to add value to the business being identified and exploited? (E.g., is there a systematic means for tracking new it developments, experimenting with promising technological innovations, assimilating new technologies into the organization?) Yes, the plan is concentrating on making fulfillment through their distribution channels more efficient; and there are dashboards specifically using analytics to measure the performance of the supply chain it investments

Are the it architecture and its management appropriate given the organization's strategy and organizational design? Yes; the highest priority in it today at Imperial Tobacco is supporting a more efficient and streamlined supply chain

IT Resources

Has the pattern of it spending changed over the past five years? Ten years? Is it projected to change in the future?

It has increased over time to support for investment in the supply chain, and also integration to other tobacco producing companies. The beginnings of a Private Trading Exchange in the Canadian Tobacco industry have begun to emerge in the last five years.

Is the level of it resources comparable to industry norms? What is the current level of it spending as a percentage of sales? Yes, in fact they are over. It spending as a percentage of sales is 4%.

Is there a clear, well-understood way of proposing, justifying, and approving it resources? Yes, there are formalized budgeting processes in place

How does the organization manage it resource allocation and prioritization of it projects? Through the use of Steering Committees that define their relative priority

Are corporate-wide resources spent on it development and management being effectively and efficiently utilized? According to Imperial Canada's Annual report, yes, there has been a positive ROI from it investments

Are informal and formal information/communication policies coherent and consistent across all organizational levels and units? Yes, they are consistent in defining shared objectives

IT Leadership

Describe the top-level leadership of it. Is there a CIO? Yes

Is there an it steering committee in place (e.g., leadership, membership, number of meetings per year, typical agenda)? Yes, and it actively defines the priorities for investment in it

Have senior managers signaled their support for it and are they engaged in it management? Yes, this is how they are measured for raises and bonuses

Have business managers assumed responsibility for it development? Yes, they are seen as the customers for the projects

Information Technology


Briefly describe the computing platform(s) in your organization (e.g., mainframes, clusters, personal computers, PDAs, and their operating systems). Dominated by several legacy ERP systems and the need for greater integration across the "home grown" systems used for managing supply chain operations in addition to managing packaging and marketing. There are system "islands" at the minicomputer level and smaller distributed PC networks as well

Has the firm adopted client-server or peer-to-peer architecture? Client/server

Has the firm adopted any hardware standards (e.g., WinTel -- the Windows operating system running on Intel microprocessors)? WinTel

What is the integration potential of the computing platform(s)? High; there are many legacy systems in the company that are not integrated together at this point

What is the evolution potential of the computing platform? (E.g., can it grow and adapt to the organization's future needs?) Intermediate; legacy systems by nature were not designed to ensure a high degree of integration therefore much custom programming will be needed to make them capable of communicating with each other and new systems

Who generally controls and/or has responsibility for the computing platform(s)? The CIO

How well do the organization's present and planned computer(s) meet the organization's needs and plans? Somewhat; not excellent by any means. Has been solely focused on supply chain applications as these are the core areas of the business that do best with automation.

Identify the communications network(s) (e.g., wide-area networks, local area networks, telephone/voice communications, video/teleconferencing, Internet, extranets, intranets, wireless facilities). WAN, Corporate Intranet; emerging Private Trading Exchanges (PTX) with other tobacco companies to gain greater transaction economies of scale.

What is the integration potential of the communications platform(s) (e.g., VANs, VPNs, Internet, VOIP)? Low integration potential due to the legacy systems that dominate the system complex of the company; no use of VOIP; limited use of VPNs, only for sales today

What is the evolution potential of the communications platform(s) (e.g., scalability, standardization)?High level of evolution potential due to the increased need for legacy system integration in Operations, Manufacturing and Finance; there is room for significant improvement in bringing more efficiency to these manual and after error-filled processes

Are there appropriate security measures in place for the networks (e.g., firewalls, virus detection and removal)? Yes; the CIO has made security, along with supply chain automation, two of the most pressing priorities for the company

Who controls and/or has responsibility for the network(s)? CIO and it

Is a communication policy in place that governs organizational and inter-organizational communication? Yes

How well do the present and planned networks meet the organization's needs and plans? Somewhat; there is a lack of integration across legacy system and the networks also mirror how balkanized or fragmented the company has become Databases

Have databases been designed around stable information elements of the business? Yes, they are designed specifically around the distributed order management (DOM) workflow within the ERP system. Databases have also specifically been designed around the distributors, yet there is no actual application suite for this customer base to use for accessing the databases.

What database technology is used to manage information (e.g., flat files, hierarchical or relational databases, object-oriented databases, text-management systems, hypertext systems)? ISAM-based databases (Indexed Sequential) from legacy IBM DB2 databases' SQL-based from Oracle and Microsoft databases

What level of technical integration is possible across the various databases? At the most fundamental level, ODBC connections are in use the majority of the time. Hand-coded adapters and connectors are used for transaction workflows again relying on ODBC. XML just beginning to be used as a transport mechanism across databases of comparable structure (SQL Servers for example),

Is data stored and managed in a comprehensive, integrated information management system that enables flexible and timely access to common sources of information by employees at all levels in the firm and across varying organizational units? No; there are many isolated islands or disconnected series of database systems in the company, many of them not talking to the other. There is no single enterprise content management or enterprise database management system in place that provides a 360 degree view of all activity. At present there are up to 56 different databases all running independently of the other, which makes it very difficult to coordinate strategic-level functions.

How well do the present and planned databases meet the organization's needs and plans? They are deficient in this regard; the databases are siloed…

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