MIS Case Study Healthlite Yogurt

MIS Case Study

Healthlite Yogurt Company

Overview of the organization

Healthlite Yogurt Company is one of the leading producers of yogurt and dairy products nationally, relying on a distributed network of processing plants located in seven states. With processing plants located in California, Colorado, Illinois, Massachusetts, New Jersey, Tennessee, and Washington, the company's strategy has been to concentrate on having the right products available at the right time to meet local demand. As yogurt is a fresh food product and has a relatively short shelf life, coordination and integration with customers on a regional level is critical for the company to accomplish inventory turns and attain profitability. The distributed network structure of the company also pervades the sales and marketing departments as well. With 20 sales regions, each with 30 sales persons and a regional sales manager, the company has 621 sales persons in the field, in addition to a 12 person marketing group located in headquarters that is tasked with supporting the advertising, promotion and marketing efforts of the regional offices. The processes that Healthlite Yogurt Company relies on include order capture, distributed order management, multiple financial and marketing activity reporting process workflows, supply chain planning and management process workflows, pre-sales and post-sales support workflows, pricing exception management, and distributed channel management process workflows as well. Given the highly distributed nature of the company processes are shared across sales, marketing, and order processing, requiring a high level of process integration as a result. Specific process workflows where the need for integration across all departments are the distributed Order Management workflows (today which are very manually-based), quote-to-order, quote-to-cash, sales and financial reporting, and quote-to-fulfillment.

Analysis of Healthlite's Problems

At the most systemic of levels, Healthlite's many problems emanate from their highly distributed organizational structure on the one hand, and their lack of systems and process integration throughout that structure on the other. Most problematic is the lack of integration across the processing plants and the headquarters, compounded by the lack of real-time data sharing and integration with the 20 sales regions. In addition, many of the order management, order entry, supply chain, pricing, marketing, pre-sales support and post-sales reporting are all manually-based. This is leading to a severe back-up in how much work can be accomplished in the first place as manual systems can't scale as quickly as electronically-enabled ones. Second, the manually-based systems have been known to create significant financial discrepancies with a $1.5M accounting error found in one instance.

While Healthlite has a fundamental challenge handling processes due to its highly distributed organizational and operational structure, the greater problem is in the lack of integration of key business processes across functional departments. Order management needs to be distributed as a process for example, with order entry being enabled in each of the 20 sales regions. Today Healthlite has a highly centralized order management system, which is putting it at a disadvantage to its competitors. Clearly from the case study the company needs to create a distributed order management system that supports multiple order entry process workflows. Having 20 workers enter 500,000 order tickets per week is anachronistic at best and error-filled at worst. What needs to happen is that the centralized distributed order management process needs to become truly distributed; only then will Healthlite be able to compete successfully. In addition to integrating the distributed order management process between sales and operations, the supply chain management and planning organizations are critically in need to being coordinated with on orders. Only by having visibility into the distributed order management system will the supply chains' managers be able to accurately plan for the right amount of yogurt, at the right price, at the right location to be competitive. Further, a revised distributed order management system needs to also be the foundation specifically for the development of a more complete pricing and quoting system for salespeople to use as well. Creating quotes, responding to pricing requests, and managing shipment dates through the use of an automated distributed order management system would make the salespeople much more effective than they are today.

The management and technological factors that contributed to these problems stem from the highly centralized organizational structure and the lack of delegated authority throughout the company. This is a major challenge for the company at a strategic level, and gets reflected in everything from an outdated and highly inefficient order management system, to the lack of real-time support for sales and marketing personnel in the field. Relying on "snail mail" or U.S. Postal Service delivered mail is a huge competitive disadvantage as well. In short there needs to be a much greater level of decentralization of both order capture, order management, and the use of information throughout the company. The company's highly centralized organizational structure is constricting its ability to move information to the departments most in need of it to compete in the market.

Management Plan for Improving Healthlite's Business

The following management plan defines the list of objectives, timeframes, major milestones, and an assessment of the plans' costs and benefits for creating an entirely new distributed order management system throughout Healthlite Yogurt Company. While this specific plan details how a distributed order management system is critical for Healthlite to remain competitive, a recommended second phase is to look at creating a single consolidated Enterprise Resource Planning (ERP) system that coordinates and synchronizes production across all seven processing centers to ensure the highest level of efficiency. The proposed distributed order management system must also be combined with a portal-based platform that allows for the sales force to create, edit and deliver quotes, pricing exceptions and order status reports directly to customers electronically as well.

List of Objectives

To create a distributed order management system that links all seven processing centers and provides for real-time integration of pricing updates, price exception handling, quoting, and availability checking of product stocks by sales personnel.

To design the distributed order management system to also allow for members of the Healthlite supply chain management and planning organizations to also have visibility into existing inventory and planned incoming shipments from suppliers.

To provide marketing with analytics that provide insights into how pricing decisions are impacting demand by customers in the 20 specific sales regions and also create a sustainable pricing model to ensure Healthlite gets the maximum margins possible on their products.

To provide sales with a portal that has a series of applications included that give members of this department the flexibility of creating quotes, creating pricing exceptions, checking on the status of orders, tracking customer order history, and getting visibility into when large orders will ship for customers. In addition, many automated tools for managing multiple accounts will be included in the portal, integrating real-time order management applications along with customer relationship management (CRM) applications to make it possible for members of the sales force to get as much done electronically as possible. This will free up the sales force to spend more time with customers in person, getting more sales.