Information Systems in the Consumer Industry/Industrial processes

A case study of reengineering of information systems – industry — A case study of reengineering of information systems – retail — Introduction to methodology — General processes — Industrial processes — Retail processes — Conclusion — Appendix A — Appendix B — Bibliography

A possible way to satisfy customer needs is to use specific processes. This means designing, industrializing, planning and producing garments which satisfy the need.

The group of customer we address can be various, it might vary from a single person (make to order) to a homogenoeus set of people on which we make some sort of “average” consideration; if I am talking about well-off teen-agers I need to make different evaluations and reasonings from a middle-age low income group.

Ability to satisfy the customer need.

The context is the system customer-company; the process goal is to satisfy all the requests starting from the fact that we know them. In this case the information system is a support system, not a core topic.

Why. We think that satisfying the customer will give immediate return and future perpestive to the company.

What. The expected results of the process include

• Product: an increase in physical appeal, reliability and availability of the product; a better looking, better quality and easier to find product.
• Subjectivity needs: a better customer care and satisfaction
• Social needs: a better customer group recognition and individual attention, the customer perception of the company as “trusted partner”.

Obviously these results need to be measured on customer expectation.

Who. People involved in customer satisfaction includes

• Product: design, industrialization, production, logistics
• Personal needs: sales, after sales, CRM executives, retail
• Social needs: promotion, brand management, public relations.

How. This point is about techniques to be used for customer satisfaction.

In the product area we are concerned about the processes quoted as “direct” in the Porter chain value model. This area is surely the most studied in organizational modeling, we can quote various methodologies from BPR to Kaizen. It is surely not the goal of this work to get into this problem, better authors then me have worked on this and you can refer to them.

Personel needs: the studies concerning this area, in my opinion, are not as structured as in the former area. As far as I know individual aspects of this field have been evaluated but in a stand-alone context, not in a complete customer relation view. The topics we are talking about concern

Customer centrality and adaption to the market

Product availability impact on sales

Sale channel competence and friendliness

After sales service impact

Customer relation management

Direct approach importance: the shop relation

Customer social needs are, in my knowledge, not the object of quantitative studies. This might depend on the fact that data collection is very difficult, so we are still at the level of hypothesis and specific experience collection. We are talking about:

“group” creation and belonging: brand nature and the role of promotion

brand management and group life-cycle

public relations and their results

“personal” service.

Where does the process take place: I think we can define the place where the customer is the location where the process starts. Obviously the customer can be anywhere in the world so we must take this into account. The rest of the process may then take place

Product: in the stylist studio, in the technical, industrial, loistic and retail areas depending on the specific subprocess

Subjectivity needs: sales, customer service and retail areas

Social needs: anywhere as customers can be everywhere.

All these areas must be informationally connectable.

When. As for the geographical aspects also for the time-related variables the sinchronicity is very important; if you are late in a subprocess there is little chance that you will be able to recover afterwards. This is the deep meaning when “time to market” has been chosen as the critical variable in the next future, speeding up every single phase might give you the elasticity to cope with unforecasted events which might have disastreous effects.

The real problem, in my opinion, is to balance the time associated with each subprocess.

Product: the total lead time, from the idea to the availability, in the fashion wholesale world, lasts about 8–9 months; this period is actually deeply questioned by e-commerce and its related attitude.

Subjectivity: we can think of

Pre-sales (contacts, reciprocal knowledge)

Sales

After sales (recal and custom loyalty).

These process mainly happen on a few months horizon, a slightly longer period than the product cycle.

Social needs. The process of creating a “group” is fairly quick, the real problem is keeping the “group” alive through many years. In this process the “customer attention and recognition” can only start once you have created the “group” so it takes even longer.

How Much. The metric we use is about

Product: Aestethic, quality, availability, cost and accepted price

Subjectivity needs: service, reassurance, empathy

Social needs: how much does the “group” means, how much am I recognized inside the “group”.

As far as the “product” indeces there are quantitative data available related to quality (Aql methodology, number of returns), availability (question sheets and lost sales) and price positioning (sales to full price ratio). As far as I know there are no indeces related to aestetichs, maybe only the number of collection presented items which never got produced.

Speacking about “service indeces” we have to divid “service quality” and “satisfaction index” (Oliver 1997). The first is related to external indeces and standard measuring techniques (SERVQUAL, SERVPERF) while the second is related to customer perception. The fact that customer gets in the analysis of the index, introduces two further variables related to time (quality has a fairly long horizon, perception short) and space (consumers in different countries and context have different perception of “satisfaction”).

As far as I know there are no quantitative analysis related to “group belonging” or “group recognition”.

Instruments

The most well known instruments existing today surely cover the areas of product definition (PDM) and production controlling (ERP); there are good instruments in forecasting, CRM and sales support.

Getting into details and assuming these are my personal opinions:

Product definition: there are good products helping the product definition (style, PLM, model marking, quality control) and they support time-phased geography problems via distributed workflows

• Production processes: definitely the best studied and supported area; you can find instruments (ERPs) very well done both on the theoretical foundaments and technical aspects. The only doubts are about their operational easiness and friendliness.
• Distribution instruments: not at the same level as the ERP but on the right way to be there.

Subjectivity needs support instruments:

• Customer relation: some good CRM package is available but it is still a long way to go to be really complete
• After sale support: it is considered the sales minor process so it has not been developed so much
• Retail. Very good in the operational aspects, not so much for the remaining subprocesses.

Customer social needs: available instruments are essentially question papers statistically analysed; there is no automatic data collection.

Talking about information systems I would like to return to a concept which I think very important. As customers are distributed all over the world, particular care must be taken at every level of integration, not just the technical one (Miotto etc.) if we want to avoid dangereous misunderstandings. Information integration is usually underestimated even though it is well known (Davenport) the importance that information technology had in process disintermediation.

Ability to communicate the capacity of satisfying the need

The system is the customer-company environment; the process goal is the fact that the customer ( “group of customers” to be addressed by my “solution”) is aware that a solution to his needs exists.

Why. We want the customer to be really aware of the existence of a solution of its limits because real customer service is respectful of customer identity and does not mislead facts.

What do I communicate, what is the content of the process.

• The knowledge of product content: aesthetics, reliability, availability and price/performance
• The fact that it is really that “product” that satisfies his need (whether primitive or induced)
• The context knowledge about expectation satisfaction, something like saying “come with us and you will be all right”
• The “group” belonging and brand identification
• The “group” recognition.

Regarding this last point we must be very careful about privacy issues, to know each person individually means knowing a lot of informations about him and this might not be compliant with local laws and/or create relation problems with the customer as he feels controlled and classified.

Who is involved in the process. The customer is the “receiving” (destination, output) part of the process and the company is the active (input) part. Obviously when we talk about customer we must keep in mind all the categories we have been talking about (known, unknown, potential) and calibrate methods and politics for each group.

Where does the process take place. As we noted companies and customers can be anywhere so the process must be geographically distributed. As far as places where the process takes place we can recognize:

Product: media and PR (testimonials etc.)

Subjectivity: direct sales channel (retail), indirect sales channel (wholesaler), other various channels including word of mouth

Social: media, retail and PRs.

How we communicate the information.

Product: direct advertising (I show the product and associate it at human sense), indirect advertising (for example technical people explain characteristics, I get attracted by the person and through him I get to the product); comparative advertising.

Subjectivity: service advertising ( we show our customer service level), the level of professionalism and availability of our sales executive, the product context (packaging, advertising campaign), the service context (POP material, shop furniture and look).

Social promotion: social involvement (e.g. Toscani’s photos per Benetton), fashion shows, licensing, media, internet community, sales point formats, sponsoring; everything which helps creating a “group”. For “group recognition” we must think in terms of personal service.

When. The time factor in communication is quite different for each need:

Product: the timing is related to the availability (shop, internet or other); it is useless and wrong to communicate a capacity which does exist in reality so it is very important to synchronize ability to communicate and satisfaction capacity

Subjectivity main issue is “trust” which is a long asset to create and a quick one to be destroyed; its time scale is even longer than fashion and style as it might get through different stages of the company; usually it is years long

Social issues, in my opinion, are linked to the idea of “styles”; they are linked to “cultural break” and easiness of information exchange has deeply changed the time scale which I would indicate in a two-three years period.

How much we need to communicate means defining the quantity of actions related to each former dimension. In the next chapter we shall propose a view where this dimension is actually related to the evaluation of the cost/return I have in each combination of variables. We know that evaluating the cost is feasible, not easy but usually can be done, while evaluating the return is very hard and it is usually done through side indicators like sale increase. I think there is a lot of work to be done in evaluating measurable parameters.

Instruments: we partially quoted them in the “how” paragraph, we are talking about publicity and PRs. As far as I know there are no instruments, now, able to quantify, as an example, the return of the investment of a fashion show in terms of social impact on the knowledge of a “brand”.

Industry: the architecture of the solution

To organize what we have been saying up to now, we have to create a schema including, for each process, every possible combination of the information dimensions we have been considering. Some of these combinations might be nonexistent like “sure needs of potential customers”.

As an example of the operational method we can have tables like this one:

		Need data collection	Analysis	Satisfaction	Communication
Process
	Product
	Subjectivity
	Sociality

Imagine the first process of need data collection, here we can ask ourselves which are the needs

Of a well known customer

Collected by a sale executive who transmit them

Semi-structured needs

Collected in a shop

With a very clear question

At the beginning of a sale campaign

Which means that we are considering one of all possible combinations of parameters.

Later in the book we shall get check how many are the meaningful combinations (Appendix A).

In this way we are segmenting the total information problem in “cells” each of which has its own individual analysis of states and processes parameters. 

In this method we are not really taking into consideration the “when” and “why” dimension. The “when” variable is related to the variation of the schema in time: an open issue. The “why” parameter, at the top level, is human related and, in my opinion, has the basic meaning of the actual nature of economical enterprise, but this is also an open issue.

This schema reminds us of the phase-space in statistical mechanics where the cell weight is not even but it is related to the weight the company gives to it in its strategy. As in statistical mechanics the content of the cell is a function of both the initial state and the state variation rule (the process), assuming a first order non explicit time dependence.

As far as the cost of cell fulfillment we can imagine a curve like this:

Where the cost to satisfy 100% is very high. The growth coefficient depends on the nature of the cell and it should be the result of specific analysis which locate the cell in the total analysis space.

When we talk about the value and the cost of an analysis cell we must not forget the reliability of the data we are using in terms of data collection, methods and people involved. This makes things very difficult when you think of a global solution so most companies, in my opinion have been using two side methods:

• What do other people do ( market driven policies)
• What is it going to happen if I don’t do this (scare of “not doing”).

The method I propose, not forgetting the associated difficulties, is to break down the problem into specific cells and define local strategies in a wider architecture.

I really think that a complete semantic ontology of all cells, including time and space dependence, is a non realistic result so I propose a local approach using also heuristic techniques.

The company strategic plan then becomes

• Assigning a value to each cell of the “customer needs” phase space
• Trying to associate a cost to the fulfillment of that cell
• Maximize the phase space covered with the constraint of the company total resources and define the attitude regarding the cells which are not considered for this moment.

From an information system point of view, in practice we need to quantify, for each cell,

The weight it has, related to company strategy

The value of information relative to the cell based on a definite metric system

The cost of getting that information.

The total combination gives the information scenario for the company.

The time factor shows its importance both in fact that the context keeps changing and also in the fact that no company starts from scratch; usually there is an information patrimony specially in the areas of product needs satisfaction (sales and production). The critical strategy factor now becomes the ability to choose the best solution for choosing the variation of customer phase space as to reach the best overall coverage.

From a practical point of view we start from the highest level four processes, get down to the individual cells and determine the actual company value, the cost of maintenance and the cost of upgrading.

It could be interesting to compare the structure of this analysis with the deployment of software projects. The phases of needs collection and rationalization is very well known in the enterprise software production while it is very little formalized in manufacturing. On the other end the phase of capability communication is much more developed in the industry context.