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Article Excerpt
ABSTRACT: Based on issues faced by an actual company, this case focuses on the design of an appropriate information systems architecture for International Lumberyards, Inc. (ILI). The design necessitates consideration of both the business strategy and the information technology that can support that strategy, since the business strategy needs to be both informed and supported by the information system. A strategy that is not supported by the requisite infrastructure will fail. Likewise, implementing technology that is not aligned with the business strategy will result, at a minimum, in a waste of resources. In the setting described in the case, the technology (or lack thereof) resulted in very constrained processes. A new technology infrastructure, aligned with the business strategy, will allow for future growth as well as addressing the limitations of the current environment. The case description forces consideration of how the organization's multiple locations will communicate with each other, and also what type of information systems software solution should be recommended. However, prior to the long-run goal of a new infrastructure, certain short-term solutions are needed to help the organization survive. The case includes teaching notes and has been designed for flexible classroom use. Due to the complexity of the case, it is recommended as an out-of-class project for use in graduate information systems classes. However, it could be used in undergraduate classes if the instructor provides additional guidance.
Keywords: instructional case; information system architecture; consulting.
I. INTRODUCTION
There is growing interest in including consulting issues as part of an accounting information systems curriculum. Consultants must deal effectively with a business and technology environment that is in a constant state of flux. Regrettably, in many educational settings students become accustomed to believing that every problem has one correct answer--which is hardly apt preparation for practice. One of the challenges of consulting is that there may be multiple good solutions to a client's problems, and consultants have to evaluate and recommend an acceptable solution. To prevent students from developing a simplistic view of problem solving, it is necessary to use instructional cases that realistically depict complexity. Unfortunately, there is a shortage of such information systems cases.
This case is loosely based on a consulting project at a company that we have renamed International Lumberyards, Inc. (ILI). The main teaching objective of this case is to help students understand the real-world complexities, including business strategy, hardware, software, short-term "fixes" and long-term solutions, and other managerial issues related to systems analysis. The case was designed intentionally to be open-ended, so that instructors can decide on a particular emphasis based upon the unique needs of their class. We have developed an example solution that is described in the "Teaching Notes" section of the paper.
Due to the complexity of the case, it is recommended for use in graduate information systems classes. However, the case could be used in an undergraduate class if used judiciously. The case lends itself particularly well to classes in systems analysis and design, and it can and has been used in networking/data communication classes. The case is best used as an out-of-class project since much of the learning process occurs as students research and integrate alternatives. If the case is used for in-class teaching, then the instructor is urged to introduce the case and issues in one class setting and allow the students to conduct the necessary research prior to the next class period during which the case is discussed.
Section II of the paper describes the ILI case. The "Teaching Notes" are presented in Section III.
II. DESCRIPTION OF INTERNATIONAL LUMBERYARDS, INC. CASE
Case Introduction
It had been a long day and Steve, a consultant employed by an international professional services firm, was finally relaxing on his way home from International Lumberyards, Inc. (ILI). He was feeling much better about his meeting with Jon (CEO), MaryBeth (CFO), and Nora (Director of MIS) than he did when the meeting began earlier that day. In fact, he was happy to still have ILI as a client after that first meeting.
Prior to the meeting, Steve had talked to MaryBeth about the problems RI was experiencing. Based on their discussions, he was confident that the problems were very simple. First, the existing computer system did not have enough capacity to handle the increased volume of data, especially since several new plants (ILI refers to its lumberyards as "plants") were recently opened and the sales volume had increased significantly. Second, the main problem, based on his discussions with MaryBeth, was that corporate headquarters was having difficulty consolidating regional information from the different locations. The end-of-month and end-of-quarter reports were being generated increasingly late. The last monthly report was distributed three weeks after the month end. Steve also knew that the normal transaction processing was pushed back during this consolidation period. After conferring with some of his technical experts, he was sure that increasing the main memory and adding disk storage would solve the consolidatio n issues. He knew that adding memory and disk storage would be a short-term fix, but he was not worrying about the long-term issues for this meeting. Steve realized that RI's computer system was rather old and needed replacement, but he believed that ILI's basic business processes were sound. A change from the centralized computing environment to client-server or web-centric computing would be needed in the near future. He put together his proposal and felt very confident about the easy sell he was going to have. Steve knew that the tougher sale was going to revolve around what should be done in the long run when an entirely new information system across all the plants would be required.
Steve began to ponder that day's events and replay them in his mind. The meeting had opened smoothly enough, and he was just about to start his proposal when Jon had asked him, "What do you think is the main problem we need to address?"
Steve responded confidently, "Consolidations." He was sure that based on his conversations with MaryBeth, he had obtained all the information he needed. He knew how long it was taking to consolidate the operating results from the regions and how long it was taking to generate all the reports. He knew he had "all his ducks in a row."
Jon simply looked at him and after several seconds quietly said, "No, the problem is not here at corporate, rather it is out at the individual plants. I suggest that you visit some of the plants and come back here when you know what you are talking about."
At that point, Steve very unobtrusively closed the folder containing his original proposal. He hoped that the meeting would last long enough so he could prove he actually knew something. He also made a mental note to never again base a proposal on a single individual's information and perspective. Fortunately, Steve was able to use the remainder of the meeting to get additional information from both Jon and Nora about current conditions. The information included strategic business plans and objectives (presented below). With the new information Steve agreed that his initial assessment was wrong. Finally, Jon told Steve that he would like to meet again, in a month, to go over a new proposal after Steve had visited some of the plants.
ILI Background
ILI manufactures, treats, and distributes lumber products for the following markets: (1) retail (stores like Home Depot and Lowe's), (2) manufactured housing, (3) wholesale lumber, and (4) industrial. ILI is headquartered in Auburn Hills, Michigan, and has distribution centers throughout North America. Major product lines include pressure-treated lumber, engineered roof trusses, dimension lumber, value-added lumber products (such as lattice, fence panels, etc.), deck components, and various do-it-yourself home renovation products. Wood fiber products such as crates, wood chips, pallets, and sawdust are marketed to industrial customers. Historically, the plants would simply cut the lumber into industry standard dimensions and fill customer orders accordingly. Recently, however, there has been a pronounced shift into "manufacturing" for roof trusses and other significant value-added products.
Each of the different markets has unique needs. The retail market is demanding electronic data interchange (EDI) (and may move to Electronic Business using eXtensible Markup Language [ebXML] once standards have been adopted), consumer-oriented packaging with labeling, and bar coding. (1) The retail stores are searching for new products constantly and will drop one vendor quickly if another provides more innovative products. The changes in the retail market are something new to ILI, for it historically had not invested much in new-product development. The retail market is demanding lower product costs also. ILI believes that these reduced costs will result from the use of advanced manufacturing techniques. (However, to date ILI has not used many advanced techniques.)
The manufactured housing market requires ILI to manage inventories, build to order, and provide just-in-time (JIT) delivery. Custom designs for different manufacturers also need to be tracked. Other smaller manufacturers are turning to ILI to provide more value-added functions in the form of product design. Recently, manufactured items such as roof trusses have accounted for a larger percentage of sales, and ILI expects this trend to continue. Builders will call the local plant with specific dimensions and ILI will prepare a bid. The manufactured housing market is highly competitive, and ILI managers see it as a market in which the company must compete.
The wholesale lumber market is a commodities market and requires timely delivery of products. Survival in this market necessitates lean manufacturing techniques with superior logistics management. Mills that previously sold only to lumberyards are starting to sell directly to ILI's customers. ILI views direct mill sales as a threat to the wholesale lumber market. The industrial market is faced with similar issues. Again superior logistics and ability to meet specific customer needs in a flexible manufacturing environment are critical.
ILI has a minimal web presence at this time, limited mostly to corporate public relations information (such as "who we are" and "what we do"). Creation and maintenance of the Internet site is outsourced and is hosted on a third-party's web server. A minimal listing of products is provided on the web site, but no listing of the markets served. A number of competitors have viewed the Internet as a way to gain market share and are aggressively pursuing the development of business-to-business electronic storefronts. The storefronts will allow customers to place an order or specify their requirements and receive a bid within 24 hours. Large customers are using an "auction" web site to determine the low bid for commodity products. ILI will need to compete by providing bids in this market. In short, ILI needs to develop an e-business strategy that will allow it to, at a minimum, preserve market share and, ideally, improve market share and profitability.
ILI has two primary types of suppliers, the mills and "other suppliers," who provide the materials needed to convert the raw wood into value-added products. Some of these suppliers are starting to employ EDI and bar coding for the products shipped to ILI. Unfortunately, most are investigating but none have implemented anything resembling JIT or other logistic management practices.
ILI Organization
ILI follows a decentralized management approach. There are four purchasing offices (in addition to the purchasing handled at corporate): East, Southeast, Southwest, and Far West. These purchasing offices serve as de facto regional headquarters. They purchase all the raw lumber that is processed by all the plants based on the processes described before.
There are six plants in the East region, five plants in the Southeast, six in the Southwest, four plants in the Far West, and six in the Midwest. The Midwest plants report directly to corporate. A listing of plant and regional purchasing center locations appears as Table 1. Not included in the list is a Mexican plant planned for operation in two years. The exact location of the plant has not been finalized, and negotiations are ongoing with Mexican officials. Also planned is at least one...
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