Office Warehouse Inc. (Part One)
Office Warehouse Inc. is a wholesale distributor for office products such as disks, stationery, file
cabinets, and more. Many business processes are involved within the supply chain, however order entry
and shipping processes would be the two most dominant. The order entry business process allows
customers to place orders of varying quantities of office products over the phone. This particular
business process contributes to organizational goals by providing a medium for customers to order
products, allows workers to easily identify, and keep track of these orders. Secondly, the shipping
process contains factors like on time delivery. On time delivery ensures the company maintains
customer satisfaction and loyalty by making sure the correct orders are delivered to customers
consistently and efficiently. Maximizing profit is an essential goal for any company, if deliveries are
consistently made correctly and on time, the company will grow at an exponential rate due to word of
mouth.
Market Segment and Operations Strategy
We identified that Office Warehouse Inc. is a whole sale distributor that provides products of ongoing
demand. Thus products are being sold in large quantities, to be retailed by others, specifically targeting
three customer segments.
1. Corporations: This particular segment is comprised of at least 30 employees, whom make
purchases for the entire organization. There are some instances where individuals in an
organization will make individual purchases.
2. Government Agencies
3. Others: In this group, we identify small companies, school districts etc.
Operation Strategy of the company involves the many processes known as the driving forces to a
company’s success. In accordance with Office Warehouse Inc, these driving forces include:
Driving Forces (Core Processes)
How it achieves objectives
Supplier Relationship Process
Employees select suppliers’ service and facilitate the timely and
efficient flow of items to the firm. Negotiates fair pricing, on time
deliveries, gain critical insights from suppliers (creating value)
Order Fulfillment Process
Produce and deliver product to external customer.
Customer Relationship Process
Identify, attract and build relationship with customers and facilitate
orders
In order to clearly identify operational strategy, we must assess how the company competes
with its competitors to gain absolute advantage. We must address issues involved with the strategic
long range (plant size, location, types of processes), tactical intermediate range (workforce size, material
requirements) and short range (jobs, equipment, inventory, etc.).
Operational Strategy is constantly changing because the company must assess corporate
strategy and modify their decisions towards managing processes and supply chains. Changes are
necessary in order to out beat all other competitors.
Nature of Output and Type of Customer Contact
Office Warehouse Inc. provides low level customer contact and practicality to the customer. Customers
simply place an order through the phone and get it shipped to them. The clerk is able to verify the
customer’s information and order to ensure that the purchase does not exceed the credit amount limit.
The nature of output of the company consists of the delivery of office supplies in a quick and efficient
matter.
Competitive Priorities and Capabilities
Competitive priorities can be identified through 6 various categories: quality, low-cost, quality,
delivery speed, delivery time, and flexibility. Companies like Office Warehouse Inc. try to succeed in all
factors and incorporate them into their strategic strategy, in order to become successful.
Below is a chart for Office Warehouse Inc. that represents Priorities against the core processes.
Priority
Supplier Relationship
Shipping Fulfillment
Order Fulfillment
Low Cost
Operations
Costs of acquiring inputs
must be kept low to allow
for competitive pricing.
Costs of shipping should
be kept to a minimum to
maximize profit.
High quality office supplies
should be delivered in
perfect condition and on a
timely-manner.
Must keep
operating costs as
low as possible.
Ensure
customer’s
validity to provide
reliable service.
Must achieve the
same quality level
each and every
time.
Top Quality
Consistent
Quality
Quality of products must
adhere to the required
specifications and be
accurate to the
information provided from
suppliers.
Delivery
Speed
Higher shipping speed to
get products to customers
is required.
On time
delivery
Inputs must be delivered
to tight schedules.
Volume
Flexibility
Must be able to handle the
variety of supplies ordered
at one time efficiently.
Customer
Relationship
Ensure customers
receive an updated
catalogue
Customers must be
provided with error
free information and
service.
Customers want
products and deliveries
to be as quick as
possible.
The warehouse makes
every effort to ensure the
office supplies are
delivered on time or they
could lose customers.
Manufacturing capabilities are characterized by the set of practices in use by the company.
Office Warehouse Inc. provides competitive prices. There are no drastic changes in prices in this market
as competitors provide the same products for similar prices; thus customers are not heavily influenced
by other competitors. They also provide fast and dependable delivery ensuring products are delivered
on time and swiftly. 95% of Office Warehouse deliveries are fulfilled, allowing the company to retain
business, yet attract new customers as well. Office Warehouse Inc. are able to make rapid volume
changes, as they transact large volumes of products daily with various clients, handling about 100 orders
per day. As the company improves its own order capabilities, priorities will be shifted towards bigger
goals which will improve the operating efficiency of the company.
Order Winners and Qualifiers
The order winner identifies what the company excel at the best in comparison to its
competitors. This can include multiple factors like price, flexibly, quality delivery speed, on time delivery
and/or development speed. We can exempt price and quality as an option, because we have justified
that the product offerings are very similar to those in the market. As a result, we decided that delivery
speed is a key order winner, because it differentiates them from their competitors. By ensuring high
speed delivery services, consumers will pay an equal amount for their products at a more efficient
delivery speed.
Order qualifiers are minimum level requirements that a company needs in order to compete
with other businesses in a similar market. For Office Warehouse Inc. the company needs to first have
the financial capital in order to buy supplies from manufacturers, buy trucks for delivery, etc. The
company also needs employees in each department (from the corporate division to the labor division).
Basic electronics such as telephones, computers to process orders.
Information System
There are many components in the company’s information system. Each customer must have a valid
customer ID that is stored within the system and displayed when an order is made by a customer. The
system displays the information to the sales order entry clerk, where information is than validated. The
information system updates data stores to keep track of all of the changing information. This process
keeps both customer and inventory information accurate. The system uses printing heavily to create
documents for associated orders.
There are four essential documents printed in the information system. The customer
acknowledgement mailed to the customer is necessary so they’re aware of their order status. The
picking ticket is used by the warehouse department to assemble the order for each customer. The
packing slip is used to send information to the customer about their shipment, and a bill of lading, is
necessary to confirm shipment of the goods. The last two documents are printed in the shipping
department and provide a record of shipment for the customer and organization.
The sales event data store is updated first when a sales order is processed by the clerk. At the
end of the day, the master data store is updated to keep track of all orders and inventory. When
shipping information has been validated, the computer calls upon the sales order and inventory master
data stores to create a record for billing. This results in the creation of a new record for the billing-due
list data store, so the company can keep track of customers that it needs to bill once orders have been
shipped out.
Revenue without Online Ordering System
Revenue with Online Ordering System
Profitability/Assessment
100 orders * 240 days = 24,000 annually
100 orders * 240 days = 24,000 annually
24,000 orders * $300 per order =
24,000 orders * $300 per order = $7,200,000 (2)
Office
Warehouse
$7,200,000 annually
= $14,400,000
Inc. makes $650 000 annually.
COGS = $7,200,000 * 0.7 = $5,040,000
COGS = $14,400,000 * 0.7 = $10, 080,000
Expenses = $300,000 + $200,000 + $100,000
Expenses = $300,000 + $200,000 + $100,000
In order for the company to
Salaries = $120,000 + $140,000 + $100,000
+$40 000 = $640 000
increase revenue, reducing
+ $100,000 + $100,000 + $30,000 +
Salaries = $120,000 + $140,000 + $100,000 +
$120,000 + $120,000 + $80,000 = $910,000
$100,000 + $100,000 + $30,000 + $120,000 +
printing cost and switching to
Profit= $7,200,000(sales) $120,000 + $80,000 = $910,000
an online ordering system is a
$5,040,000(COGS) - $600,000(expenses) Profit= $14,400,000(sales) - $10,080,000(COGS) $910,000(salaries)
$640,000(expenses) -$910,000(salaries)
must. By investing $600
Profit= $650,000
Profit= $2,770,000 – current profit $650,000
installation cost and $40,000
=2,120,000
recurring cost per year they
can increase revenue by 100%, increasing your current profit by $2,120,000 second year and on. The
600 installation cost only occurs in the first year. In conclusion, by implementing the online order
system, it will positively benefit the company as profit rises at an alarming rate.
Table of Entities and Activities
Entities
Customer
Clerk
Computer
Paragraph
1
1
1
Computer
Clerk
1
1
Clerk
Computer
1
1
Computer
Computer
2
2
Computer
2
Computer
2
Computer
2
Computer
2
Shipping clerk
3
Computer
Shipping clerk
3
3
Computer
3
Shipping clerk
3
Computer
3
Computer
3
Computer
3
Activities
1. Give clerk customer ID and name.
2. Enter customer ID into computer.
3. Retrieve customer record from
customer database.
4. Display data on screen to clerk.
5. Compare customer name to data on
computer to ensure legitimacy.
6. Enter customer order into computer.
7. Compare customer credit limit to
amount of order.
8. Create entry in sales event data store.
9. Allocate inventory in sales event data
store.
10. Record customer order in the sales
order master data store.
11. Process and compare sales event data
against customer and inventory data.
12. Print acknowledgement (for
customer) in mailroom.
13. Print picking ticket (for shipping
department) in warehouse.
14. Enter sales order number into
computer.
15. Display sales order to shipping clerk.
16. Enter shipping information into
computer.
17. Display shipping information to
shipping clerk.
18. Confirm and accept shipment
information on computer.
19. Update sales order and inventory
master data.
20. Create record for billing in billing-due
list data store.
21. Print packing slip and bill of lading in
shipping department.
1.0
Capture
Customer
Order
2.0
Record
Customer
Order
3.0
Record
Sales
Order
Context Diagram
Customer
Warehouse
Picking Ticket
Completed
Customer Order
Customer ID &
name
Customer Order
Acknowledgement
Picking Ticket
Order Entry
Process
Customer Order
Acknowledgement
Completed Order
Mail Room
Carrier
Physical Diagram
Customer
Mail Room
Carrier
Customer ID &
name
Customer
Order
Customer
Acknowledgement
Printed
Customer Order &
Acknowledgement
1.0
Order Entry
Clerk
Input
Customer
Order
Display
Customer
Account
Customer Name
Credit & ID
Order
Completed
Display
Order
3.0
Shipping
Clerk
Input Quantity
Enter Sales
Order Number
Check
Picking Ticket
2.0
Computer
Prints
Printing
ticket
Billing-Due
List
Warehouse
Customer Credit
Database
Customer
Database
Inventory Master
Database
Sales Order Master
Database
Sales event
database
Logical Diagram
Mail Room
Customer
Customer ID &
name
Customer
Prints Customer
Order
acknowledgement
Customer Order &
3.0
Acknowledgement
1.0
Customer
Order and
Verification
Shipment
Record &
Validation
Carrier
Confirm
shipment record
Record
Created
Billing-due List
Credit
Customer
Validation Validation
Customer Credit
Database
Customer
Database
Inventory
Master
Database
Sales Order Master
Database
Sales event
database
Warehouse
2.0
Record
Sales
Order
Picking Ticket
Flow Chart 1
Sales Order Clerk
Computer
Mailroom Clerk
Customer
Key in customer ID
Customer
data
store
Retrieve customer
record
Customer record
Print picking ticket
Print customer
acknowledgement
Receive picking
ticket and customer
acknowledgement
Compare
customer
data
Validate credit
information
Sales
event
data
store
Enter customer
order
Mail customer
acknowledgement
to customer
Record customer
order
Send picking
ticket to
warehouse
Allocate inventory
End of day
Process and
compare sales data
Customer
data
store
Inventory
data
store
Flow Chart 2
Shipping Clerk
Start
Received picking
ticket
Received
goods
Computer
Carrier
Sales
order
master
data
store
Retrieve sales order
information
Input sales order
number
Sales order
information
Sales
order
master
data
store
Retrieve shipping
data
Print packing slip
Input shipping info
Receive confirmed
shipment data
Print bill of lading
Receive bill of
lading, packing slip,
and order
Shipping data
Update confirmed
shipment data
Retrieve
shopping
data
Confirm
validity of
data
Inventory
master
data
Sales
order
master
data
store
Billing-due
list data
store
Ship to Customer
Office Warehouse Inc.
Part 1
Professor. Margaret Plaza
Project Number: I-03
Members:
Amy Ho 500465494
Josh Manuelpillai 500452320
Jyoti Kapadia 500447268
Michael Nguyen 500525899
Kevin Tu 500462645
Asad Khan 500449906