ShopKo and Pamida: Systems Triumph or Tragedy?
1. Evaluate the role of information systems in the way ShopKo and Pamida run their business. How important are they?
ShopKo’s information system help determine the price markdowns for overstocked items. The determination of the price is by the clearance price from the previous year which did not help the company’s financial struggles. The company did not have the demographic information of the different ShopKo’s stores it had as an item could be more popular in one city, but not another. This information system became ineffective and costly to ShopKo. The new system helped the company price its products based on various factors, including season, geography, local tastes, and historical demand. All item markdowns were optimized to each store rather than the entire system determining these for all stores. These help the company increase their profit and decrease the need for human labor.
For Pamida’s their strategy was to maintain a high stock rate and its weakness was that stores were usually out of stock on items in the store, but not the warehouses. Pamida maintain a high number of items in their warehouses and their software was not efficiently communicating with the stores. These helped decline in the company’s profit by millions of dollars, and lawsuits were filed by shareholders. The current technology for Pamida was not communicating effectively therefore the inventory was high in the warehouse and low in the stores.
2. Evaluate the importance of Pamida's distribution center consolidation project for both Pamida and ShopKo. What management, organization and technology factors prevented Pamida's new distribution center from working successfully?
Was to consolidate the distribution center from Pamida and ShopKo. Their primary goal was to established a distribution center that will permit Pamida’s store to successfully maintain a high in stock rate than in the warehouse. As for ShopKo goal was to expand the Pamida store into small towns, and the distribution center was key to achieving this objective. One of the challenges was to move Pamida’s distribution to a full service facility. Also the technology was outdated Catalyst, International warehouse management software and the mainframe systems. Unfortunately, the CIO assumed that the existing technology would satisfy management objectives because the technology had worked fine in the past. The case points out that the existing technology was inflexible and required the new distribution center to conform to the technology, as opposed to having the technology support the new management and organizational requirements.
3. Are ShopKo and Pamida using information systems effectively? Why or why not? How much value do their systems provide to the business?
Before their systems were ineffective for their company which did not help ShopKo place to correct markdowns according the demographics and sales, furthermore, Pamida was unable to keep their stores stock as all their warehouses had the necessary inventory the stores needed to sale. The system is vital for this company when the systems was improved and aligned with management objectives, the information systems enabled ShopKo and Pamida to achieve objectives and earn a profit.
4. If you were the CEO of ShopKo, how would you have addressed the problem? If you were the CEO of Pamida when it was purchased by ShopKo, would you have recognized the problem? Explain. How would you have solved the problem?
As the CEO of ShopKo, one should recognize that the consolidation project required changes in the information systems for both companies as well as examining the management team. The functions of a company usually rely on the success of the employees or failure. At this point I would have addressed the problem for ShopKo to the new CEO for a smooth transition. As the new CEO for ShopKo and Pamida it was imperative to have the companies communicate with each other through a information system that will allow both the warehouse and the stores know what stores need what items replenish? This helps the profit increase as each store is different from the other. My protocol would be check the Information system how can it effectively communicate and adapt to demographics and sales, next is evaluate the employee team in each store, and audit each store.
5. What management challenges does this case study illustrate? Explain your answer.
Both ShopKo and Pamida face management challenges, including strategic business, information architecture and infrastructure, information systems investment, and responsibility and control challenges. Both companies were in desperate need of new Information system investment. The informational system is high demand with the communication break down with both companies. The management team needs to be evaluated as an information system is vital to the company, and very little action is taken to make the switch. The information architecture and infrastructure was not working correctly as there were loss in both places. ShopKo was low in profit due to the lack of demographic and sales evaluations for each store and taking action to place the same items on clearance in all stores. Pamida made good sales but had many empty shelves and most of the inventory in warehouses. With the profit lost it was evident that management needs to be restructuring for increase the acceleration for profit increase and not decrease.
No comments:
Post a Comment