IFSM 301 CASE STUDY PT 1

IT Strategic Plan, Part 1

Using the case provided, analyze the business environment described to develop Part 1 of an IT Strategic Plan. Identify the business’ strategic objectives, develop an IT mission and vision for the organization, describe an appropriate governance process, and provide an inventory of the organization’s current IT projects. Your analysis will be presented in a short paper that follows the outline provided, using Microsoft Word, or in a format that can be read using MS Word.

Case Study: Wobbly Wheels (WW) Distribution Company

Overview

WW is a regional transportation and distribution company in operation for over 60 years. The company serves major cities in the Mid-Atlantic region. They are headquartered in Wilmington, Delaware and have a staff of 400 employees including truck drivers. There are 6 distribution terminals (Philadelphia PA, Baltimore MD, New York City, Washington DC, Newark NJ and Wilmington DE) for consolidating freight, and 100 delivery vehicles including 20 tractor/semi-trailer units, 40 box trucks and 40 panel vans.

The company operates in a highly competitive business environment. Growth has been stagnant because of a slow economy. John, the president of the company, would like to see growth at 5% per year. He would also like to see expenses cut by 5% to help fund new initiatives. Current revenue is about $39 million a year with profit running at 4%.

Current Business Operations

WW operates 24 hours a day, 7 days a week. Sales personnel (12 people, two per terminal) visit prospective customers to outline company capability, services provided and costs. When a customer decides to use WW they call the dispatch office with shipment information. Usually they FAX a copy of the bill (s) of lading to a terminal with information such as origin, destination, product description, weight and number of packages.

A dispatcher at a terminal makes a list of freight pickups and sends a truck to get the freight. To do this they use the routing system to determine the sequence of pickups by zip code. They use local maps within a zip code to map out the specific order of pickups since there may be several in a zip code area. They have a performance goal of 98% of freight picked up within 24 hours of availability.

A driver follows the dispatch order for pickups. Many of the drivers complain that the pickup order is not efficient. When they pick up an order they sign for receipt and either load the freight or guide the customer’s forklift operators to arrange it properly in the truck.

After freight is picked up it is brought to the terminal where it is unloaded and sorted by destination. A dispatcher then prepares a delivery ticket (again using the routing system) that is used to load a truck in the proper sequence for delivery. Some trucks take freight from one terminal to another while others make local deliveries. About half of a terminal’s space is used on any given night. Dispatchers have a goal to turn freight around in the terminal overnight for next day delivery.

When freight is sent out for delivery, the driver follows the delivery ticket order. Often they are held up at a delivery destination by traffic or by lack of available unloading space. This can cause the driver to be late trying to make the day’s deliveries. Sometimes they get to a destination and the facility is closed and they bring the freight back to the terminal for delivery the next day. It is unloaded and re-sorted by destination. The dispatchers then add it to the next day’s delivery tickets.

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The major freight volumes are between New York, Philadelphia and Baltimore (about 70% of total volume). Trucks run at about 70% of capacity between terminals overall. Local delivery volume is heaviest in New York, followed by Baltimore and then Philadelphia. Local delivery trucks operate at about 80% full while pickups fill about half of the vehicles space. Some customers pickup and/or drop freight at a terminal with their own equipment.

Truck drivers communicate with the dispatchers using two-way commercial radios. Some also carry personal cell phones and use them if the radio is out of range. A few drivers also carry GPS devices to help locate addresses. In general the drivers are content with the company. Pay and benefits are good and they get overtime pay when deliveries run late. Complaints are few and mostly center around either the sequence of pickup and delivery of shipments or vehicle maintenance.

The fleet is maintained at the main Wilmington maintenance shop and at a smaller shop in Washington. Either one can handle minor maintenance and preventative work. Only Wilmington can perform major engine and transmission work. Overall the fleet is in good operating condition. All vehicles are on a preventative maintenance schedule which places them out of service two days a month, usually on weekends. Maintenance scheduling is a challenge because it can interfere with the steady flow of shipments both between terminals and for local delivery. There are no “extra” vehicles in the fleet.

Administration

The company management team consists of the President, Vice President of Operations, Chief Financial Officer (CFO), Chief Information Officer (CIO), Sales Manager, and a Fleet Manager who is in charge of maintenance and safety. They meet weekly to discuss opportunities and issues and to plan for the future. Except for the CIO, the management team has been in place for many years

The president of the company just hired its first Chief Information Officer (CIO), Carol, after the previous IT Director retired. She comes from a nearby manufacturer who is also a major customer. At that company she was Deputy CIO and primarily responsible for network operations and security.

At a recent meeting the management team decided to change the strategic plan for the business in order to meet growth and cost goals. They highlighted three new strategies they want to employ to increase profitability and grow the business. First, they desire to provide warehousing services for customers who want to reduce delivery time to their customers by having product available locally. Second, they want to improve the percent of loaded miles in their fleet to reduce costs by coordinating the pickup and delivery of freight at the same time in the same geographic area. Third, they want to track the whereabouts of freight both in the terminals and on the trucks to provide customers with accurate delivery dates and times.

In addition, the management team wants to ensure that the company remains in compliance with all applicable federal and state regulations. The ones they are most concerned about are: (1) the Sarbanes Oxley financial audit and reporting requirements; (2) a new federal requirement to conduct a vehicle safety check every 10,000; and (3) an FCC reporting requirement on the number hours per day for each driver (or max per week, etc.). The CFO has been charged with the overall project. He has asked Carol to

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help with this effort by modernizing information systems to support the new strategies. She has decided her first step is to update the IT strategic plan to link to the new strategies in the corporate plan. Second, she wants to engage her customers in a proactive way to first, identify and prioritize IT projects that will help meet the new goals, and then develop a set of requirements for each project. Third, she wants to decide on the best approach to modernize the information systems that will meet requirements at a reasonable cost, and for this she will need to make some changes to the IT organization.

Technology

WW is using a mix of older technology products for finance and accounting, route optimization, freight tracking and fleet maintenance. There are several projects already in the IT portfolio competing for resources. The CIO sees a major challenge in balancing available funding, IT staff workload and project prioritization. The project nearest completion is the adoption of the Accurate Financials System to replace the aging finance and accounting system. It will be completed in six months. There are two other projects under way, one for management reporting and one for a mobile application that sales staff can use to show potential customers information on the fleet, distribution services available and freight rates, including a comparison to the competition.

The route optimization and freight tracking system is very important to the operations manager and dispatchers. The current system allows the input of freight origin and destination information. This is taken from a bill of lading which contains a plethora of specific information. When the dispatchers enter the origins and destinations into the system they are grouped by zip code. The dispatchers then decide which zip codes will be loaded in a truck and in what sequence for delivery. This takes several hours at night to accomplish and must be done as quickly as possible so trucks can be loaded and sent out in the morning for delivery. Arranging shipment sequence within a zip code is done by locating each address on a map and entering it into the system in the best order. Pickups are handled in a similar manner.

The fleet maintenance system contains information on each vehicle in the fleet. It includes all vehicle specifications, a summary of all repairs, a preventive maintenance schedule and an inventory of parts on hand. This information is entered by accounting clerks, mechanics, purchasing clerks and anyone else who has time to do data entry. It is not as time consuming as the routing system but it contains information critical to fleet reliability. The greatest challenge is scheduling preventative maintenance since it requires vehicles to be down for two days. The dispatchers do not want the equipment taken out of service because it causes planning headaches. The relationship between dispatchers and maintenance personnel is…