Scenario
Herald’s is a small specialty grocer that was doing well financially until recently. Customers shopped at Herald’s because it was stocked with hundreds of items that could not be found at the superstore grocers. The check out process was also unlike what you would find at the superstore grocers. Herald’s did not accept credit cards. It still used a very primitive form of check out and record-keeping. Prices of items were listed on the merchandise and were manually punched into the cash register. Lately however customers have been complaining of the lengthy check out process and the limited payment methods. Sales have been steadily declining over the last 12 months. And keeping track of inventory has proved more difficult too, as each store kept track of stock orders and inventory differently.
Senior management (led by Mr. Herald) knew it was time to convert their check out process. In fact, one of Mr. Herald’s friends had recently experienced a similar transition to a new IT checkout system and had explained all of the features and capabilities of his new system to Mr. Herald. Automating their merchandise systems saved them time and money. They cut down on their paperwork and were able to reach out to more suppliers. Mr. Herald was excited about this new automated scanning process which would include an IT inventory-control system and scanning software.
Your Role
You are one of Herald’s leading store managers and have found a number of ways to be more efficient and effective in the past three years. Senior management recognizes you are always up for a new challenge and therefore they have tasked you with locating and procuring a company who specializes in inventory-control software and scanning equipment. You have located a number of companies who can offer you inventory-control software and scanning equipment. And you actually have had the opportunity to sit down with the company that helped Mr. Herald’s friend. Through that interview process, you now have a clear understanding of the steps needed to automate Herald’sinventory and have written a pretty thorough scope of work.
You are now at the point of issuing the request for proposal, but you are trying to figure out which contract pricing structure to use.
Key Players:
Robert Collins
Finance Manager – You have been given a healthy budget by senior management to complete this project. They want a comprehensive product and are not willing to cut corners to get it. All that said, don’t forget what senior management said at our monthly review meeting last week. Do not go over budget! They want limited cost risk exposure on this project.
Lisa Hunter
Vice President of Marketing and Public Relations – The work schedule is important to senior management. We cannot wait too many years for this system to be implemented. We have given you exactly one year from today to get this system in place and tested. And of course, if you can get the system in place, the sooner the better! Just make sure that all the bugs have been worked out and that the system is a good one. We want something that is going to last and make our customers and employees happy. Here at Herald’s we always emphasize quality and our customers will expect no less from this inventory control scanning system.
Andrea Gold
Assistant Store Manager – I know this is a fun and exciting project, but don’t forget about your own store. You still have to manage it. I cannot pick up all the slack and we cannot let this store’s sales decline. Our store is one of the only ones still doing really well. So listen, you cannot devote too much time and energy to the inventory scanning software project. In fact, it would be great if the only oversight you had to provide was making sure everything stayed on track. I cannot imagine if you had to review detailed invoices and keep track of multiple payments!
Mark Sansone
Office Manager – Man, this project sounds cool. I am in the middle of working on my own IT program that handles the payroll of our employees and the invoicing and payments to our suppliers. I am about six months away from rolling out the program, but I hope when I do it will integrate nicely with your inventory control system. And if not, don’t worry I’m sure we can work together with your guy to make that happen. I don’t really have a budget for that type of thing, but gosh, IT companies are always looking to add new work to their portfolio! And besides, senior management told me that the two systems better communicate with each other so we’ll just figure it out as we go!
Assignment
Given the scenario, your role and the information provided by the key players involved, it is time for you to make a decision.
You can return and review this scenario again at any time.
YOU DECIDE
Activity
You decide–Which contract pricing structure would you use and why? Consider such issues as:
- Project complexity,
- Definition of scope of work,
- Incentives to emphasize quality, schedule, and performance,
- Risk sharing, and
- Out-of-scope work and scope changes.
0 comments