BBQfun Operational Environment
Legislative and regulatory context
BBQ fun needs to fulfill all legal and regulatory requirements. Like any business entity, BBQfun must register its e-Commerce activity for an Australian Business Number (ABN). The business must also be registered for all other laws such as labor laws, consumer protection, intellectual property rights, and competition regulation laws. Considering that the business is to be conducted online, BBQfun must also comply with laws that protect the privacy of its customers.
Policies and procedures
BBQfun [is getting into the online market, and such one of the policies that must be developed is that on payment by customers. Should payment be made with an order or on delivery? With this kind of business, payment with order is more appropriate since it would enable BBQfun to reserve products for clients. It is also a good strategy for getting operational cash flow and minimizing the need to refund stubborn clients who would reject products they order.
BBQfun must also revamp their website and ensure that stocks are updated. This will enable the clients to know of new stocks arrival and also minimize refunds occasioned by stock-outs. Since BBQfun needs to employ more people to run the online business, its employment and staff training policy. The new employees must have the knowledge of online business while the existing ones have to undergo training to enable them to adapt to the new changes.
The role of an operational plan in achieving the successful implementation of the e-commerce strategy
The purpose of an operational plan is meant to evaluate the performance of a business. Given the e-commerce is yet to begin, the operational plan is meant to break down the tasks anticipated under the new business model. Once the tasks have been broken down, such plans act as guidelines to be followed when conducting business. For example, if the e-commerce strategy is aimed at increasing the market share by 10%, the operation plan will define how this increase in market share is going to be achieved. Is it by targeting the untapped market or competing for the existing customers? For BBQfun, I intend to use the following operational plan:
BBQfun Operational Plan (with strategic objectives, measures, and tasks) FY 2013–2014
Objectives: Performance measures Tasks:
1 Engaging with customers through marketing, research, and personalized service. ● Completion of market/marketing research.
● Completion of customer surveys.
● Completion of reports to identify marketing opportunities. ● Conduct quarterly surveys on customer satisfaction.
● Evaluation of market and marketing data to determine marketing opportunities.
2 Building a reputation for quality products and quality customer service:
● Raise organizational profile by 20%.
● Improve client satisfaction performance by 25%. ● Percentage of brand recognition in sought-after categories in periodic customer surveys.
● Percentage of customers with a positive view of organizational responsiveness, innovation, quality, ethics, safety.
● The number of customer complaints.
● Delivery times.
● The number of returned items. ● Audit of supplier quality.
● Regular contact with suppliers.
● Investigate resourcing needs: people, products.
● Fulfill resourcing and distribution needs in accordance with policies and procedures.
● Maintenance of enterprise resource management (ERP), point of sale (POS) and customer relationship management (CRM) systems.
3 Supporting people to perform via training and performance management. ● Numbers of injuries
(Target = 0).
● Numbers of absentees
(Target = <3% of total hours).
● Anti-discrimination complaints (Target=0).
● Lost Time Injury Frequency Rate (Target=2)
● Percentage completion of performance plans and performance management process.
● Numbers of coaching sessions completed.
● Numbers of operational-related training programs completed. ● Research effectiveness of possible incentives for safe work achievement; healthy lifestyle.
● Engage workers with strategic goals of the business and support professional development in line with strategic goals. (Targets to be set by individual managers).
● Management engagement with employees to achieve greater buy-in of organizational goals.
● Include an explanation of how activities work with organizational strategic goals in all communications to internal personnel.
● Regular coaching.
● Training needs analysis and training (leadership, WHS, ethical/legal training).
● Strategic goals included in the induction program.
● Employee incentives for performance in all areas relevant to operational and strategic goals.
4 Increasing sales revenue. General ledger accounts; financial statements:
● Revenue target = $11 million
● Profit target = $1,792,286 ● Marketing campaigns.
● Sales training for floor staff.
5 Reduce the direct and indirect costs of operations. ● General ledger accounts; financial statements:
○ wages
○ cost of agent services
○ consultancy fees
○ Wastage and associated expenses.
● Expense target = $5,004,714
● COGS target = $5,890,000 ● Renegotiate with suppliers.
● Research potential new suppliers.
● Research new distribution possibilities, such as e-commerce/delivery.
● Management engagement with employees to achieve greater employee support for organizational goals.
● Greater use by managers of budgets to encourage restraint.
● Greater focus on budget restraint in the management of projects/activities.
● Inventory management through ERM to reduce overstocking and risk associated with storage.
● Incentives (as part of manager/employee performance management and bonus system).
Physical resourcing
Milestone: Action and/or objective
(to achieve strategic aims of physical or human resourcing) Date Person responsible Budget or resources
(where applicable)
Redeveloping the website 31/03/2014 IT consultant
Configuration of new infrastructure 31/08/2014 Operations manager
Purchase of new assets 31/07/2014 Finance manager
Compliance with legal and regulatory requirements 31/03/2014 Corporate affairs manager
Hiring and training of staff 30/06/2014 HR manager
Necessary consultations
• The Sales and Marketing Manager to discuss human resourcing requirements with the HR manager.
• The IT consultant to discuss with the finance manager physical resourcing requirements related to the development of e-commerce website
Balanced scorecard
KRA (key result area) Target KPI (key performance indicator) Result
Organizational reputation Building reputation for quality products and quality customer service ● Raise organizational profile by 20%.
● Improve client satisfaction performance by 25%.
Staff satisfaction Supporting people to perform via training and performance management ● Numbers of injuries
(Target = 0).
● Numbers of absentees
(Target = <3% of total hours).
● Anti-discrimination complaints (Target=0).
● Lost Time Injury Frequency Rate (Target=2)
Revenue and profits Increasing sales revenue and profits ● Revenue target = $11 million
● Profit target = $1,792,286
Cost Reduce direct and indirect costs of operations ● Expense target = $5,004,714
● COGS target = $5,890,000
Risks
● High risk of staff misunderstanding changes and considering online sales as a threat to jobs
● Medium risk of not being able to recruit fully trained online staff
● Low risk of loss of IP relating to confidential information contained within the e-commerce strategy when employees leave the organization
● Medium risk of loss of IP ownership if a relationship with the website developer contract ceases
● Low-level risk of not complying with WHS legislation through lack of risk assessment conducted on potential musculoskeletal disorders resulting from poor customer service workstation design
Resources Proposal
The following operational costs are associated with e-commerce business strategy.
Costs: e-Commerce strategy (initial investment)
Resources Costs
Plant and equipment ● Delivery trucks $50,000 x 6 = $300,000
● Forklifts $10,000 x 3 = $30,000
Promotional costs $300,000
Website developers $100,000
Staff training Online customer service training $3,000 per staff member = $24,000
Recruitment costs $30,000
Management change leadership training for store managers and team leaders $3,000 each = 1 Brisbane store manager, 4 Brisbane team leaders, 1 Gold Coast store manager and 3 Gold Coast team leaders x $3,000 = $27,000
Warehouse and office reconfiguration $50,000
Total $861,000
In addition, ongoing staff costs will be incurred.
The expected life of the initial investment is expected to be three years.
Costs: e-Commerce strategy (ongoing)
Resources Costs
Additional staff: (At $40,000 year average annual salary)
• 4 online staff 4 x $40,000 ($160,000) per year for 3 years = $480,000
• 4 warehouse staff 4 x $40,000 ($160,000) per year for 3 years = $480,000
• 6 delivery drivers 6 x $40,000 = $240,000 per year for 3 years = $720,000
Total $1,680,000
The following expenses should be incurred in the 2014 financial year and be included in associated financial targets for spending:
Additional staff $400,000
Additional marketing $300,000
Additional training $51,000
Recruitment $30,000
Benefits to business
According to financial projection prepared by the CFO, the business expects the proposed strategy to be profitable over three years.
Profitability index over three years
Profitability index (PI) = Present value (PV) of future cash flows
Present value (PV) of the initial investment
PI>1 indicates the project should be undertaken
FY 2014 FY 2015 FY 2016
Cash flow from operations (minus ongoing operational costs associated with e-commerce such as additional staffing) $200,000 $500,000 $800,000
Present value of future cash flows (discounted future cash flows with respect to opportunity cost, inflation) $180,000 +$420,000+$600,000 = $1,200,000
The present value of initial investment $861,000
Profitability index 1.39
The expected additional profit for 2014 would be $200,000. This figure should be added to targets.
Risks to implementation
● Medium risk of poor online sales
● High risk of customer service quality problems for online customers leading to a breach of consumer law
● High risk of staff misunderstanding changes and considering online sales as a threat to jobs
● Medium risk of not being able to recruit fully trained online staff
● Low risk of loss of IP relating to confidential information contained within the e-commerce strategy when employees leave the organization
● Medium risk of loss of IP ownership if a relationship with the website developer contract ceases
● Low-level risk of not complying with WHS legislation through lack of risk assessment conducted on potential musculoskeletal disorders resulting from poor customer service workstation design
● Medium risk of wastage due to overstocking product in anticipation of increased online sales.
Physical resourcing
Consultation with the management team at BBQfun has provided you with the following information:
● Three website developers will bid for the contract to redevelop the existing website:
Company Bid
Ace developers $70,000
Premier Tech $80,000
Innovative Technologies $90,000
● The budget for the redevelopment is $100,000.
● Bids have been analyzed as follows.
Ace Developers Premier Tech Innovative Technologies
Factor Weight Score (S) Weighted score
(W x S) Score (S) Weighted score
(W x S) Score (S) Weighted score
(W x S)
Maintenance x1 2 2 3 3 3 3
Range of features:
● payment options
● integration with existing systems x3 2 6 2 6 2 6
Future-proofing:
● ability to be upgraded as technology improves x5 3 15 6 30 6 30
Quality:
● usability for customers x10 4 40 4 40 6 60
Total 63 79 99
Price (% of budget) .70 .80 .90
Total score/price (final assessment of bid quality) 90 98.75 110
Human resourcing
Consultation with the management team at BBQfun has provided you with the following information:
● The budget for the recruitment of four online customer service and sales representatives is $30,000. The breakdown of costs is as follows:
Advertising $5,000
Recruitment consultant $10,000
Your time $10,000
Contingency $5,000
● You now have three suitable online customer service and sales representatives.
● You have two more candidates to interview.
● The candidate is required to have the following skills and attributes:
○ enthusiastic and motivated
○ attention to detail
○ compliance with organizational requirements
○ takes initiative
○ problem solver
○ two years’ experience in online sales
○ telephone and keyboarding skills
○ ability to learn features and benefits of products to discuss with customers.
● The following skills and attributes are not strictly required, but desired:
o marketing and sales formal training
o knowledge of BBQfun’s product line
o familiarity with CRM systems.
Individual performance data
The following performance data is available for Lee Waters:
KRA Target KPI Result
Quality of online sales and service 1% error rate % of informational or order mistakes 10%
Speed of service (online) <10 minutes per interaction Average time to completion 20 minutes
Financial $30,000 sales $ sales $20,000
Professional development Participate in 2 hours of sales training per month. Training hours 0 hours
Organizational performance
Information from the Sales and Marketing Manager
A discussion with the Sales and Marketing Manager has provided you with the following information.
The Sales and Marketing Manager has been tracking progress against the following key performance indicators (KPIs):
1. Quality of online sales and service is measured in % of mistakes made by a customer service employee when providing information or making an order. The target is 1%. Currently, the rate of mistakes made is 10%.
2. Speed of online sales and service is measured in average time to resolve a customer inquiry. The target is <10 minutes. Currently, the average time to complete an online inquiry is 20 minutes.
3. Average delivery speed is measured in the average time in days from the order being made to the customer receiving delivery of the product. The target is three days from order to delivery. Currently, the average delivery speed is three days.
4. Revenue success is measured in the amount of revenue generated in dollars. The target is $300,000 in sales per quarter, which would make an $80,000 profit per quarter. In the second quarter this financial year, we generated $250,000 in revenue, providing a profit of $40,000 for the quarter.
Further to the KPIs, the Sales and Marketing Manager provides more information on each area of performance.
Quality of online sales and service:
● Staff not familiar with the product line, even after training.
● The staff does not understand CRM (customer relationship management) systems and ordering processes.
● The staff does not understand the product line. Unable to locate information.
● Poor communication lines.
● No job aids or support from management.
● No ongoing performance management as per company policy.
● Low staff morale: complaints of back pain and distractions in the environment.
Speed of online sales and service:
● Many customers abort interaction due to the length of time for order completion.
● Some extra time is taken because of a lack of skills and knowledge.
● Some time is taken because of poor website maintenance and occasional downtime.
Speed of delivery:
● A driver team leader is an exceptional motivator.
● Driver morale is high.
● Driver attendance of routine training and team briefings is at 100%.
Online sales and revenue
● Some lack of sales may be due to poor customer service.
● Sales may pick up as awareness of online option through marketing actions increases.
In terms of our key actions, we’re tracking well. The website redevelopment has been completed on time and to budget. The delivery trucks and forklifts have been acquired and put into operation on time. In terms of recruitment, the staff has been recruited on time, and the planned training has been completed.
Information from the Chief Finance Officer (CFO)
A discussion with the CFO has provided you with the following information:
The CFO has been tracking progress against the following key performance indicators (KPIs):
1. Budget success is measured in % overrun/underspend. The target is 0% overrun. Currently, there is a budget overrun of 10%. Cost overruns are due to:
○ the wastage from order mistakes and over-stocking due to misuse of the system
○ over time due to overly long customer interactions.
2. The timeline for the e-commerce project is to have the e-commerce activities implemented by 1 October 2014. Currently, the implementation is on track.
In addition to these key performance indicators, we have identified a number of risks that all need immediate action:
● The training program has not been adequate to cover the required skills and knowledge. Training has been too short and insufficient to be effective.
● Staff is unable to perform roles due to lack of support in job roles and ongoing training, coaching.
● Website downtime contributes to increased service and sales disruptions.
● Sales continue to perform under target.
On that last risk, I think sales may need to be more closely monitored. Customer needs and changing market conditions/competition may need to be reassessed and addressed.
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