Case Study No. 1

Using Information Systems as a Business Turnaround Tool - Tam-Tam Bakers'

Tam-Tam Bakers Company name says it all. It is known for its Tam cake single-portion cupcakes, snack pies, cookies, donuts which are wrapped fresh at its bakery and sold through approximately 15,500 convenience stores and supermarkets in the eastern Africa. The Kenya -based company, which sold Ksh2800 in cakes its first day of business in 1970, rang up nearly Ksh170 million in sales in 2011.

Although Tam-Tam Bakers Company made customers smile, management and stockholders were frowning. Tam-Tam is a fairly small enterprise in a maturing business, and it saw its market share and sales dropping in the mid-1990s. In 2002, probability levels were at an all-time low, with a -4.9% operating margin. To turn the company around, Tam-Tam's new president and CEO Charles Hare introduced a new management team and strategic transformation plan.

The strategy required new manufacturing methods and new information systems. Tam Tam's existing systems were technically challenged, inflexible and posed serious compliance and business risks. Many key processes were traditional and heavily manual and the company did not have timely information for tracking manufacturing outputs and warehouse inventory shipments. Tam-Tam had to physically count all the items in its warehouse every day. Even so inventory information was still inaccurate and out of date. Shipments were missed and excess inventory had to be sold at a discount at bakery thrift stores. Tam Tam's market share and sales dropped while operating costs rose.

Much of Tam-Tam's information about sales and products comes from its network of sales distributors. Tam -Tam needed to create better connections with its sales operation to receive this information as soon as it was available. Tam-Tam new management team decided to implement a new enterprise system using software from SAP designed specifically for the food and beverage industry. Consultants from SAP and Deloitte helped the company identify its business processes and figure out how to make them work with SAP software. By limiting the changes to the software and enforcing rigorous project management standards, the company was able to implement the new enterprise system on time and on budget in nine months.

Tam-Tam was willing to make many changes in its business processes to make maximum use of the enterprise software's capabilities. It adopted Deloitte's best practices for the food and beverage industry. Tam-Tam implemented the SAP modules for financials, order entry, manufacturing resource planning (MRP), and scheduling. The system integrates information that was previously maintained manually or in separate systems, and provides real-time information for inventory and warehouse management, financial activities, and centralized procurement. It provides more precise information about customer demand and inventory that helps managers make better decisions. Since implementing SAP's enterprise system, Tam-Tam's financial condition has become much healthier. The company has reduced inventory write-downs by 60% and price markdowns by 40%. Customer satisfaction has increased, as reflected in lower return rates and higher order fill rates. Tam-Tam increased sales 11% without having to hire more staff.

REQUIRED

Q1. (i). List all the problems experienced Tam-Tam Baker's company (6mks)

(ii) In one paragraphexplain how enterprise resource planning could solve all the problems in (i) above at goal (6mks)

Q2. Identify benefits Tam-Tam drawn from new system and classify as either as either tangible or non-tangible (6mks)

Q3. Implementing Enterprise systems in organizations many times fails

(a). Explain any four things that may cause implementation of new system to fail

(4mks)

(b. Suggest a possible solution to each factor (4mks)

(c). Describe any four things in this case study that ensured success of this project (4mks)