Given a product distributor company which is not technologically mature came across a problem where the key employees in the company will be retiring soon. Here we will discuss how the company is going to face the transition from highly loyal and experienced labor pool to a less loyal and inexperienced labor pool which is observed as present employment trend. Necessary recommendations are listed in this report to maintain their business without any major halts.
A small product distributor company is not using advanced technology in their business process which can harm them in many directions. In addition to it the key employees of the company who are there for decades are retiring soon. Company heavily relies on these people for knowledge of business operations, vendor relationship, inventory control and distribution patterns. Once these employees are retired it will be a huge loss to the company as there will be no one to continue the business flow. We will go more in details about the problems faced by the company and we will be suggesting the possible relevant recommendations to the company where they can resume their normal business flow. In our case study the major problems faced by the company can be broadly viewed as the following
1. Heavily depending upon few main employees for general business operations.
2. Using old fashion information systems (not using advanced technology for general business operations)
3. Handling the new employees after the key employees retire
Description of the problems:
Heavy dependency on few employees for general business operations:
Generally, when we observe the process patterns of old companies its all people driven. It was profitable or benefitable in those days, but time has changed new inventions happen in day to day life and researches found process driven companies may be more profitable. Here when we look into the problem it seems that the company is following people driven process because only few key people play a crucial role in the business operation of the company. They are many major problems faced by people driven companies as follows
· In people driven companies the key decisions are taken by only few main people where there is a high chance of not taking correct decisions. Any time discussing with many people gives us the polished and outstanding results which cannot be observed in people driven organizations.
· In the case study above those keys employees are present from decades in the company they might be old enough to update their knowledge, this might be one of the problem because if we are not updating the knowledge we might lose some advanced techniques which can make our work easier.
· As we see major business process in depending upon the key employees of the company if by any chance any one of them are not available for any reason there might be a halt in general business activities because other never knew how to take it forward.
· It also results in bottleneck effect where at any step if the work is been halted it results in the slowdown of entire work process.
Old and simple Information Systems:
Technology always plays a key role in pulling the market towards us. The more latest technology we use the more efficient work will be produced. In our case as it was mentioned that their information system is simple and old they might not produce the same efficient work which they used to provide earlier because the competitors might have updated the technology where this company still did not look into it. Major problems can be listed as below
· Using same old systems can not perform work more efficiently when compared to new advanced computers. For example, as this is a product distributor company if it needs to track any product information from their database and if they are using the same old computers which eventually might be having low RAM speed will take lot of time when compared to advanced computers. This eventually reduces the efficiency of the company.
· As mentioned above because of old technology it will be time consuming and the service provided might not be efficient which eventually results in losing the customers
· Retrieving the customers is always the key success for any company. If we are using the same old systems, there might be a chance where other competitor will be updating their systems and deliver best service which eventually results in losing customers.
Transition from old employees to new employees:
Once the key employees retire it will be a huge breakdown for the company to run their business smooth because the newly appointed employees might not know the procedure because it was driven by these keys people from very long time. Some major problems because of this transition can be
· Improper transfer of knowledge about the functionality of the organization
· Might not retrieve the old vendors because they trust the old employees of the company and may not trust the newly appointed employees.
Changing the process of the company:
It is very clear that the company in our case is following a people driven process. If we dig into the evidences and facts of many premier companies its clearly observed that process driven companies perform much better that people driven companies. For example, GE once was following a people driven process it was successful for very long time but eventually when all the competitors started using process driven and the results are very clear even GE shifted their process from people driven to process driven and achieved tremendous results.
On the other hand, process driven is always better than people driven process because we never relay on any individual everything goes in a dedicated process. Even if the concern person is not available all the set of rules are documented, and everything runs smooth according to the procedure. As we discussed about the bottleneck effect in the problems section even that can be minimized because we cannot see any halt of the process if every step in the process is documented. It will have its own set of rules where it will be hardly halted. The main advantages of process driven can be viewed as
· In process driven business operations carryon in a dedicated path. Every step is documented, and it is having its own way. Here we no need to depend on key employees everything has a set of rules need to be followed. The main advantage of this process is even if the work flow is interrupted because of non-availability of the key employee work flow runs smooth according to the procedure.
· Process driven helps the company to maintains its structure it prevents the slowdown on business operations
· Process driven is more efficient because here we do not depend on the employers we directly follow the procedure.
Replacing the old Information Systems with new technology:
Updated technology is always a driving factor for profits in any business. Improving the technology results in minimizing the cost and it also saves a lot of time for both customers and the distributors. Some of the major recommendations regarding the new technology is as follows
· As this is a distributor company it deals with lots of information about the products which customers buy from them. Tracking down the product and taking the customer satisfaction survey after the product is delivered would really help us to where we need to improve. For tracking down the product first we need to create database where we can reduce the search time and the status of the service. This can be done with creating database which is advanced technology.
· Distributors should deliver the goods on time. Using GPS for every vehicle and tracking the locations helps the company to deliver the goods on time and how it can provide goods service and retain the customers without losing them.
· There are lots of software companies in the market which can customize software according to our requirements. Once if the company buys a customized software according to their requirements it can save lot of time in tracking the status and we no need to worry about the key employees of the company because everything is taken care by the software and whoever joins the company it requires less time to adapt into the environment as they will get used to software to maintain a proper business patterns.
Dealing with new employees:
Dealing the transition from highly experienced employees to the newly employed employees is the major task. This transition should be handled very carefully because the business operations should run smoothly without any disturbances with high efficiency. If the customers notice any disturbances in the work flow or in the functioning of the company, they may be afraid that same service will not be provided. To deal the transition, the following are highly recommended
· Providing adequate training to the newly appointed employees is always a promising idea. For example, as discussed above if the company buys a customized software it should give training to the employees on how to use it. once the employees are comfortable with the software they no need to rely on the key employees.
· Make sure the business process does not change in this transition for this it will be advisable for the newly appointed employees to learn certain key ideas from the previous employees it will make work run smoothly in the transition with the same efficiency.
· Generally, distributor companies might stack products more than required by the customers which is called Bullwhip effect. In other words, bullwhip effect can be explained with an example if there is a demand of say 5 products from the customer side the retailer orders 8 products just in case not to run out of the stock. Retailer will order 10 products so that he will buy them in bulk finally the demand is for 5 products, but it went to 10. This is called bullwhip effect, and this should be reduced. This can be reduced by maintaining healthy relationship with the customers so that all the products will be sold out there will be no loss. This we can achieve only if we have healthy relations with the customers. As the key employees might already have good relations with the customers the newly appointed employees should learn to maintain that relation.
Finally, training the newly appointed employees with the old employees for maintaining relations with the customers and moving from people driven to process driven is highly recommended. Advanced technology is always a driving force towards efficiency updating their technology as mentioned above will be an innovative idea. By following all the recommendations mentioned above this transition problem can be resolved with maximum efficiency.