Final assignment submission

Module title Operations and Information Management

Student full name Le My Hanh

University of Salford
@00756897
Student ID

Date 05 May 2024

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Executive summary

In order to realizing its objectives for global expansion, Alphaco, as a medium-sized company that
produces high-quality handmade furniture, need to improve its operational processes in terms of
capacity, quality, supplier and customer relationships. In doing so, the company might consider
taking advantage of some of the Industry 4.0 technologies and other technological innovation in the
market. The report explores the new operational objectives’ trajectory towards internationalization
and gives recommendation on the application of information systems innovation to support the
process.

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Table of Contents
Executive summary................................................................................................................................2
List of figures.........................................................................................................................................4
List of tables..........................................................................................................................................5
Strength, weakness, opportunity, and threat (SWOT) analysis..............................................................6
Strengths...........................................................................................................................................6
Weaknesses.......................................................................................................................................6
Opportunities....................................................................................................................................6
Threats...............................................................................................................................................6
Capacity, quality, and supply chain management in internationalization..............................................7
Capacity management (CM)..............................................................................................................7
Quality management.........................................................................................................................8
Supplier and customer relationship management.............................................................................9
Business Process Model for SCM improvement...................................................................................11
Enterprise Resource Planning (ERP) evaluation...................................................................................14
Industry 4.0 technology adoption in SCM: Blockchain.........................................................................16
Conclusion...........................................................................................................................................17
Reference list.......................................................................................................................................18

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List of figures

Figure 1. Gap in actual and desired operations performances..............................................................6

Figure 2: Existing SCRM BPM in Alphaco.............................................................................................11
Figure 3: Proposed SCRM BPM at Alphaco..........................................................................................12

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List of tables

Table 1: Evaluation criteria of four ERPs..............................................................................................15

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Strength, weakness, opportunity, and threat (SWOT) analysis
A SWOT analysis gives an assessment of the company’s current status quo and the international
market environment to which it aims to move forward. The result supports managers to prioritize
addressing specific operations problems, in realizing its internationalization goal.

Strengths
- Alphaco has a strong reputation in the domestic furniture industry, owning great trust and
confidence from customers, as most of them have been purchasing its products for a long
period of time.
- Product quality constantly meets customer satisfaction as they keep coming back for re-
purchases. This also means that the company possesses the technology and knowledge to
produce high-quality products.
- Their suppliers are reliable and competent who can deliver materials up to quality standard.

Weaknesses
- Low dependability and speed in fulfilling new orders; lead time can be over four weeks due
to incapabilities in making good demand forecast.
- Limitation in flexibility to changes in the market and customer demand.
- Weak connections with local supply chain partners due to the company’s lack of proficiency
in demand and supply management.
Opportunities
- The rapid trend of globalization, the presence and wide adoption of Industry 4.0
technologies have bridged the physical distance between international businesses and
provided businesses with various digital solutions for productivity and profit growth.
Threats
- Customers become more cost-sensitive due to rising inflation and the impact of COVID-19
pandemic.
- Customers become more demanding in product quality (Christopher, 2011; Piercy, 2009)
and timely delivery (Mentzer et al., 2001).

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Capacity, quality, and supply chain management in
internationalization
Based on the SWOT analysis and operations management theory, a relative comparison between
Alphaco’s actual and desired performances is displayed in Figure 1. The company is achieving
optimistic quality and dependability performances; therefore, the new quality strategy should focus
on repositioning while maintaining consistent delivery of high-quality product even in the foreign
market. Meanwhile, notable gaps in speed, cost, and flexibility objectives are recognized, implying
the new capacity, supplier and customer management strategies should emphasize on effectiveness
and improvement, rather than maintenance.

Figure 1. Gap in actual and desired operations performances

Capacity management (CM)

Capacity is a significant determinant of cost (Anil Kumar & Suresh, 2009). When the production
capacity is below the demand level, the company fails to meet the highest possible demand, which
means underutilization of capacity and consequently high unit production cost (McNair &
Vangermeersch, 2020; Slack et al., 2022). Effective CM bridges the gap between market demand and
capacity, so the company could make the most capitalization on their internal capabilities and
resources, minimize wastes, and save costs from running idle resources (McNair & Vangermeersch,
2020; Sabet et al., 2020; Slack et al., 2022).

To maximize capacity effectiveness, Alphaco must have an accurate forecast of market demand (Anil
Kumar & Suresh, 2009). This allows managers not only to make timely decisions on the production
levels required to satisfy different demands at different times (Slack et al., 2022), but also diminish
their vulnerability to sudden market changes. Insights on customer demands increase visibility of
future orders, which can have positive implications on shortened lead time (Sabet et al., 2020). In the
long run, effective CM generates advantageous change in corporate competitive advantage through
closing the gaps towards the desired cost, speed, and flexibility performances (Olhager et al., 2001).

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Quality management (QM)
As explained earlier, what is required in the new QM strategy is to maintain consistent delivery of
high-quality products in the new market. This objective covers not only quality control but also
quality assurance. In this context, the total quality management (TQM) concept is a recommended
approach.

Compared to traditional QM which mainly focuses on final inspection for errors before product
release, TQM is a more integrative and comprehensive approach. Its principles are to prevent the
mistakes from occurring, and when mistake happens, to treat it at source for the best work quality to
be transferred to the next step (Heizer et al., 2017; Oakland, 2014; Slack et al., 2022). TQM therefore
can provide the benefits of improved final product quality and continuous quality creation in all
functions. This is significant to Alphaco when its brand image is determined by the level of product
quality. Furthermore, studies have shown that TQM has positive influences on sustainable corporate
competitive advantage and market differentiation, especially in fierce international competition
(Heizer et al., 2017; Reed et al., 2000; Valmohammadi, 2011).

Total quality from creating customer satisfaction

Different groups of customers have different expectations from the product; hence they define
quality differently (Foster, 2017; Heizer et al., 2017; Oakland, 2014). In establishing quality objectives,
TQM emphasizes the importance of customer’s opinion and the variability in their perception (Slack
et al., 2022). This consequently drives quality improvement, innovation in product design, solid
customer satisfaction rate (Christopher, 2011; Foster, 2017; Slack et al., 2022) and improved market
position (Reed et al., 2000). In doing so, a customer-centric quality-oriented goal for all departments
must be established, despite them having different priorities and functional objectives (Oakland,
2014; Reed et al., 2000; Slack et al., 2022).

Total quality from building company-wide quality culture

TQM has been proved to enhance corporate performance and production efficiency (Chen et al.,
2020; Foster, 2017; Lepistö et al., 2022; Oakland, 2014) by making QM become a responsibility of all
functions. It propels everyone to do things right the first time to save the company from wasting
resources, cost, and time to repair the errors (Foster, 2017; Oakland, 2014; Slack et al., 2022).
Consequently, TQM could shorten expected lead time, avoid damage to the company’s brand image,
and eventually decrease the current rate of cancelled orders to obtain more profits.

Company-wide quality competencies are vital for quality assurance (Foster, 2017; Slack et al., 2022).
Relevant training for staff at all levels should be provided to build stronger capacity, heighten staff
awareness towards quality orientation (Reed et al., 2000). Clear, effective, and accurate flow of
information across the company is also required to enable efficiency and quality achievement
(Oakland, 2014; Reed et al., 2000; Slack et al., 2022). Furthermore, TQM would not be feasible
without commitment from top management to create a working culture that focuses on quality
delivery yet is stress-free for everyone to learn from their mistakes, raise feedback and innovation
ideas (Chen et al., 2020; Foster, 2017; Oakland, 2014; Reed et al., 2000).

Supplier and customer relationship management

Instead of focusing on sales promotion and cost reduction, conventional supply chain management
(SCM) concept places greater priority on building long-lasting and meaningful relationships between

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supply chain (SC) shareholders (Christopher, 2011; Gattorna, 2015). Applying this approach, Alphaco
could overcome the struggles in maintaining relationship with suppliers and customers, thereby
achieving profit growth through superior customer value creation (Lambert, 2010; Piercy, 2009;
Taghipour et al., 2022) and higher market differentiation and competitive advantages (Christopher,
2011; Gattorna, 2015).

Customer relationship management (CRM)

Applying the SCM concept, the company must put customer demand as the primary driver of the
production process (Christopher, 2011). From a marketing perspective, being customer centric is
strategically significant since losing an existing customer is often more costly than gaining one new
customer (Lambert, 2010; Oakland, 2014; Foster, 2017, Slack et al., 2022). In addition, sustainable
customer retention has been proved to significantly impact profit growth (Kassem et al., 2022;
Lambert, 2010). Henceforth, effective CRM requires managers to put a strong emphasis on customer
loyalty, which could beachieved most effectively by maximizing superior customer value (Peelen &
Beltman, 2013). However, in optimizing customer satisfaction, the company still needs to remain
strategic by considering its capacity availability and sustainable profitability (Peelen & Beltman, 2013;
Sánchez-Gutiérrez et al., 2019).

SME’s ability to create more customer value could be elevated by advancing their relationship
management and marketing innovation capabilities (Sánchez-Gutiérrez et al., 2019). Managers need
to comprehensively understand customer needs (Peelen & Beltman, 2013; Sánchez-Gutiérrez et al.,
2019), how those needs change and how to dynamically respond to the changes (Lambert, 2010;
O’Cass & Ngo, 2012). In doing so, regular and meaningful engagement with customers is crucial
(Christopher, 2011; Gattorna, 2015; Peelen & Beltman, 2013; Sánchez-Gutiérrez et al., 2019). Thanks
to the Internet of Things and technological advancement, the company can choose to interact with
customers strategically through various communication channels (Peelen & Beltman, 2013) such as
social media, websites, etc., enabling just-in-time flow of information and consequently reduced lead
time (Foster, 2017).

Managers also need to be able to translate the knowledge of market demands into product design
and development to create the offerings that could best satisfy the customers (Sánchez-Gutiérrez et
al., 2019). This marketing innovation capability would be a key source for market differentiation and
flexibility advantages (O’Cass & Ngo, 2012). Lastly, customer value creation would not be feasible
without the synergized effort and involvement of all internal departments, from the front (sales,
marketing, etc.) to back office (human resources, accounting, etc.) (Chang et al., 2014; Chen &
Popovich, 2003; Lambert, 2011; Peelen & Beltman, 2013).

Supplier relationship management (SRM)

Internationalizing SMEs often struggle with the liabilities of foreignness due to their limitations in
resources and knowledge compared to established firms in the foreign market (Al-Tabbaa & Zahoor,
2024; Brouthers et al., 2015; Lu & Beamish, 2001). Studies have shown that they could overcome
these limitations by forming strategic collaborations with local firms (Dominguez & Mayrhofer, 2018;
Tabbaa & Zahoor, 2024; Lu & Beamish, 2001). Alphaco could take benefits from these alliances by
leveraging the partners’ superior expertise on the local market (Al-Tabbaa & Zahoor, 2024; Baihaqi &
Sohal, 2013; Brouthers et al., 2015) to promote innovation (Piercy, 2009), and create higher value
outputs at lower costs (Christopher, 2011; Heizer et al., 2017).

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SCM principles place importance on viewing SC shareholders as partners, not rivals (Christopher,
2011). In today’s market, competition is now no longer among firms but among the whole supply
chains (Baihaqi & Sohal, 2013; Christopher, 2011; Heizer et al., 2017; Li et al., 2006; Prajogo et al.,
2018). As a result, Alphaco’s internationalization success will rely heavily not only on its performance
but also the performance of its SC (Al-Tabbaa & Zahoor, 2024; Christopher, 2011; Nyaga et al., 2010).
Studies have shown that close relationship based on good will, instead of confrontation and caution
attitude, is a major mediator for enhanced SC performance and mutual gain for all parties involved
(Baihaqi & Sohal, 2013; Heizer et al., 2017; Li et al., 2006; Nyaga et al., 2010; Oakland, 2014).

According to Prajogo et al. (2018), effective SC performance is driven by effective external process
management which is characterized by the configuration of processes between SC firms. In addition,
joint activities, as a trust-building tool between SC members (Nyaga et al., 2010), have been found to
propel the superiority of not only the internationalizing SME’s performance (Lu & Beamish, 2001) but
also that of its whole SC (Baihaqi & Sohal, 2013).

In implementing joint activities, open information, instead of secrecy, is the requisite (Lewish, 2006).
Active, transparent, and high-quality communication reinforces trust between SC members (Baihaqi
& Sohal, 2013), facilitating accurate and seamless flow of materials, thus ensuring no disruption in
the production process (Oakland, 2014), and diminishing lead time (Slack et al., 2022). SC partners
together could then provide faster response to unexpected market changes and diverse customer
demands, which generates positive impacts on the SC dependability, flexibility, and competitive
position (Lewish, 2006; Nyaga et al., 2010; Oakland, 2014; Prajogo et al., 2018; Taghipour et al.,
2022).

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Business Process Model for CRM improvement
The Business Process Model and Notation (BPMN) might be the most dominant method in business
process management (Leopold et al., 2016; Tomaskova & Weber, 2020). Henceforth, to close the gap
between the current and proposed customer relationship management (CRM) strategies, two
corresponding BPMN models have been developed as in Figure 2 and 3, respectively.

According to Lambert (2010), effective CRM includes four processes: customer segmentation,
relationship management, performance measurement and controlling actions. The same idea was
presented by Kassem et al. (2022), only in different terms as “Listen, Prepare, Act and Measurement”.
Regardless of the names, they share the common idea of starting CRM processes with learning about
customer demand and requirements. The idea was also shared by Foster (2017) and Slack et al. (2022).

However, this first step could be seen missing in the current operations of Alphaco. Empirical and
theoretical studies have proved the profound impact on company benefits of being customer centered,
as discussed in the above sections. It is then recommended for Alphaco to consider improving its CRM
processes by starting market research activities to gain a better understanding of their customer
demands. From the acquired knowledge of customers, the company could develop an appropriate
capacity and production plan, to prepare beforehand and provide better and faster responses to the
coming orders, instead of passively waiting for the new orders to arrive. A better production plan would
also enable Alphaco to coordinate with raw suppliers on preemptive orders more smoothly.

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 Figure 2: Existing CRM BPM in Alphaco

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 Figure 3: Proposed CRM BPM at Alphaco

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Enterprise Resource Planning (ERP) evaluation
ERP is a tool that is widely used by companies of all sizes to overcome operational challenges in
terms of effective communication and business process integration, not only within the company
boundaries but also with strategic partners (Baihaqi & Sohal, 2013; Gómez-Llanez et al., 2020). ERP
therefore could be an effective contributing solution for Alphaco to achieve its global expansion by
increasing supply chain visibility, upgrading market demand forecast capabilities, and facilitating
information sharing (Chen & Popovich, 2003; William & Tjhin, 2021).

Based on the selection criteria suggested by Yulianto et al. (2020), Shouhong and Hai (2014), we
evaluate four common ERP software: Odoo, OpenBravo, SAP Business One, and Oracle NetSuite, as in
Table 1. Among which the two formers are open-source software (OSS), and the remaining two are
commercial systems. Based on the evaluation, recommendations on the most suitable ERP in the
context of Alphaco will be given.

Criteria 1: License cost

Licensed ERP is often more expensive than OSS, especially to SMEs (Gómez-Llanez et al., 2020;
Wanchai, 2019). Moreover, the failure rate in ERP implementation has been reported to be
considerately high, and many companies report facing lengthy struggles and financial risks (William &
Tjhin, 2021). Henceforth, in the context of Alphaco which is lack of technological infrastructure and
information systems capabilities, an OSS ERP might be a more ideal option.

Criteria 2: Range of operational processes covered

Despite being an OSS, Odoo covers an extensive range of functionalities in its software including
sales and marketing, human resources, finance and accounting, SCM, TQM, manufacturing, etc., as
similar to Oracle Netsuite and SAP Business One. A wide coverage is operationally beneficial as it
could streamline all business processes in one single platform, providing ease in the integration
process and data access for all partners. On the other hand, Openbravo possesses a limited number
of provided modules, which restricts the number of processes a company would want to use and
integrate (Gómez-Llanez et al., 2020).

Criteria 3: User-friendliness and compatibility with the corporate strategies

From the assessment of Gómez-Llanez et al. (2020), Odor is the most user-friendly among all OSS. A
user acceptance test (UAT) has shown that most employees in the company who deployed Odor
found the new system relatively easy to use and face little challenges in the changing business
environment. Another survey found that OpenBravo was reported as complicated to use and
requires the company to have extensive infrastructure for the implementation.

Criteria 4: Scalability and customization capability

Odoo and SAP Business One claim to design their systems most suitable for SMEs, while the other
two suppliers claim their solutions could fit in companies of all sizes. Odoo, SAP Business One and
Oracle Netsuite take pride in their capability to provide customized packages to clients that could
lead to enhanced flexibility and lessened technical difficulties while implementing.

Criteria 5: Supporting and maintenance services

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Odor, SAP Business One and Oracle Netsuite also provide training and education programs for users
which are easy to access on their website and available upon specific requests from clients.
Compared to OpenBravo, Odoo operates its customer support system more effectively through
making frequent updates and bug corrections (Gómez-Llanez et al., 2020) and building an active
community platform where clients can receive assistance from other users and from the staff
directly.

Table 1: Evaluation criteria of four ERPs

SAP Business
Oracle NetSuite Odoo OpenBravo
One
Implementation Free with paid
High High Free
costs option
Operational Limited (target
Extensive Extensive Extensive
processes covered retail business)
User-friendliness and
High High High Moderately
compatibility
Scalability and
customization High High High Moderately
capability
Supporting and
maintenance Excellent Excellent Good Limited
services
The table is created using information from Odoo (https://www.odoo.com/), SAP Business One
(https://www.sap.com/sea/products/erp/business-one.html), OpenBravo
(https://www.openbravo.com/) and Oracle NetSuite
(https://www.netsuite.com/portal/products/erp.shtml).

Considering the context of Alphaco and the evaluation of the above ERPs, it could be concluded that
Odoo is the most suitable option, in terms of costs and technical benefits it could bring to the
company.

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Industry 4.0 technology adoption in SCM: Blockchain
Blockchain is an Industry 4.0 technology solutions that offers strategic effectiveness improvement for
companies, especially SMEs, to overcome SCM difficulties (Kopyto et al., 2020; Srhir et al., 2023). In
the context of Alphaco’s new strategy, Blockchain is believed to provide the benefit of minimized SC
complexity, increased data transparency and traceability, and promoted transition towards
sustainable supply chains. Moreover, studies have suggested that SMEs adopting blockchain
technology can easily receive funding from worldwide investors (Rejeb & Rejeb, 2020).

Blockchain can lead to disintermediation, in which the supplier and buyer can connect without the
intermediates, thus alleviating inefficient procedures and related overhead costs, improving SC
visibility and overall performance (Fernando et al., 2021; Kopyto et al., 2020; Rejeb & Rejeb, 2020).
The technology also drastically boots inter-firm business process integration along SC (Rejeb & Rejeb,
2020), which then allows SC members to trace information in a more timesaving and efficient
manner (Kopyto et al., 2020). For example, using Blockchain platform, Alphaco could quickly access
inventory data to verify the stock of relevant raw materials of its partners, eventually reducing lead
time to the market.

Another advantage of Blockchain is data security and transparency. In blockchain-based SCs, data are
stored in blocks following a set of computational algorithms which makes them traceable,
impregnable, and unchangeable (Fernando et al., 2021). This increases data visibility between SC
partners and ensure them that their data is secured from hackers and other competitors (Kamble et
al., 2020; Yadav & Prakash Singh, 2022). Thanks to the benefit of information transparency,
Blockchain users are encouraged to conduct transparent business practices, avoid misinformation,
deception, and the use of manipulated data (Fernando et al., 2021; Kamble et al, 2020; Kopyto et al.,
2020), which overall helps relieve trust issues along the SC (Rejeb & Rejeb, 2020) and improve SC
performance (Mentzer et al., 2001).

The technology is also suggested to “poses a shift in the development of SC sustainability” (Rejeb &
Rejeb, 2020). Companies and customers are growing concerns of the sustainability of their activities,
particularly of the massive internationalization movements (Gattorna, 2015), given the impact of
climate change and the COVID-19 pandemic (Srhir et al., 2023). Using Blockchain, Alphaco can keep a
carefully calculated track of the carbon footprint of their activities (Fernando et al., 2021), providing
foundation to their low-carbon strategies and present positive message to the public community.

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Conclusion
Global expansion poses the quest to change and innovate many operation processes of the company.
To achieve the objectives, it must work towards improved capacity management, better market
demand forecast and customer insight, assured the flow of total quality across functionals, and
strengthened strategic relationships with all SC members. The company could also leverage the
advantages of the current wide adoption of technological advancement and solutions, thanks to the
trend of globalization and Industry 4.0 revolution. Technology could serve as a tool for the company
to increase the likelihood of internationalization success. However, it should be reminded that
human resources and capabilities should be taken into the most consideration in its agenda due to
their direct involvement and being primary executors of every important process in the organization
(Chen & Popovich, 2003).

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