For Your Comfort (FYC), an ergonomic furniture manufacturing company was a dream founded by Ronald J. Dirksen and Richard Woodart in 1947, the year after World War II ended. War veterans were returning home and wanted to lead a life of material comfort; FYC's trademark Easy Couch was a seller! The company expanded its line of furniture into both residential and commercial office furniture but remained largely a small-town family-owned boutique for many years. In the early 1980s, FYC introduced "mail-order" selling which increased its revenues substantially. FYC gained gradual recognition with its introduction of an "ergonomically friendly" office and home furniture line in the late 1980s and opened 2 branches in different cities during the decade. It also started sourcing timber from Canada and South East Asia and some hardware, hinges, saws, and fasteners from China. The 1990s saw FYC branch out to new territories by owning and operating branch stores. There are currently 16 stores throughout the USA with the manufacturing plant at its base. The biggest store in each city is equipped with a clearance floor, which holds items that are rejects, used returns, or items that are simply out of style but are marked down consistently until they are sold. In 1999, Ronald J. Dirksen, CEO, passed away, leaving the business to his daughter, Donna Dirksen, a smart Berkeley-educated mechanical engineer.
Donna had several challenging tasks on her hands: sorting out the operations and finances of the company; knowing her employees; riding through the recession of early 2000's; and getting the company out of the red. Before she took over, the company's sales had been slipping, and it even suffered a small loss one year due to increased competition. With Donna at the helm, the company's profitability and product line visibility grew but still functioned in an old-fashioned way. Both fixed and variable costs were very high in comparison to industry averages, and Donna had some concerns: high paper-based transaction volume; delayed processes (especially in invoicing and collections); expensive overhead costs in managing different locations (franchisees and employees), internal departments, ineffective marketing campaigns; and lack of latest technology (old POS systems and applications).
Donna, who is quite technologically savvy, has analyzed many furniture and other retail organizations which have shown remarkable profitability through a well-managed technologically-upgraded IS strategy. She wants to invest in new technologies and a sound IT strategy aligned with FYC's business to turn the company around. She has hired you as the IT leader in the organization who will spearhead the alignment of IT and business goals; capitalize on the latest emerging technologies, e-business, and IT management; and harness that information to aid corporate growth.
Deliverable Length: 4-6 paragraphs
Details: Debbie is compiling a report on business processes outsourcing, and she needs your help in recommending an IT outsourcing/offshoring strategy. As you know, FYC does do some outsourcing?they hire some on-site contractors off and on for development and installation work. Should FYC outsource more? Should FYC outsource offshore or nearshore? If yes, why and what kind of applications and infrastructure? If no, why not? What are the key pros and cons of outsourcing? Please be sure that you answer all five components.
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Should FYC outsource more?
Yes, FYC should definitely outsource more to significantly improve its operating margins and bottom line profitability. Retail sector is extremely competitive and in order to survive in this competitive retail marketplace, FYC needs to follow the trend and outsource some of its processes/ activities to outsourcing service providers. For example, it can outsource its routine customer service/ back office operations to an offshore business process organization in countries like India. The company obviously need to be extremely careful in selection of its offshoring partner as it cannot compromise on quality of its customer service and back office operations. However, a decision to outsource in a bigger manner is certainly must ...
IT outsourcing/offshoring strategy