Azzaz Shop’s Operations and Information Management

Business Process Models

Order fulfilment model

As a mobile phone and accessories retailer, Azzaz must streamline its activities to support process integration and respond to demand changes. The BPM workflow showing Azzaz’s order fulfilment process is shown below. The model will enable Azzaz to expedite its current point-of-sale ordering to item delivery processes.

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Order fulfilment model

Shipment process model

Since Azzaz plans to introduce e-commerce functionality, it can be assumed that the retailer wants to automate its processes to provide online ordering, support, and reverse logistics. A proposed shipment process model that can support product returns to the stores and via courier is illustrated below.

Shipment process model

Strategic Analysis for Azzaz

The strategic analysis of Azzaz using two tools, i.e., PESTLE and SWOT, will identify the firm’s internal strengths and weaknesses as well as the opportunities and threats in its external environment.

SWOT Analysis

A SWOT analysis evaluates a company’s micro-and macro-environmental factors that influence its strategic positioning in the market (Kotler & Keller 2011). The SWOT analysis for Azzaz is as summarised below.

Strengths

  1. Tangible resources – Azzaz has 11 stores in England and Norway. Brick-and-mortar outlets can support reverse logistics to improve customer experience. In addition, physical stores can optimise the visibility of the brand in this market.
  2. Low cost of sales – assuming Azzaz obtains its stocks from Asian suppliers, the firm can compensate for the shipping costs by setting competitive prices, leading to the low cost of components.
  3. Strategic leadership – Lewis, the founder of Azzaz, has grown the brand from a single store to 11 outlets in less than three years. His strategic vision has seen the firm acquire PhoneBits to drive its expansion.

Weaknesses

  1. Unstable demand forecast – the company’s sale volumes rely on the number of damaged devices. Therefore, it may difficult to predict demand in this industry compared to other industries.
  2. System incompatibilities – Azzaz’s IT systems differ from those of PhoneBits, making it difficult to achieve integrated business processes.
  3. Limited overseas presence – Azzaz’s primary market is England. It has limited visibility in the European market, including Norway, where PhoneBits had its operations.

Opportunities

  1. Skilled labour – Azzaz can utilise the skilled workforce and enhanced labour mobility in the European market to drive its business growth/expansion to Norway.
  2. B2C e-commerce functionality – the proposed e-commerce functionality provides opportunities for interactive online self-care to differentiate the Azzaz brand and raise competitiveness.
  3. New product introduction – Azzaz can diversify into other product lines through partnerships with high-end phone manufacturers, e.g., Apple. In this way, the firm will increase its market share and competitive position.
  4. Big market – the population of mobile phone users is growing each year. Therefore, the potential market in Europe is large. This means that the demand for phone accessories, including covers, will keep on rising.

Threats

  1. Stiff competition – the number of players in the phone accessories market is likely to increase with time. Thus, Azzaz will face competition from established firms in overseas markets and new entrants in these locations.
  2. Manufacturers are offering a similar service – firms such as Apple offer components to the iPhone users through the Apple retail store. In addition, Apple’s long-term warranty means that few iPhone users can purchase accessories from Azzaz.
  3. Supply chain risk – Azzaz’s suppliers may be based overseas in Asia. Customs delays during public holidays may cause shortages and affect customer satisfaction.

PESTLE Analysis

PESTLE analysis evaluates macro-environmental factors that are beyond the control of a firm (Kotler & Keller 2011). These factors affect Azzaz’s expansion efforts, as explained below.

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Political Environment

The Norwegian political forces may influence the operations of Azzaz’s two outlets. Norway is a stable monarchy that has no transnational conflicts. It is rated among the top 10 globally in the ease of doing business index and has ratified multiple accords, including the European Free Trade Association (EFTA) and the EEA (Lucintel 2013). Thus, Azzaz may benefit from the FTAs and labour mobility agreements between EU member states.

Economic Environment

The GDP in the EU and Asia is declining due to economic shocks. However, England and Norway enjoy economic stability characterised by low unemployment – 2.4% for Norway (Lucintel 2013). Thus, the global competitiveness of these countries is relatively high.

Socio-cultural Environment

Statistics indicate that the registered mobiles in England are over 50 million (Lucintel 2013). Most adults own phones for communication and internet access. At the same time, mobile phone theft is on the rise in the EU.

Technological Environment

Smartphone applications are used for e-mailing and communication. Internet use among Norwegians aged between 15 and 19 years stands at 82% (Lucintel 2013). The users utilise the internet on their devices to search cafes and restaurants through the e-catalogue portal.

Legal Environment

Norway has a robust legal system to handle labour disputes and corporate crimes. The regulatory regime, especially in the banking sector, is transparent and egalitarian with respect to Norway’s EU obligations.

Environmental Factors

Ethical corporate practices create a positive public image. Unethical practices related to personnel issues in overseas suppliers attract sanctions in the EU. In addition, environmental protection initiatives sponsored by firms are considered corporate social responsibility.

Open Source Software Comparison Table

As a medium-sized retailer, Azzaz requires open source software (OSS) to support its planned B2C eCommerce functionality. Ideal ecommerce software should support a host of business processes and integrated customer experience through multiple channels, including social media (Oracle 2012). The criteria used to compare the four ‘ecommerce’ software below include pricing, user experience, and functionality. Based on the analysis, the recommended open-source software for Azzaz is AmeriCommerce.

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Ecommerce software Pricing User experience Functionality
Amazon Webstores Retailers have the option of selling through the Amazon marketplace or via an individual site. The first plan attracts 1% transaction fee, while the second one costs 2% (CPC Strategy 2014). In addition to the transaction fee, retailers subscribed to the first plan pay selling fees and payment processing charges.
  • The site design (JavaScript) is highly customisable.
  • Integrates readily with Amazon marketplace and ads
  • Has an in-built payment processing feature
  • User support on how to set up a store
  • Inadequate marketing tools, e.g., email CRM, in-built blogs, and customer loyalty functionalities
  • Limited integration with mobile devices
  • Inadequate SEO customisation, i.e., it lacks item pages
AmeriCommerce It provides five monthly payment plans ranging between $24.99 and $299 (CPC Strategy 2014). The ‘Medium Traffic’ grade costs $149 monthly for 10,000 listed items. In contrast, the ‘High Traffic’ grade costs $299 for over 10,000 products. Other customised pricing plans exist for retailers with higher product ranges.
  • It supports scalability, i.e., retailers can upgrade or downgrade their packages depending on traffic
  • Initially, the backend was complex to navigate. However, customer complaints led to a redesign of the backend, introducing customisable graphics that are compatible with the OS of mobile devices
  • Multi-store functionality that allows multiple stores to be managed
  • Contains marketing tools, including email marketing, an in-built blog, and social engagement tools
  • Customizable design, i.e., website HTML
  • Customer support is limited (available only 8 hrs on weekdays)
Big Cartel It has a simple pricing plan. Its Titanium plan costs $29.99 per month for 300 item listings (Brynjolfsson & Smith 2000).
Requires customers to pay via PayPal only
  • Very simple to set up and use
  • Supports inventory tracking
  • Retailers can sell a range of items, including ebooks and digital products
  • Limited store size, i.e., it supports a maximum of 300 products
  • Limited flexibility (SEO customisation)
  • No customer support via telephone
  • Has a variety of design templates that supports customisation
Bigcommerce It has variable plans for retailers of all sizes. The ‘Gold’ Bigcommerce plan costs $79.95/month for less than 1,000 products and storage capacity of 5GB (Bakos 2007). Two other plans, Platinum and Diamond, cost $149.99 and $299.99 monthly respectively for unlimited product listings.
  • Robust inventory management capability
  • Free trial period (two weeks)
  • The in-built payment getaway charges an extra $0.3 for every transaction
  • Lacks an in-built blog
  • Has outdated design templates
  • Has optimised user control (SEO features)
  • Simple design process

Operations and Information Management

Introduction

This report recommends a business strategy for Azzaz, an England-based mobile phone and accessories retailer. Driven by the strategic vision of its founder, Lewis, the firm has acquired PhoneBits and plans to launch an ecommerce functionality to bolster its B2C processes. An efficient business model is required to identify and alleviate process gaps and inconsistencies for improved customer experience. Further, robust ecommerce software suite can support efficient management of the envisaged processes.

Overview of the Current Situation

Azzaz, which began as a single shop, has 11 stores currently. The retailer is pursuing a diversification strategy into other European markets, primarily Norway. Its acquisition of PhoneBits is strategic in two ways. First, from a resource-based view, Azzaz will leverage on the acquired tangible resources, e.g., two PhoneBits stores in Norway, and intangible resources, e.g., PhoneBits’ competencies, to compete in the new market.

According to Chase, Jacobs, and Aquilano (2004), a firm acquires competitive advantages through resources and unique capabilities that rivals cannot imitate. Second, the combined infrastructural capabilities will give Azzaz the capacity to launch an ecommerce platform. However, providing a unified customer experience using the existing business processes could present a challenge due to the incompatibility of the two IT systems.

A Business Process Roadmap/Strategy for Azzaz

Robust ecommerce software is required to expedite business process change and differentiate the brand. Azzaz will need to deploy integrated open-source software to manage its order fulfilment and shipment processes and workflows. To optimise the ecommerce functionality, Azzaz should deploy a software application that offers superior performance in terms of user experience, pricing/customer value, and functionality. An ideal integrated application will support automated responses, analyse market data, and manage new customer accounts (Dabaghkashani, Hajiheydari & Haghighinasab 2012).

While most applications support automation of customer-side processes, scalability is an important consideration in software choice decisions. For instance, to facilitate returns, the software that supports supervisor approval of the reverse logistics will allow timely replacement or repair of the phone or component. The BPM technology implemented in the software application will help restructure the workflows and logistics related to customer-side processes, leading to improved retail processes (Smith & Fingar 2003).

Built-in capabilities for online marketing via email, blogs, and social media will ensure customer concerns are addressed in a timely manner. Higher online activity also increases a firm’s online presence and image (Cleveland 2010). Azzaz should go for software with multi-store management capabilities. Since the retailer has 11 shops (two in Norway), effective management of in-bound and out-bound logistics will reduce the supply chain risk and increase customer satisfaction. Therefore, multi-store functionality is a desirable software attribute that Azzaz should consider.

Forecasting demand in the mobile phone accessories segment is challenging compared to other industries. Therefore, a demand/supply forecasting functionality will be useful in inventory management through “lead-to-order and order-to-cash” business processes (Melenovsky & Sinur 2006, p. 76). A BPM model can expedite the two retail processes and attain optimal turnaround time across Azzaz’s multiple shops. Further, the order fulfilment model described will enable the retailer to manage its global supply chains and avoid SC breakdowns and delays.

This model is an example of the Supply-Chain Operations Reference (SCOR) framework, which is essentially a multifaceted analytic tool for improved SC management (Rajput 2000). Thus, the model will enable the retailer to integrate its business activities with its suppliers to optimise SC efficiency. As Hajiheydari and Dabaghkashani (2011) note, retailers have to operate in “increasingly fluid markets” characterised by shocks and SC disruptions (p. 7). Therefore, efficient business processes are required to strengthen a retailer’s market presence all year round.

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Software Recommendation

The recommended software for Azziz’s ecommerce business is AmeriCommerce. The application ranks top among the software reviewed because of the unique advantages it offers in terms of pricing, differentiated user experience, and functionality. AmeriCommerce offers a broad-ranged plan to customers, allowing them to upgrade or downgrade depending on the traffic flows. Azzaz can subscribe to the ‘Medium Traffic’ initially and switch to the ‘High Traffic’ upon introducing more products.

Unlike the other three software applications, AmeriCommerce has a multi-store functionality that Azzaz could utilise to manage business processes in its 11 stores to ensure a unified customer experience. In addition, this tool comes with in-built marketing tools, including a blog. Such social media tools will enhance customer response and engagement.

Recommendations for Effective Software Implementation

Deployment of service-oriented architecture (SOA) – Azzaz’s IT systems are incompatible with those of PhoneBits. Thus, a software architecture that links all applications deployed in different shops would ensure that AmeriCommerce integrates seamlessly with current applications. SOA is an approach for interlinking disparate programs to ensure end-to-end workflows (Bradley 2008). It interoperates with IT systems, enabling the seamless implementation of applications. Thus, the retailer should first deploy the SOA architecture to support the integration of AmeriCommerce with existing business processes.

Use industry standards in business processes design– in order to have unified business processes, it is recommended that Azzaz implements retail industry standards, e.g., the “Association for Retain Technology Standards (ARTS)” that facilitates “unified payment systems” in its BPM models (Silver 2006, para. 5). Using ARTS standards will help overcome operational challenges, automate the processes, and provide consistent customer experience online and in stores.

Restructure the workflow/business processes – since PhoneBits and Azzaz have different IT systems and business models, process inconsistencies are likely to arise making it difficult to attain consistent customer experience and integrated supply chains. In addition, disjointed customer channels may hinder process automation. Therefore, the BPM technology can help restructure and optimise the retailer’s business processes to meet its expansion goals.

Staff skills – Azzaz should train its staff, especially the line managers and supervisors, on how to use the software. Staff competency in using AmeriCommerce functionalities, such as the in-built emailing tools and multi-store feature, will increase support for the process changes and minimise resistance.

Information security – the privacy of customer information entered into the system is of utmost importance. A secure system enhances data integrity, as it is less vulnerable to cybercrime. Azzaz should deploy security features, such as login passwords for users, to protect the customers and keep away hackers.

The potential implementation challenges include system incompatibility and inadequate staff skills. PhoneBit’s IT systems are incompatible with those of Azzaz; hence, providing consistent online services may be a challenge. Further, the implementation of the software will need skilled staff and an IT department to build capacity. Therefore, inadequate staff skills may be a challenge to the implementation process.

Conclusions and Recommendations

Ecommerce software has empowered customers and improved consumer purchase experience. AmeriCommerce is recommended for Azzaz as its multi-store functionality will enable the retailer to build consistent processes across its 11 shops. In addition, the software supports the integration of processes and customisation of BPM models related to shipment and order fulfilment.

References

Bakos, Y 2007, ‘Reducing Buyer Search Costs: Implications for Electronic Marketplaces’, Management Science, vol. 43, no. 12, 145-151.

Bradley, R 2008, Fertile Ground for ROI in BPM: three unlikely areas. AN SOA, BPM, Decisions Management and cloud computing guide for the Enterprise community. Web.

Brynjolfsson, E & Smith, M 2000, ‘Frictionless Commerce? A Comparison of Internet and Conventional Retailers’, Management Science, vol. 46, no. 4, 77-83.

Chase, R, Jacobs, F & Aquilano, N 2004, Operations Management for Competitive Advantage, Boston, McGraw-Hill/Irwin.

Cleveland, S 2010, BPM from a Business Point of View, business process management, Greatest Benefit from BPM, weblog. Web.

CPC Strategy 2014, Ecommerce Platform Comparison. Web.

Dabaghkashani, Z, Hajiheydari, N & Haghighinasab, M 2012, ‘A Success Model for Business Process Management Implementation’, International Journal of Information and Electronics Engineering, vol. 2, no. 5, pp. 725-730.

Hajiheydari, N & Dabaghkashani, Z 2011, BPM Implementation Critical Success Factors: Applying Meta-synthesis Approach, IACSIT Press, Singapore.

Kotler, P & Keller, K 2011, Marketing Management, Prentice Hall, New York.

Lucintel 2013, PESTLE Analysis of Norway 2013. Web.

Melenovsky M & Sinur, J 2006, ‘Having a BPM Maturity Model is Important for Long Lasting BPM Success’, Business Rules Journal, vol. 7, no. 12, pp. 71-81.

Oracle 2012, Enhancing the Customer Experience: The Promise of BPM Technology for Retailers. Web.

Rajput, W 2000, E-commerce systems architectures and applications, Artech House, London.

Silver, B 2006, BPMS watch: BPM’s evolving value proposition. Web.

Smith, H & Fingar, P 2003, Business Process Management: The Third Wave, Meghan-Kiffer, New York.

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