MSCI304: Developing Business Information Systems

Individual Assessment

Lent Term 2024/25

Introduction

Lush Continental is a luxury restaurant chain in the UK that offers luxury continental dishes, with locations mainly in the North of England, such as Manchester, Liverpool and Lancaster. The restaurant sources the  majority of its food produce  locally, that  is, within the  UK, through partnerships with major importers.

Lush Continental prides itself as a luxury continental restaurant, attracting mainly customers from the middle class and above. The restaurant has a website listing all the menus, locations and opening and closing hours of Lush Continental’s branches. Customers can make table reservations using the Lush Continental website. Each table reservation is free, but customers must provide their card details, where a fixed amount will be deducted if the customer cancels less than 24 hours before the reservation time. Apart from fine dining, the restaurant usually organises a buffet for corporate organisations, but reservations and payments must be made at least 48 hours in advance.

Sales were significantly impacted during COVID-19, as the government rolled out the stay-home and safe distance rule across the UK. Most businesses that require socialisation, such as restaurants and bars, were all shot down as people were advised to stay indoors and work from home.  Lush  Continental  was  one of the  many  businesses  impacted  during  this  period.  It recorded significantly low sales in the first few weeks of the pandemic, before the restaurant was forced to close its doors to customers during the stay-at-home policy.

At the peak of the pandemic, the CEO, with the support of the board of directors of Lush Continental, decided to pivot and  start home delivery across the major cities where  the restaurants were located. The CEO employed the service of a small web development company to quickly upgrade the website to an e-commerce site where customers can place orders for food and get it delivered to their address. However, this quickly turned out to be a bad strategy, as many customers complained about the food’s temperature, presentation, and taste. Fine dining restaurants do not usually offer take-out service in most cases due to the same issue experienced by Lush Continental. Therefore, to salvage the brand’s reputation, the company decided to shut down the home delivery service, innovate and re-pivot the business.

The company decided to launch Lush Fresh, a grocery company that delivers fresh groceries with instructions on how to prepare some of the Lush Continental’s top and chef choices meals. Lush Fresh established a relationship with food importers and manufacturers in the UK for supply. The new Lush Fresh website allows customers to view, select, buy and pay for groceries, which will be shipped to customers the next day, depending on available delivery slots.  In addition, there is a digital product called Lush Meal on Lush Fresh’s website, where a customer can select a Lush Continental meal, decide on how many persons the meal is to be prepared for, and the website will automatically add the required ingredients and instructions to prepare the meal to the customer’s cart. The Lush Meal was popular and generated a lot of social media buzz, hence the company decided to spend more money to promote Lush Meal.

Due to the speed at which the company needed to pivot, the web platform was not integrated with the old restaurant management system – which has been quickly modified to accommodate the new business model. Therefore, the company have to rely on the old systems used for warehouse management, including systems for managing sales, procurement and accounting processes. In the old system, data may be sent between each system using file transfers or manual inputs. All paper documents generated by the systems are pre-numbered and filed in numerical order. Each permanent staff is assigned a unique user ID, so data recorded and documents generated can be traced back to their origin. However, the risk of losing these documents is very high. This is a concern because some approvals must be done on paper, because for some processes, there is no approval workflow within these systems (i.e., no electronic approval).

Furthermore, errors in file transfers and high data entry errors could result in data held in different  departmental  systems  not  being  updated  correctly.  Overall,  this  integration  issue creates  organisational  silos  because  departments  do  not  have  adequate  means  to  share information or knowledge. Before the pandemic, they did not feel the need to upgrade as their operations so far have been quite simple, and demands have been relatively stable.

Overall, the Lush Fresh pivot was highly successful, and the company have decided to spin it out of the Lush Intercontinental brand, planning to expand to the rest of the UK and establish itself as a fresh grocery company in the UK. Therefore, the new management of Lush Fresh has called on you, as the lead enterprise resource planning system designer for your company, to help develop an enterprise system for the company to manage its grocery delivery process.

Lush Fresh aims to have an enterprise system that is not only integrated nationwide but also can be seamlessly integrated with their new Lush Fresh website to handle online grocery sales and delivery efficiently. They need to revamp their processes as well. Currently, all Order-to-Cash (O2C) and Procure-to-Pay (P2P) processes are manual processes that can be automated. For example, all customer orders are downloaded as an  Excel file by the Sales Clerk into the Accounting System, and sales orders are manually reviewed, printed and signed off by the Sales Manager. Every six-hour shift, the Warehouse staff packs goods according to the approved sales orders and processes for delivery.  Processes with other stakeholders, such as suppliers and banks,  are  also  very  manual.  Due  to  the  comparatively  low  number  of  daily  and  weekly transactions during the restaurant era, every morning, the Accounting Clerk manually uploaded bank data downloaded from Internet banking into the Accounting System.

In view of these deficiencies, Lush Fresh understands that it will not have the capacity to respond to increased online retail customers and potential market disruptions as the company plans to expand to other cities in the UK. Therefore, Lush Fresh needs an enterprise system that is not only affordable but also agile and scalable so it can adapt to changes should the business expand further to Europe.

In your first meeting with Lush Fresh’s CEO, you found out that the company has a Sales Clerk and a Sales Manager in the Sales Department, including a Purchasing Clerk and a Purchasing Manager  in  the  Procurement  Department.  The  company  has  an Accounting  Clerk  and  an Accounting manager dealing with both Accounts Receivable and Payable. One of the owners of Lush Continental is the Finance Director, who is responsible for the finance side of the company. They have four Operations Staff and an Operations Manager in the operations department. In the Warehouse, they have four Inventory Clerks who are responsible for recording and managing the movement of stocks from the receipt of freshly delivered groceries and ten Warehouse Staff who process both incoming and outgoing deliveries. Finally, Lush Fresh has one HR Clerk and one HR Manager, who deals with all HR-related matters, including payroll. During busy seasons, Lush  Fresh  employs casual staff across all departments to  help them deal with  increased business activities.

Lush Fresh expects to be able to start its business expansion next year, employ more permanent staff and borrow a large sum of money from the Bank. Consequently, this year, they aim to first improve their enterprise system in preparation for the expansion. Hence the reason for calling on you.

Business Process

The following systems documentation and narration are given by the Lush Fresh CEO after interviewing relevant employees. As an online fresh grocery retailer, Lush Fresh’s transaction cycles consist of short operations circles that involve the following operations: customer service, inventory management, vendor management, accounting and finance, warehouse operations, and order fulfilment.

The  CEO  has  informed  you  that  although  the  company  requires  a  comprehensive  Retail Management  System  (RMS)  that  will  cover  all  their  operations.  However,  at  present,  the company wishes to focus on the digitalisation and automation of its present Order-to-Cash (O2C) and  Procure-to-Pay  (P2P)  processes,  which  contains  a  combination  of  silos  and  manual processes.

The CEO states that the new RMS’s O2C process should ensure that once a customer makes a purchase  using  the  Lush   Fresh  website,  the  order  details  should  be  sent  to  the  Order Management system (OMS). The OMS should track the order at each stage of the order’s life cycle and keep the customer informed of order progress, including identifying and attempting to resolve  any  problems  –  e.g.  out-of-stock  items. The  OMS  should  integrate  with  the  order fulfilment system, where warehouse staff are able to access order details in real-time for picking, packaging  and  shipping.  Once  the  items  have  been  packed,  the  invoicing  system  should automatically email the invoice and other details to the customer, such as the expected time of delivery  and  any  changes  to  the  order  –  for  example,  out-of-stock  items  that  have  been exchanged. In addition, once the item is shipped and the invoice sent, the Accounts Receivable department should receive the invoice and payment details. When a customer decides to use the  buy-now-pay-later  option,  the  Payment  Collection  department  should  be  automatically notified to enable them to track and collect payment. Finally, the system should automatically generate a daily report at 12 midnight containing key metrics based on best practices.

The CEO further states that the new RMS’s P2P system should consist of tools to help with suppliers' selection, such as analysing  prices,  quality  and freshness  of  produce  based  on customers’ feedback. The system should be capable of automating the process of generating stock requirements based on inventory and sales reports and creating Purchase Requisitions (PR). The procurement manager should be able to review all automated generated requisitions for  approval.  Also,  once  requisitions  are  approved,  a  Purchase  Order  (PO)  should  be automatically generated and sent through an approval loop – consisting of the accounting and finance departments. If the PO is successfully approved, the system should automatically send the PO to the supplier/vendor via email.

In addition, The CEO states that the suppliers are expected to deliver within 48 hours, and during the delivery, the Goods Receipt (GR) process should be automated. The system should have a Barcode and/or RFID scanner at the warehouse, where the sealed cartons of fresh produce are scanned, and the codes are automatically matched with the PO’s ID and the different IDs of the products listed in the PO. After the GR process is completed, the system should automatically generate reports on the supplier's performance, which contain information such as quantity delivered vs quantity ordered, etc. When the GRs are approved by the Inventory Managers based on the generated reports, an invoice approval process that matches the purchase order, the vendor’s invoice and GR should be automatically initiated. If there are no discrepancies found, the invoice and approval report should be automatically sent to the Accounting and Finance Managers for approval and payment.

Tasks (100 marks)

As an enterprise resource planning system designer, your task is to create an RMS for the Lush Fresh grocery business based on the CEO’s narratives. That is, an RMS with a specific focus on digitalising and automating the Order-to-Cash (O2C) and Procure-to-Pay (P2P) processes. You are to conduct more research to ensure there are no process gaps and inconsistencies in the O2C and P2P processes narrated by the CEO. Where there are gaps and/or inconsistencies, you are free to make changes to the requirements but ensure you state your assumptions and rationale. In the process of developing the RMS for Lush Fresh, you are to carry out the following design tasks:

1.   Create an “As Is” Business Process Model for the Lush restaurant’s table reservation and the Lush Meal processes (10 Marks)

2.   Create a Structured Narration Table for the new RMS and state the rationale for your approach (10 marks)

3.   Create a Context Diagram for the new RMS and state the rationale for your design (5 marks)

4.   Create a Level 1 Physical DFD for the new RMS and state the rationale for your design (10 marks)

5.   Create one Level 1 Logical DFD and two Level 2 Logical DFDs for the new RMS and state the rationale for your design (30 marks)

6.   Create the following two System Flowcharts for the new RMS (20 marks):

a.   Flowchart 1: “Customer Order life cycle”

b.   Flowchart 2: “Goods Receipt process”

7.   Provide a brief reflection on your RMS design (15 marks):

a.   highlighting the key challenges you encountered and

b.  suggesting improvements you would make if you had the opportunity to revisit the project.