Analysis Of Vermont Teddy Bear Company's IT Challenges And Solutions

VTB is an e-commerce company founded by John Sortino in Vermont in the year of 1981. Initially the company used to take orders through phone calls but later with improvement in the technology, the company started taking orders through the web. This raised the business of the company and generated commendable revenue. But the IT department had issues related to maintaining the expectations of the customers due to hike in the rate of orders around Christmas.

The insufficient number of employees was not able to provide the promised customer service to the customers. Apart from this, the middleware, i.e., the vendors did not live upto the expectations of the brand image and issues such as defective and delayed delivery were raised.

These problems were analyzed using the analysis tools like fishbone diagram, CATWOE, Kaizen analysis etc. to reach to the point of the problems and prevent the company from facing such problems in the future. The company appointed Bob Stetzel as the chief IT head and his appointment brought certain changes in the company strategies.

Stetzel made an amazing team along with Gilbert and the two were able to solve certain issues. A few more recommendations made below can be utilized to make the company fight issues such as using updated software versions, increasing the revenues, establishing a data warehouse etc.  

Background

Vermont Teddy Bear Company was founded in 1981 by John Sortino in Vermont. The company started peaking up its business in 1990 with the introduction of "Bear Gram Service" by Sortino where the customers used to call to order personalized bears with the desired costumes and colors. The revenues collected by the company grew to $17 million in 1993 and the company occupied 21st position in the list of fastest growing companies released by Inc. Magazine. But the business of the company was restricted to certain occasions such as Christmas, Valentine's Day etc. To increase the business company started opening departmental stores in Freeport Maine and New York City. In 1997-1999, Elisabeth B. Robert joined the company as the new CEO and initiated "Make-a-friend-for-life" venture and took the sales of the company to $21.5 million. VTB also launched some women accessories in its stores like handbags, food baskets, pajamas etc. but cut down its products to bears, calyx flowers and pajamas by 2008. The Company resumed back to its private ownership in 2005-2008 but Elizabeth Robert resigned from the job in September. Just after this, the stock market crashed and had disastrous effect on the company and about 35 employees were fired from their positions. In 2009, John Gilbert joined VTB as the new Chief Bear Officer. The company signed licensing deals with movie studios, television studios and game makers to promote their products. Bob Stetzel joined the IT team in 2009 during the peak time of the sales around Thanksgiving (Gogan & Lewis, 2011). He went through the data of the company and found out that most of the essential knowledge about the company prospects lied with siloed individuals. This made him arrange development sessions for other individuals to make them aware of the company information. The strategies adopted by him taking Gilbert in the scene uplifted the condition of VTB in the market and the position continues to be the same till date.  

"The company’s business reaches its peak during special occasions like Valentine's Day, Christmas, Thanksgiving and many others. Handling the customers during such rush is a major problem as they do not have adequate IT infrastructure. The IT department faces challenges to manage the orders of the customers and clients during the season which leads to complications in customer service and the delivery of products."

Problem analysis can be done efficiently when the root cause of the problem is identified and analyzed. The steps involved in Problem Analysis are-

1) Identifying the problem and its symptoms: The problem in this case is the handling of customers during the special occasions due to innumerable orders. The symptoms of the problem include complaints of the customers related to order delivery, improper handling of the products ordered through mails, web and telephone and problems related to the middleware in delivering the products.

Figure 1: Position of VTB on Mcfarlan’s Strategic Grid

From the above system, it can be seen VTB’s current system can be placed in “Support” quadrant. To overcome problem and gain competitive advantage, there is need for organization to transition from “Support” to “Strategic” quadrant. This can be done by implementation of efficient and systematic enterprise IT architecture.

Problem Statement

2) Collection of data: Analysis of data maximizes the effectiveness of the identification of the problem. It includes the steps like acknowledging the time for which the problem has existed and discovering the impact of the problem. Tools like CATWOE can be used at this stage (Elmansy, 2015). This diagram helps to understand the problem from different perspectives of Clients, Actors, Transformation, worldview, Owner, Environmental constraints etc. After applying CATWOE analysis a brief and systematic template can be prepared for the problem. The data of the above case signifies that the absence of efficient enterprise software causes a problem for staff and the owner.  The mismanagement and problems related to delivery of defective product or delayed delivery are the concern issues from the side of the customers.

3) Identification of the Causal Factors of the problem: In this step, the factors responsible for the problems are identified. Some of the tools used frequently for this purpose are - 5 Whys (to get to the root of the problem), Appreciation (to determine the possible consequences of the problem), Cause and effect diagrams or the Fishbone diagram (to list all the possible causal factors to see the initiation point of the trouble) and Drill Down method (breaking the problem into small fragments to understand it in detail) (Mind Tools, 2017) .

In the above mentioned case, the fishbone diagram can be used to give a clear picture of the problem effectively.

Figure 2: Fishbone Diagram

4) Identification of the root causes - This step provides a better understanding of the causes and effects of the problem. The same tools used in step three can be used for this step as well. In the case, the root causes of the problem are-

• Mismanagement in the IT department
• Insufficient availability of the human resources in the IT department
• Unavailability of the required high level software technology despite of being an e- commerce site
• Lack of an efficient leader
• Absence of a separate warehouse for the company
• Lack of cash reserve for the establishment of a warehouse
• Discrepancies in the enterprise software may be responsible for issues related to sales, entry of the orders and management of the inventory.
• Issues related to the middleware

5)  Recommendations and implementation of the solutions: The final step includes the steps one can suggest to prevent the company from the problems identified above in step 3 and 4. This step also ensures mentioning the steps which can be taken to prevent the company from such problems in the future. The methods that can be used to plan the solutions for the causal problems are Failure Mode and Effects Analysis (FMEA) to analyze the risks of failure of the predicted solutions (Quality-One International, 2015); Impact analysis which deals with the impact of both negative and positive outcomes of the changes introduced into the organization through the recommendation process; and Continuous Improvement or the Kaizen analysis  favors the introduction of small changes to create a good overall impact. 

Figure 4: Implementation Plan

Figure 4 shows the five steps implementation plan to be followed for upgrading IT infrastructure.

The following recommendations can be made after the identification of the root causes through the above mentioned procedure-

• CRM system: A genuine customer base must be built by the development with the use CRM system. This will make the communication of the company representatives feasible with the customers and help the company in serving their clients in a better way. It will also allow the company providing customer service to the clients in multiple lines of products like pajamas, calyx flowers etc. along with the teddy bear stuff.
• Adoption of new software for the enterprise: A brand new enterprise system will replace the operator used previously for the purpose of inventory management, order entry, maintaining a valid record of the customers and sales. The accounting system previously used will be replaced to provide a better service.
• Replacement or adoption of new supply chain: This will ease the process of procurement of finished products and the raw resources from the vendors all over the world and will improve the qualities of the operations.
• Establishment of a data warehouse: This step could help the department of business analytics to lift up and enhance their performances.
• Hiring of an outsourcing panel: Outsourcing departments increase the efficiency of customer service and are answerable to the organization if it is unable to do so. It is a onetime investment for any organization. The team of executives in these departments is trained for dealing with dealing with the customers.
• Development of the methods to increase the revenue resources: The CEO of VTB should find alternative methods for the expansion of the business so that it may generate sufficient revenue for the establishment of warehouses and adopting better software.
• Hiring of experts in the IT: During the time of recession, many of the employees were laid off from their jobs. So, the new employees must be hired with expertise in the IT field.
• Paying similar attention towards other business ventures started by the company may help in the generation of extra revenue. This generated revenue can be used in bringing new IT tools to the company and uplifting its sales.

Recommendations and Conclusions

Being an e-commerce site, IT department plays a vital role in the business development and sales of VBT. Christmas proves to be a critical time for the company business as a lot of online orders pave their way during this period. This leads to the problem for the IT department of the company to manage the orders. This becomes an issue for the customers as they are not able to get their correct orders on time. Bob Stetzel, the chief of the IT department recommended and adopted so many methodologies to improve the business analytics such as transfer of the essential company knowledge to rest of the employees apart from the siloed employees. In my recommendation the company CEO must find out the ways to expand the business and must establish data warehouses at certain locations to manage the customer data. Adoption of new enterprise software can help in maintaining the accounting problems. The vendors must be dealt appropriately and strictly to prepare the orders on time. These steps may be included to cure the causes of the problem and prevent the company from the reoccurrence of such problems in the near future. The CEO and CIO need to take collaborative steps where CEO needs to plan on the revenue increment and the CIO should look into the technical matters to increase the sales of the company.

References

Elmansy, R. (2015). CATWOE: Building a Problem-Solving Checklist. Retrieved from https://www.designorate.com: https://www.designorate.com/catwoe-problem-solving/

Janis L Gogan, M. O. (2011). Peak experiences and strategic IT alignment at Vermont Teddy Bear. Journal of Information Technology Teaching Cases, 61-70.

mindtools. (2017). Root Cause Analysis. Retrieved from www.mindtools.com: https://www.mindtools.com/pages/article/newTMC_80.htm

Quality-One International. (2015). Failure Mode and Effects Analysis (FMEA). Retrieved from quality-one.com: https://quality-one.com/fmea/