Community Chef: Issues And IT Solutions Essay.

Challenges Faced by Community Chef

Community Chef provides quality meals to the people who are at risk nutritionally. It is a social enterprise and result of vision of 20 Victorian councils who wanted to provide food security to older and people with disability. It provides meals on wheels’ service and provides high quality food compliant with government dietary requirement at an affordable price (Amrollahi & Ghapanchi, 2014). This is one of its kind businesses with no software products that supports such businesses.  With the increase in demand, there is increase in the complexity and as a result, Councils envisions that state of art production facility which can produce quality – compliant meals at effective costs and that is how the community chef was born. In further course of this action, Community chef will be analyzed based on the issues it is having and how the accounting package has come to rescue to the issues at Community chef. 

Community Chef is not a very big organization. It has close to 100 employees. The organization is headed by CEO, Joe Ciccaraone who directly supervises the three departments that are facilities and maintenance, Operations and quality and Human resources (https://www.communitychef.com.au). Finance is a separate and independent function in community chef.

Figure 1: Organization Structure (Source: https://www.communitychef.com.au/who-we-are/community-chef-organisation-chart/ )

In case of community chef, the demand is quite predictable as it delivers to 5 hospitals and 3 aged care facilities in rural Victoria. Total number of meals that it prepares and delivers close to 18,000 every day.  But the challenge here is although total number of meals are predictable, actual items are not known. Its menu consists of 54 varieties of soups, 39 side vegetable options, 244 mains course dish, 78 salads, 3 side salads, 41 sandwiches and 91 types of desserts.  They provide highly customized food not only for each hospital but for each patient, which means each of their meal, is customized and prepared for a particular patient or old person. Some of the issues are as follows:

• Dual entry of data by operation and Finance and challenges during reconciliation (Dumas, ROsa, Mendling, & Reijers, 2013).
• While preparing the meal, often there is shortage of raw material, which leads to wastage of work in process meal. Food is such an item, which is highly perishable and limited shelf life.
• Wastage, manual efforts, human errors during order taking, too much inventory, mismatch of the inventory levels in stores and in books (Kisakye, 2013)
• Highly inefficient system

Based on the size of the community chef, it does need matured ERP systems like Microsoft, Sap and Oracle, as their licenses are quite expensive and suitable for large enterprises. It could consider some vendor that has integrated Manufacturing, distribution and Finance capabilities.  Community chef has invited quotations for implementing IT systems. It has received 21 applications and shortlisted 7 out of that. Finally, it has selected SYSPRO. SYSPRO is quite successful in medium and small-scale enterprises. IT has good testimonials and it is highly customized. Community chef business model was one of its kinds and it was also not sure what kind of business processes would evolve in future and thus it is looking for Commercial software that can be customized to suit its needs.

IT Solutions for Community Chef

Going for custom software is not at all advisable due to the lack of direction, high cost and timeline (Johansson, & Carsson, 2013).

Customers place their orders once in a week for the meals they want after 15 days i.e. community chef has communicated the lead-time of 15 days of its customers. If they order today, they will get supply after 15 days. Every customer places his or her orders once a week. Once the order is booked, its plans for the other things like creating requisitions, converting them to Purchase order, scheduling work orders for a particular day, resource and machine levelling.

Its typical production cycle consists of three days i.e. day one consists of buying the materials as the lead time is relatively low in buying the food item related stuff. Day two consists of converting them to raw materials and packing and Day three consists of distributing them and account receivables are hit. Once the payment is received, account receivables are reconciled and transferred to general ledgers. This is the order to cash cycle at community chef. Also, products are highly configured i.e. make to order. However, the items/subassemblies, which are common across all the products, are manufactured in keeping the total requirements in mind (Lim, & Perrin, 2014). For instance, boiled rice can be input to most of the dishes consisting of rice.

• Also, as of now work orders are released but sometime some quantities is lost in the process and the final finished quantity is not sufficient to meet all the orders. And sometimes it is also happen that excessive food items are processed leading to the wastage. Systems should be built that can match the demand with supply.
• Also, systems should ensure that all the materials required for word orders should be available. Sometimes, in the middle of the work order, it is found that particular raw material is not available and then closes substitute is used that can impact the exact specifications for the particular dish and thus taste and nutritional quantities can also be impacted due to change of substitute product.
• Also, since revenue recognition and conciliation all happens manually, there may be chances of human errors. Not only this, it can be accounts can be manipulated/inflated also sometimes to present the rosy picture for the investors, which can create problems later on (Salleh & Kassim, 2015).
• There is not enough reporting happening in the system that can decrease the visibility in the system and also increase theft, obsolescence.

The history of progress of accounting software packages dated back to 1980s when Teleware has developed one such software. Another Australian company later acquired same software and the name of the software was change to MYOB in 1999. It became the best seller in Australia with no rivals. There were players like SAP, Oracle, JD Edwards but that were quite expensive in terms of licensing and not suitable for small and medium scale enterprises (Scholtz, calitz, & Cilliers, 2013). However, later, many new rivals like Xero, Reckon, Saasu, SYSPRO, and QuickBooks Online have flooded the market. As of now, Xero with its innovative products is gaining the market share while MYOB’s market share is on downtrend. MYOB focuses more on financial aspects like GST, Tax and provides less functionality on the purchasing and inventory management front. Xero is also a very good software, widely used across Australia and New Zealand but its supply chain planning capabilities and material requirement planning capabilities are limited (Hossack, 2015). Community chef has made clear that it is looking for a balanced product in functionalities for Manufacturing, Distribution, procurement, inventory and accounting. Not only this, software should also supports some level of configuration. SYSPRO is one such product, which is finalized by the community chef. SYSPRO provides excellent reporting, dashboard capabilities and also can be configured easily without much effort. Presently, SYSPRO and Xero are quite popular in Australia while MYOB’s share is declining.

Market Analysis of Accounting Software in Australia

The market size for the accounting software is quite good. With the shift in technology and digital revolution, more and more traditional firms that are using papers only or is surviving by using basic tools of Microsoft like excel have begun to think about adopting accounting software in order to attract and increase their business and also for compliance purposes. Earlier, there were software designed for large-scale enterprises however currently market is flooded with numerous software for medium and small-scale enterprises. Cloud computing also helps in reducing the cost of using technology without acquiring appropriate infrastructure and thus small organizations are getting attracted towards using accounting software (Woodward, & Tan, 2015). According to IBIS research, Australia’s accounting software industry market size is whopping 20 billion US dollars and have grown at the rate of 2.6% since 2012 (https://www.ibisworld.com.au ) and also the forecasts for its growth are very good.

Xero accounting software captures the maximum market share in Australia. It has ended the MYOB leadership 2 years back and become the most famous software in Australia. Xero offers very good pricing options (Zhang, Nan, & Tan, 2016) and has something for everyone. It also markets its product very well. Xero provides good reporting also integrates will with 3^rd party systems and other Bolton systems. It has very good testimonials from the existing clients and that is what is working for this software (https://www.xero.com/au/ ). It is also relatively easy to use and has more attractive feature than MYOB.

MYOB accounting software has enjoyed the leadership status since decades however recently it is surpassed by Xero but it is still 2^nd large market share in Australia. The biggest advantage of this is first mover advantage and established credibility, good network and popularity in Australian market. It is a leader in providing accounting functionalities like GST, Taxation (https://www.myob.com/au ) however its downside is slow innovation as compared to the market standards and thus it has not developed fully the other modules like inventory, procurement. Also, reporting and analytics is most important requirement of the today’s businesses and it does fulfill that capability also effectively.

There is no one size fits all software available in the market. MYOB can be good for 1 organization but very bad for other. Similarly, any organization can have good experience with Xero while others will condemn Xero. It all depends upon the requirements of the organizations and capability of the software. Thus, it is very important that whenever any organization is shortlisting vendor, it must analyze deeply its offerings and its own business requirements and try to align both of them (Boonstra, 2013). Software should be selected if good level of alignment is found. For example, perpetual inventory is supported by Xero and SYSPRO  (https://www.syspro.com/au/ )but not by MYOB. Support for 3^rd party integration is quite low in MYOB and thus if the organization is using many systems and its requirement is to integrate the accounting software with 3^rd party systems, then it should not consider MYOB. Finance functionalities are maximum in MYOB but minimal in SYSPRO. Thus, each software has his own unique proposition with which they are capturing market.

Specific to Community Chef, SYSPRO will work best for this as it is looking for support in manufacturing, finance, inventory and distribution. SYSPRO is also having history of serving clients in food processing industries like purity foods.

Conclusion

This case study discusses the history of accounting software packages in Australia and how they evolved in today’s world. Today, there is huge potential in market for accounting software. Also, while earlier there was only one such software, which is MYOB, currently market is flooded with many software like Xero, QuickBooks Online, SYSPRO, and Saasu. Different software were also discusses and leaders were also identified. Xero captures largest market share followed by the MYOB. Another part of this case is specific to one organization in Australia, which is community chef. Community chef was managing its systems manually and facing lot of difficulties and that is the time, it started its search and selected SYSPRO.

References

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