Executive Summary
Worldwide Sports is a company in
Shippensburg, PA that provides sporting equipment and memorabilia to the community. The current
website for Worldwide Sports does not allow any customer interaction. Customers
can view items, but there is no way for a complete checkout.
The Worldwide Sports Online Site (WSOS) is a
project started by LEMM Solutions to identify a solution to their current
problems. Worldwide Sports would like to have a website that allows customers
to have more usability. This website will give customers the option to create
an account, search different products, select products to purchase, add items
to cart and checkout order. Employees will be able to keep a better track of customers and orders, as well as manage the customer accounts. By improving the company
website, Worldwide Sports plans to expand its customer base and inventory to
help increase sales and profits.
Project Goals
Worldwide Sports plans to become one of
the leading retailers in the sporting goods industry by:
- increasing the customer base by 40% in 24 months
- increasing sales by 50% in 24 months
- increasing inventory by 25% in 18 month
- reducing inventory shrinkage by 25% in 12 months
Based on the research we conducted, there were three potential alternatives
- Keep the current system.
- Hire a team to create a webpage for an online store and train Worldwide Sports on the technology to allow them to maintain the system themselves.
- Buy a software/hardware package to do all of the required functions defined in the project scope and have a team customize the system to fit Worldwide Sports.
Introduction
Worldwide
Sports is a company that has provided sporting goods locally for over 50 years.
Some of the items that Worldwide Sports sells:
- Baseball bats
- Football pads
- Hockey sticks
- Balls for all sports
- Athletic clothing for many leagues
Worldwide
Sports is the lone provider of sporting equipment to many of the local leagues. Their main source of income is through the physical store, with the online site not functional.
Currently,
Worldwide Sports has a website that does not allow users to have much functionality. Customers are able to look at some of the products on the site, but
are not able to see if the product is in stock or how much it costs. There is
no way for customers to purchase items efficiently either. This has contributed to their below
average sales over the past several quarters. In the technology age, fewer
customers want to physically come to the store to buy items. If they are out of
a product, customers do not know until they call or come into the store, which is very inconvenient. Some
of their customers have been turning to competitors for their needs as a
result.
Worldwide Sports Online Site
Worldwide
Sports Online Site is a temporary endeavor to evaluate what features to use for their
website and any alternatives. The purpose of this evaluation is to understand all
alternatives and find the best solution to Worldwide Sports current problems.
The most important aspects of this website will be allowing customers to buy
products online and eventually for the employees manage inventory. These goals
will be realized through the Worldwide Sports Online Site (WSOS) project.
Desired Areas of Impact
The MOV table below lists the potential areas that this
project will impact and summarizes the measurable organizational value of the
Worldwide Sports Online Site (WSOS).
Organizational
Impact
|
Value
|
Metric
|
Time Frame
|
Strategic
|
Increase
the variety of sports and teams in inventory.
Increase
reliability of inventory available.
|
Increase customer base by 40%
Increase inventory accuracy 100%
|
24 months
24 months
|
Customer
|
Provide
more merchandise for customers.
Provide a
better online store for purchases.
|
Increase
inventory by 25%
Increase
online shopping website 75%
|
18 months
28 months
|
Financial
|
Provide
more marketing strategies.
Reduce
cost inventory control by going paperless.
|
Increase
sales by 50%
Reduce
inventory costs by 25%
|
18 months
12 months
|
Operational
|
Increase loss
prevention.
|
Reduce inventory shrinkage by 25%
|
12 months
|
Social
|
Increase
the number of customers to purchase online.
Extend to
other states with shipping.
|
Increase the number of customers served
online from 0 to 200.
Increase
their variety of locations 25%
|
12 months.
48 months.
|
At an average the Worldwide Sports Online store served 0 customers online to at least 200 per year within 12 months. Worldwide Sports wants to be one of the top stores to sell sports equipment, merchandise, and memorabilia. Through WSOS, Worldwide Sports will be able to provide an online system that customers can purchase merchandise online versus coming into the store within 28 months. They also want to be able to extend their store to other states by 25% within 48 months.
Desired Value of the Project
From the information that we assembled and a thorough breakdown of Worldwide Sports problem and opportunity, it is clear that this project will deliver an online database and computer based store, which will add a lot of value to this sports shop. The figure above shows how the MOV is related to the goals of Worldwide Sports.
Alternatives
Our team did research on alternatives to the LEMM Solutions
project ‘Worldwide Sports Online Site’. We looked at 3
alternatives to the system we are deciding to implement, alternative #1 is the
continued use of their current system, and alternative #2 and alternative #3
will be described in the following analysis.
The Worldwide Sports Online Site (WSOS) project: This project option will include creating an online product purchasing system specific to Worldwide Sports and the needs of their customers. This project is going to utilize Visual Basic for creating the systems graphical user interface (GUI), creating customized code in order for Worldwide Sports to add products to its site, maintain customer selected items, and printing customer receipts. The system will also allow new users to create log-in names to be saved for future access. The most expensive parts of this project will be the programming, because it has to be customized from scratch by LEMM Solutions to meet functional requirement needs, and the training to Worldwide Sports and their employees so that they can continue to use this system far into the future and so that system maintenance can be internalized instead of outsourced to save money.
The Worldwide Sports Online Site (WSOS) project: This project option will include creating an online product purchasing system specific to Worldwide Sports and the needs of their customers. This project is going to utilize Visual Basic for creating the systems graphical user interface (GUI), creating customized code in order for Worldwide Sports to add products to its site, maintain customer selected items, and printing customer receipts. The system will also allow new users to create log-in names to be saved for future access. The most expensive parts of this project will be the programming, because it has to be customized from scratch by LEMM Solutions to meet functional requirement needs, and the training to Worldwide Sports and their employees so that they can continue to use this system far into the future and so that system maintenance can be internalized instead of outsourced to save money.
Alt #1: Continue to use the current system that is in place.
The current system is out of date, slow, and does not get much use due to its
user friendliness and coding bugs.
Alt #2: Hire a designer team to create a webpage for an
online store Worldwide Sports can use, they will provide new hardware,
software, programmers, and a customized training program for the employees of
Worldwide Sports. All of the upkeep of the system will be done by Worldwide
Sports, so the training will have to be intensive and include any technology
change.
Alt #3: Buy a software/hardware package to do all of the required
functions defined in the project scope. There would need to be a lot of
customization after purchasing the software. The training will need to be very
expensive and elaborate to ensure 100% understanding by the employees of
Worldwide Sports. Another big cost would be the maintenance to keep the
technology up to date.
-Total Cost of Ownership (TCO)
The following table is the complete analysis of the total
cost of ownership for the system we decided to implement as well as the 3
alternative options to the project for year 1.
Resource
|
Description
|
WSOS
|
Alt
#1
|
Alt
#2
|
Alt
#3
|
Personnel
Time
|
8 hours/day $38/hour rate, 4 member team
|
$40,000
|
$0
|
$40,000
|
$40,000
|
Software
|
WSOS: creating a system for functions like log-in, search, shopping cart, and purchasing
Alt #1: a very basic program, not using current technology Alt #2: paying for a shopping cart subscription Alt #3: Custom code and soft-ware |
$25,000
|
$1,200
|
$1,200
|
$5,000
|
Programming
|
$40/hour until completed
|
$150,000
|
$0
|
$150,000
|
$150,000
|
Training
|
Alt #1 and #2: On-site training for the desired option, $600/hour
Alt #3: $1000/day/employee
|
$65,000
|
$600
|
$1,800
|
$84,000
|
Hardware
|
Servers and new computers for the project and operation
|
$10,000
|
$0
|
$6,000
|
$6,000
|
Support
& Maintenance
|
Shopping cart monthly fee, domain name fee, regular maintenance
(biannually)
|
$10,000
|
$1,000
|
$1,100
|
$5,000
|
Totals
|
$300,000
|
$2,800
|
$200,100
|
$290,000
|
Summarizing this table, keeping the system that Worldwide
Sports has in place would only cost $2,800 in its first year. Although this is
the cheapest solution, it would just continue to give the company very poor
results. Alternative #3 has the highest start-up cost of the given 3
alternatives at $290,000, only $10,000 less than our WSOS solution. The reason
for this is because of the extensive training that the employees have to
complete in order to operate/maintain the system.
-Out Flow for 3 Years
The following table displays the 4 options and their
respective costs for years 0-3, as well as total cost.
Year
0
|
Year
1
|
Year
2
|
Year
3
|
Total
Cost
|
|
WSOS
|
$300,000
|
$180,000
|
$192,000
|
$192,000
|
$864,000
|
Alt
#1
|
$2,800
|
$81,600
|
$81,600
|
$81,600
|
$247,600
|
Alt
#2
|
$200,100
|
$82,900
|
$82,900
|
$82,900
|
$448,800
|
Alt
#3
|
$290,000
|
$125,000
|
$125,000
|
$125,000
|
$665,000
|
The total cost for the WSOS solution we chose was the
highest of the 4 options through its first 3 years and has an increasing
maintenance cost as the years progress. This is offset, though, by its profit
over the first 3 years which exceeds $1.1 million, and continues to grow in the
years after.
Alternative #3 was 2nd in total cost due to its high
maintenance costs. The reason this alternative was not chosen was because it
has costs this high for maintenance alone in every year and no profit estimates,
there was a high risk for the system to not work and for the costs to outweigh
the profits.
-Total Benefit of Ownership (TBO)
The following table displays the 4 project options and rates
them all using weights in regard to their relevance to the MOV.
Benefit
|
Weights
|
WSOS
|
WSOS
Weight
|
Alt #1
|
Alt
#1 Weight
|
Alt
#2
|
Alt
#2 Weight
|
Alt
#3
|
Alt
#3 Weight
|
Functional
|
20
|
15
|
3.0
|
3
|
0.6
|
10
|
2.0
|
10
|
2.0
|
Log
in
|
10
|
10
|
1.0
|
4
|
0.4
|
7
|
0.7
|
9
|
0.9
|
Usability
|
5
|
5
|
0.25
|
2
|
0.1
|
5
|
0.25
|
4
|
0.2
|
Addition
of Information
|
5
|
8
|
0.4
|
2
|
0.1
|
5
|
0.25
|
6
|
0.3
|
Search
|
10
|
7
|
0.7
|
3
|
0.3
|
8
|
0.8
|
7
|
0.7
|
Select/Buy
Products
|
15
|
10
|
1.5
|
1
|
0.15
|
10
|
1.5
|
8
|
1.2
|
Security
|
5
|
7
|
0.35
|
5
|
0.25
|
5
|
0.25
|
5
|
0.25
|
Order
Confirmation
|
10
|
5
|
0.5
|
3
|
0.3
|
7
|
0.7
|
5
|
0.5
|
Import/Export
new Data
|
15
|
10
|
1.5
|
2
|
0.3
|
8
|
1.2
|
7
|
1.05
|
User
Friendly
|
5
|
5
|
0.25
|
2
|
0.1
|
5
|
0.25
|
4
|
0.2
|
Weighted
Benefits
|
100
|
9.45
|
2.6
|
7.9
|
7.3
|
Looking at the above table, the important functional
requirements of the project have been listed as well as their corresponding
weights. Each alternative, as well as the WSOS, was given a score for each
functional requirement, and this was then multiplied by the weight. To summarize
the scores, alternative #2 has a score of 7.9, alternative #3 scored 7.3, and
alternative #1 ranked last with a 2.6. All 3 alternatives scored lower than
WSOS, but some aspects of the alternatives were better than our decision. These
scores, the total costs over the first 3 years, and the estimated profit of the
WSOS all went into consideration of our choice.
Additional Details
Weight
|
Current Sys.
|
WSOS
|
||
Financial
|
||||
ROI
|
15%
|
5
|
10
|
|
Payback
|
5%
|
5
|
10
|
|
NPV
|
5%
|
5
|
10
|
|
Organizational
|
||||
Alignment
w/
strategic
objectives
|
13%
|
6
|
10
|
|
Likelihood
of achieving MOV
|
10%
|
3
|
8
|
|
Project
|
||||
Availability
of skilled team members
|
4%
|
5
|
10
|
|
Maintainability
|
4%
|
5
|
10
|
|
Time to develop
system
|
5%
|
10
|
4
|
|
Risk
|
5%
|
8
|
6
|
|
Level of
customization
|
8%
|
3
|
10
|
|
Full
integration
|
10%
|
3
|
10
|
|
External
|
||||
Customer
Satisfaction
|
6%
|
7
|
10
|
|
Increased
market share
|
6%
|
5
|
10
|
|
Country
recognition
|
4%
|
1
|
10
|
|
100%
|
71
|
128
|
ROI
Total Expected Benefits – Total Expected
Costs
Total
Expected Costs
$1,136,000 –
$864,000
$864,000
Solution: 31%
Payback
Initial
Investment
Net Cash Flow
$300,000
$1,136,000
Solution: 26%
Breakeven: the time it
takes for the project’s revenue to cover all of its costs.
Year 0 cost
+ Year 1 cost
Year 1 revenue
$300,000 +
$180,000
$500,000
Solution:
$480,000(Year 0 and 1 total cost)
$500,000(Revenue after years 0
and 1)
= 0.96 or 96% into year 1
Breakeven point occurs at 96%
completion of year 1.
So the breakeven point is 100% of
year 0 and 96% of year 1.
Year 0 = 365 days, Year 1 = 350
days.
Breakeven point is 365 + 350 =
715 days or 1 year and 350 days.
Mandatory
|
Implementation
of WSOS to ensure customers can view, purchase, and compare items. Convert
from a paper based inventory system to a computer based inventory system to
decrease inventory shrinkage and increase inventory stock for Worldwide
Sports.
|
Optional
|
Inventory
to other sports teams and different divisions that Worldwide did not previously
carry. Global sales of future
equipment.
|
Wish-List
|
Collecting
sales from all 50 states and globally. Becoming the top leader in selling sports
equipment in the country within 2 years after system implementation.
|
Recommendation
If Worldwide Sports continues
with their current system they will not be able to increase sales because of the lack of customer interaction, inventory shrinkage, and customer loss due to competition.
The current system limits Worldwide Sports to only local sales of sports
equipment, which they will not be able to expand throughout the region as
planned. The current system restricts Worldwide Sports to become the leading
retailer in sports and thus limits future growth for the company. The current
system does not have the ability for customers to view, purchase, or compare
items online. This will continue their trend in decreasing sales and possible
extinction of the company in the future. The selected WSOS system will provide much
needed value to Worldwide Sports so they can increase sales and further their
company tradition for selling sporting goods. The WSOS system will allow customers
to view, purchase, and compare items from the website. Customers can also to
see if items are in stock and what price that item is selling for. The WSOS
system will help Worldwide Sports become more competitive as they can expand
sales throughout the country, and possibly the globe. The WSOS
will help Worldwide Sports help keep track of inventory, prevent loss of
inventory and inventory shrinkage, and will save money, being better prepared
for the sports seasons. The WSOS system will help provide Worldwide Sports with
much needed help in the sporting goods industry as this system change can give
Worldwide Sports an advantage to become one of the top retailers in sporting goods.
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