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BLetson-Oxford Case Evaluation

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BLetson-Oxford Case Evaluation

  1. 1. Letson 1 Oxford Industries Case Evaluation Oxford Industries was founded in 1942 as a US-based producer and marketer of branded and private label apparel for men, women, and children. Throughout the 1950s and 1960s, 90% of Oxford’s manufacturing was located within the US; however, the “807” clause of the US customs regulations brought about significant change. It allowed for duty-free re-importation of US clothing made in a Caribbean Basin country. 1 This brought about the growth of “mega retailers” who imported their entire product line as finished goods. By the late 1990s, manufacturing in North America had almost completely dried up as a result of the “807” clause. This decline in manufacturing caused Oxford to reassess their business strategy. They made the decision to move away from the manufacturing industry and into the sourcing industry, which ultimately placed them into the same industry as the companies they had previously serviced. To get Oxford out of the manufacturing business and into the sourcing business, they acquired several international lifestyle brands including Viewpoint International that operates as Tommy Bahama in 2003, Ben Sherman of the UK in 2004, and Arnold Brant from Canada in 2005. These acquisitions did not come without their share of headaches. The key issue Oxford now faced was an extraordinarily complex IT and systems portfolio. Each of the acquisitions had their own set of accounting and inventory tools, IT systems, and network infrastructure. The accounting departments, in particular, were wasting significant amounts of time and resources at each accounting close. Wybo and Bernier state, “The Oxford CFO, corporate accounting staff and the operating unit accounting staff all participate in each accounting close. It currently takes five to seven days for a month-end closing, three to four weeks for a quarter-end, and two months for a year-end.”2 Some locations were even faxing and emailing spreadsheets or reports from local accounting systems to corporate headquarters each month. To make matters worse, the central accounts payable system came with its own set of problems. It could be queried in real-time; however, corporate management employees were the only ones who could access the data until the end of the fiscal period. Inventory orders (POs) within accounts payable could not be viewed until the end of the first closing period after the receipt of the goods. This made for a very disconnected and confusing environment. The Tommy Bahama facility had just recently acquired a new ERP system, Blue Cherry. This further complicated the already-complex portfolio of systems. HR and payroll were also struggling as this information was being submitted by the business units to corporate via email or hard copy and was being keyed into the appropriate system at the corporate level. This was quite the security issue as well as a duplication of work. Unfortunately, the IT systems did not make this situation any better. Corporate IT was managing central systems in addition to supporting legacy wholesale, retail, and licensing operations for North America as well as Ben Sherman’s North American operations. Each newly acquired site came with its own set of hardware, software, applications, and staff who were knowledgeable of their respective business processes and data. Oxford’s legacy IT infrastructure was also a constraint on their ability to implement a new strategy.3 There was little to no congruency among the various business units’ IT teams or with Corporate IT. To resolve the complexity issues that have plagued Oxford as a result of these acquisitions, a project team needs to be formed to manage the selection, testing, acquisition, and
  2. 2. Letson 2 implementation of an IT portfolio replacement. This project should be sponsored by the CEO, have a project manager, and team members should include the CFO, CIO, Corporate IT Manager, corporate developers, business unit plant managers, business unit IT managers, and business unit supply chain managers (or a subset of business unit personnel from two to three business units). This team will use the COBIT 5 model to see to it that the stakeholders’ needs are being met, Oxford’s IT functional responsibilities are covered from one end of the company to the other, a single, integrated framework is applied throughout the organization, a holistic approach is taken, and governance is separated from management. They will also identify risks associated with this project as well as the scope, timeline, and budget. Exhibit 1 After looking at the SWOT analysis in Exhibit 1, I have identified a number of critical gaps in the system that can and should be corrected. First, it is clear that there needs to be a common, consolidated system at the corporate level where all business units can report to on a daily/real-time basis. This will eliminate the need for daunting, manual processing, wasted time at fiscal period ends, and it will allow employees to focus more on business process improvements and creative thought. To handle this sort of system, new infrastructure will need to be put into place in areas where legacy infrastructure currently exists. This can be anything from new fiber runs between sites to hardware such as servers, switches, firewalls, routers, and wireless access points. Along with this hardware replacement/upgrade will come the need for new network monitoring software. All of these improvements will require employee training, guidance, and likely the hiring of new subject matter experts. To reduce or eliminate the complexity of various manual accounting, HR, and inventory systems, the project team should implement Oracle’s PeopleSoft ERP at the corporate level. STRENGTHS •Rich history and reputation as a quality apparel manufacturing company •Newly acquired companies Tommy Bahama, Ben Sherman, and Arnold Brant •Tommy Bahama's new Blue Cherry ERP system •Wide variety of existing IT knowledge across all business units of the company WEAKNESSES •Oxford's legacy IT infrastructure •No common IT infrastructure throughout the company as a whole •No central ERP/HR/Inventory system •Significant time wasted doing manual processes (accounting, HR) •Limited IT security/oversight •Potential for disgruntled employees OPPORTUNITIES •Enterprise ERP systems such as Oracle's PeopleSoft •Outsource contractors to replace legacy infrastructure •Team building workshops THREATS •"Mega-retailers" already have significant market share and economies of scale •Hackers •Poor publicity SWOT
  3. 3. Letson 3 PeopleSoft applications provide comprehensive business and industry solutions, enabling organizations to increase productivity, accelerate business performance, and provide a lower cost of ownership.4 This would eliminate the need for faxing or emailing accounting reports and it would cut the month-end, quarter-end, and year-end activities to days rather than weeks or months for the accounting department, which will lower Oxford’s overall operating costs. PeopleSoft also offers HR tools that will provide HR a way to enter payroll, talent management, and communications in a one-stop-shop. Inventory management would be taken care of, too. PeopleSoft’s supply chain management tools handle customer orders, inventory and fulfillment, and supply chain warehouse needs. This will allow for users to view pending activities, so there will be no more waiting for fiscal period ends to see purchase order requests. As part of a phased service transition, corporate headquarters should receive the first installation of PeopleSoft with an additional system for redundancy. Those employees should be trained first on these applications and should begin using it first. Once corporate’s systems are in place, the roll-out should begin into the business units. An instance (with redundancy) of PeopleSoft should be installed at each business unit to prevent a single point of failure at corporate. Because the legacy Oxford facilities already have a system in place that works, it would be best to address the newly acquired Ben Sherman first followed by Arnold Brant. The business-level PeopleSoft instances will replicate to the corporate-level instance once every 5 minutes. This will give corporate a near-real-time insight into what is going on at the business level and will provide insight into pending transactions as needed. Rather than replacing Tommy Bahama’s new Blue Cherry ERP system, we will integrate it with corporate Oxford’s PeopleSoft and reconsider replacing their local system 5-10 years from now (or sooner if needed). The Tommy Bahama site, in particular, has already been through two significant changes – the switch to Blue Chery and then the acquisition by Oxford. There’s no reason to force another change upon them so quickly if we don’t need to, and it will be a cost savings opportunity for the project team. From there, the project team will identify an order for upgrading the remaining business units. In the interim, business units who are awaiting the upgrade will continue to send their data to corporate as usual, and corporate accounting will enter data into the corporate PeopleSoft instance. The phased service transition will begin at a new facility every 3 months. While these activities are going on, infrastructure upgrades should be taking place simultaneously through local contracting companies. As part of the IT portfolio replacement project, each business unit’s IT manager will work with the Corporate IT Manager to assess their current infrastructure and identify what improvements need to be made. Also, corporate IT will install SolarWinds’ suite of network monitoring tools both at the corporate and business unit levels to gain insight into where bottlenecks are within the systems and potential threats. Finally, the people of Oxford Industries are the core of its success. Onboarding the new employees with team-building opportunities is absolutely key. Oxford executives should provide detailed avenues for professional development and a promotion guide so that employees with the most growth potential can be recognized and placed into positions where they will find and provide value to the organization. While Oxford’s acquisitions can be seen as a challenge, there are plenty of opportunities to get the train back on the tracks and gain recognition as a “mega-retailer”.
  4. 4. Letson 4 References 1 Wybo and Bernier, “IT Governance at Oxford Industries: Information Architecture for Financial Data,” International Journal of Case Studies in Management Vol. 6 Issue 1, May 2008, p. 1. 2 Wybo and Bernier, “IT Governance at Oxford Industries: Information Architecture for Financial Data,” International Journal of Case Studies in Management Vol. 6 Issue 1, May 2008, p. 3. 3 Wybo and Bernier, “IT Governance at Oxford Industries: Information Architecture for Financial Data,” International Journal of Case Studies in Management Vol. 6 Issue 1, May 2008, p. 4. 4 Oracle, Oracle PeopleSoft Applications, http://www.oracle.com/us/products/applications/peoplesoft-enterprise/overview/index.html , access June 2016.

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