TuffEnuff Case Study

TuffEnuff Pty Ltd Case Study

Learning Activity Set for Certificate IV in Information Technology (Websites)

© NSW DET 2006 of 19

Appendix A – TuffEnuff Pty Ltd Case Study

Standard Galvanised Box Trailer

Custom built dump trailer

Introduction TuffEnuff (formerly Steel Craft) was founded in 1990 as an architectural metal fabricator specialising in specialty aluminium and stainless steel fabricating.

TuffEnuff diversified into trailer manufacturing in the spring of 1995. Initially, TuffEnuff manufactured small box utility trailers as an opportunity to use available manufacturing capacity during slow business cycles in the architectural metal business. By 1998, the trailer division had grown so much that TuffEnuff made the decision to become a full time trailer manufacturer.

TuffEnuff Pty Ltd is a company that manufactures trailers. It produces standard box trailers but will build customised trailers to the customer’s specification. It prides itself in the quality of its work and currently all design drawings are produced manually and there is no automation of the factory.



There are sales offices in Sydney, Melbourne and Brisbane. The manufacturing takes place in Newcastle (NSW) and trailers can be shipped using contract hauliers from the factory direct to the customer’s site or for pickup directly by the customer from the factory. The head office is also in Newcastle on the same site as the factory.

Since TuffEnuff started it has grown steadily. In the last two years sales really took off and increased by 40% each year. It now has a turnover of $10M and around 1,000 customers.

TuffEnuff has a very healthy level of retained profits and is eager to expand into new areas.

Policy At TuffEnuff we do our best to provide our customers with the best product, service and convenience they need – and all of this at a reasonable price.

A satisfied customer is our best advertisement. Our concern for our customers helps them to have the best, most reliable, most innovative trailers possible.

We know of many contractors, landscapers and concessionaries who purchase a trailer, and then modify it to mount equipment. But we offer our customers freedom to buy what they actually want. If we do not have a product that matches their requirement we can build it for them.



Staff

In addition to the managers there are:

• Finance – 4 account clerks

• General Office – 3 office assistants

• Manufacturing – 16 (sheet metal workers, welders, fitters)

• Human Resources – 2 filing clerks

Total head office staff is currently 30.

The three sales offices are run by account managers who have sales staff, office assistants and a designer/estimator. Each sales office has a show area for the display of standard box trailers.

TuffEnuff Pty. Ltd Newcastle Head Office

Bob Sedgewick Managing Director

James Blake Finance Officer

Jenny Smith Office Manager

Wolfgang Weiss

Manufacturing

Celia Norton Human

Resources

Angelo Cassati Sales and Marketing



Branch Manager’s Name Staff

Sydney Jason Potter 13

Melbourne Peter Flanagan 7

Brisbane Albert Chen 10

Sales office activities The sales offices have been strategically located in industrial areas and car sales areas. Each sales office is run by an account manager who supervises sales and general office staff. The account manager and sales staff spend time on the telephone calling prospective customers, visiting customer sites and also working in the sales office. They have some basic brochures but most of the sales are made to order. Customers may also walk in “off the street” to visit the show areas, which have basic box trailers on display.

Once a customer has expressed interest in the trailer the account manager or sales person will obtain the details, measurements, style, finish, etc., and produce a simple diagram of the requirements. The sales staff should also be able to give the customer an estimate of the likely price at this stage. When this estimate figure is agreed with the client the diagram and sales notes are passed to a designer, also in the local office, who will develop the detailed plan which will be used in manufacturing. The designer will then work out the final price for the customer. This may require the designer to contact head office to check prices and availability.

Once this plan has been completed the account manager will usually visit the customer, or get the customer to come to the office, so that the customer can sign off the plan as representing their requirements. A 20% deposit is asked for and a handwritten receipt is given to the customer.

The agreed plan is then sent to Newcastle to be manufactured.

If the client has ordered supplementary items which are not made by TuffEnuff then the local sales office will place orders on the distributor and will ask the distributor to hold the items until the trailer is ready to be shipped to the customer.

When the customer signs the contract a copy of the contract, the trailer design and the deposit is sent to head office and the originals are filed in the sales office.

The cheque is banked and the transaction is recorded in a spreadsheet. It is not put into the accounting system at this time because cheques cannot be received unless there is a corresponding invoice already in the system.

When the designs are received in Head Office they are checked and an estimator works out the requirements for the design. This is costed and compared to the quoted selling price. TuffEnuff normally expects to make 40 to 50% gross profit on orders.

The order is passed to the manufacturing manager who looks at the factory schedule and estimates how long this will take to make and when it can be completed. A fax is sent back to the sales office so that the customer can be informed and the delivery scheduled.

The sales order will be entered into the accounting system.

Meanwhile, in the sales office a list of non-TuffEnuff items is compiled and these are given to a clerk who will contact the appropriate supplier and confirm prices and times for delivery. Orders are placed on these suppliers.

In the factory the orders are scheduled basically as they are received and placed in an in-tray. The foreman is responsible for ensuring that the fabricators are kept busy and will allocate the orders when required.



When the order is completed a fax is sent to the sales office detailing the date of delivery. The sales office will convey this information to the customer and organise final delivery details. At the same time the suppliers of other components like wheels will be contacted and their deliveries scheduled to coincide with that from TuffEnuff.

When the trailer is delivered a dispatch document is created and a copy of this is sent to the accounts department. When this is entered into the system an invoice will be generated and this is mailed to the customer.

Terms are payment within 30 days and debtors are tracked in the accounting system.

Manufacturing Notable features of the manufacturing process are:

• Minimal inventory

• FIFO scheduling of jobs

• Specialist job roles e.g.

o clerk – storeman

o welder

o fitter

o assembly

o paint and coating

Design – drafting Special parts delivery

Component fabrication Powder coating



Welding

Assembly Assembly

Finished Trailer

Purchasing There are two types of purchasing processes, which are currently performed independently.

• Head office – Purchases raw materials on behalf of the factory and office supplies and services. The factory maintains small amounts of raw materials but since TuffEnuff tries to minimise stocks it normally orders in sheet metal and structural steel when it gets the customer order. When the customer order is received a clerk at the factory will check the design and then work out the materials that are required. These will then be ordered specifically for that customer.



• Sales offices - Each sales office will place orders for items that customers require which TuffEnuff does not manufacture such as electrical components, suspensions, hydraulic gear, wheels and tyres. These tend to be local suppliers and each sales office is free to negotiate their own terms. In addition each office has a budget for other purchases such as office supplies, sundry requirements, etc. Any item over $2,000 has to be approved by head office.

To obtain the best prices TuffEnuff has restricted its purchases of raw materials to a few suppliers. Each order generates maybe four or five purchase orders. TuffEnuff keeps in stock items such as rivets, nuts, bolts, washers and self-tapping screws. These stock items are only purchased from a handful of suppliers.

Since each office is allowed to make use of local suppliers for items not manufactured by TuffEnuff there are also several suppliers for each sales office. The details are shown below:

Location Suppliers

Head Office Manufacturing 80

Sydney 30

Melbourne 20

Brisbane 15

Due to the different locations and the propensity to use local suppliers it is rare that a different sales office will purchase from the same supplier.

The sales office will place an order on the local supplier but all financial transactions are processed at Newcastle. When the goods are received a copy of the delivery document is posted to Newcastle and the supplier will send invoices directly to Newcastle.

Payment to suppliers is normally made within thirty days.

Computer systems TuffEnuff has the following computer systems in place:

Location Hardware Software Used for

Head Office 12 PCs, approximately two years old.

Networked together.

Currently no Internet access.

One NetWare server, all others running Windows 2000 Professional OS.

Office XP standard edition.

Accounting software (DOS based).

Accounting and finance, letters and documentation, keeping track of materials in the factory.

Sydney Sales office

4 PCs used standalone.


Windows XP Home Edition.


Letters and quotes.

Melbourne Sales office

2 PCs.

Apple Macintosh Performa 5260CD

Mac OS. Letters and quotes.



features a 100 MHz PowerPC 603e processor, 8 MB RAM, and a 1.2 GB hard drive.


Brisbane Sales office

3 PCs used standalone.


Windows XP Home Edition.


Letters and quotes.

With such a small company no one has really been responsible for the computers and each sales office has been allowed to do their own thing provided they had the budget to cover the cost. At head office, each department has acquired PCs and about two years ago they were networked using the services of a local Systems Integration firm called Mr FixIT who has provided support as required since then.

Mr FixIT - Profile Mr FixIT support staff are currently responsible for the installation, maintenance, upgrades and day-to-day troubleshooting small and medium business computer systems. The problems faced by many small and medium businesses in regard to IT infrastructure are similar and we have learnt that your time is better spent doing what you know best. Let our engineers take care of:

• Getting (and keeping) your business connected to the Internet

• Getting your business on the web

• Getting your computers networked (sharing printers, Internet, files, etc)

• Allowing remote (distance) access to your network's resources

• Keeping your machines protected from viruses, spam and other threats

• Routine maintenance to keep your IT investment operating at 110%

• Performing upgrades and rolling out new hardware

• Providing technical support to your staff.

You will find our support staff an invaluable resource for your company's IT infrastructure whether you have 2 computers or 100 computers.

Accounting Software The accounting package is a DOS based program that has worked well in the past but is limited and unfriendly by current accounting software standards. Several functions like inventory and deposit cheques are tracked through spreadsheets.

Customers Customers can be classified as small, medium and large. The small customer may be an individual or small organisation requiring one or two trailers. The average order value for these customers is around $3,000.

Medium customers average around $20,000 orders.

Large customers average orders are around $75,000.

The breakdown of customers is shown below:



Location Small Medium Large

Sydney 400 75 10

Melbourne 100 15 2

Brisbane 300 40 6

The business is such that once a customer has purchased from TuffEnuff they may go two or three years before they need any more major purchases and so each year the sales force has to find new customers. There would be around 1,000 to 1,200 invoices issued each year.

Problems The company’s internal systems and computer systems have worked well in the past but with the increase in sales TuffEnuff has realised that they may not be able to cope with continued expansion especially into some of the new areas that it hopes to exploit.

In particular the following problems have been experienced:

1) Customers want to be able to see more examples of the types of customised trailers that can be produced. The sales catalogues are very basic and the sales offices can only hold a limited number of demonstration items. With the benefit of hindsight it would have been a good idea to photograph each customised trailer for inclusion in a more comprehensive brochure.

2) The estimates that the sales force produce are normally on the low side so that they can get the customer’s business. When the designer works out a more accurate cost this can be 10 to 20% higher than quoted. Several customers have then cancelled their order. In other cases the office manager has agreed to the lower price and TuffEnuff has only made a margin of 20%.

3) It can take several days for the local office designer to get information back from head office before working out the price. Several customers have cancelled their orders because of this delay.

4) There have been problems coordinating the supply of non-TuffEnuff items. These are often supplied early or late. If early then the supplier is demanding payment well before TuffEnuff gets paid from the customer. If late the customer is not happy and will refuse to pay any money until the whole order is complete. Both issues cause cash flow problems.

5) Factory cost reporting is showing an increase in the amount of scrap and waste. Since raw materials are ordered separately for each client no attempt is made to consider savings from bulk purchase or larger sizes. In one month there were orders placed for the same material every day. If these could have been combined there would have been a substantial saving in delivery costs and larger sizes, costing less could have been purchased.

6) Third party supplies are not coordinated and so there is no opportunity for bulk buying and negotiating better prices.

7) There is no notification to head office of the amount that has been ordered on third party suppliers and often the first time the accounts office is aware of the order is when the invoice comes in.

8) Since the supplier may require payment before the customer pays TuffEnuff this can cause cash flow difficulties. In one month a large customer ordered 30 customised dump trailers each requiring hydraulics at $650 each and this had to be paid a month before the cheque from the customer came in.

9) The sales offices are demanding better computer facilities so that the sales force can send out more professional quotations. Most of the office staff can use computers and they do not like being forced to share. They think that they should have one each. The sales force in particular want laptops. The designers also believe that they should be using CAD systems for their designs and want Sun Workstations.

10) There have been several occasions when a large order has been held up because it was missing small but essential components like LED lights.



11) With the increased number of customers the accounts department have forgotten to take into account deposits (recorded separately in a spreadsheet) and have been chasing customers for the full amount of the invoice. This has lead to disgruntled customers.

12) Occasionally the sales office may delay sending the cheques to head office with a corresponding delay in banking the cheque.

13) The head office estimator is finding an increasing number of mistakes in the costs calculated by the sales office designer, usually to the detriment of TuffEnuff. Since the contract has now been signed it is not possible to change the price.

14) While additional staff have been taken on at the factory the foreman does not identify expected dates of delivery but simply processes the jobs sequentially. In addition when quoting the time for delivery the estimator does not know what the current queue is but assumes that the job will start almost immediately. This means that most orders are shipping between 2 and 4 weeks later than quoted. Recently, as the number of orders has grown, the situation has started to deteriorate.

15) About a month ago the network in head office failed as the file server disk became full. The Mr FixIT support people came in and deleted old files but the system was down for about two days. Luckily the monthly statements had been sent out so no real damage was done.

16) Because each order is built for the customer TuffEnuff does not record inventory items and invoice details will often describe the product shipped as - “Trailer as per design BT437”. This means that it has not been possible to analyse sales in any way. Management is now keen to identify what types of trailer are being sold and which finishes, and accessories are most in demand etc.

Future strategies In addition to looking at ways to stop the problems listed above TuffEnuff has recently employed a firm of business consultants to assist it plan a business strategy. Bradshaw and Associates (see profile later) believe a move to lean manufacturing and better internal communications will be a great benefit to the company.

Don Bradshaw is something of a lean manufacturing evangelist and has provided a table outlining its benefits:

Problem Effects Remedy

Inflexible equipment Long, expensive setups

Large batches

Inappropriate layouts

Setup reduction

Smaller scale equipment

Functional layouts Excessive handling

Work-in-process queues

Disconnects

Poor quality

Cellular layouts

Quality Angry customers

High scrap & rework costs

Unpredictable schedules

Six sigma & TQM

Workcells

Work & quality teams

Inappropriate scheduling Complex systems

Inaccurate inventory records

Large queues

Long lead times

Kanban

Broadcast schedules

Workcells



The other major area that Bradshaw would like to see addressed is a move towards Web Services where TuffEnuff can take advantage of closer integration with supplier systems and improve the integration of it’s own distributed systems. Given the current very basic use of IT systems within the company this should not be the major problem that a company with extensive legacy systems would encounter.

Some of the major changes in direction that arose from the strategic plan include:

1) A move into the camper trailer and boat trailer market to provide solutions for people travelling around Australia or towing boats. This will be achieved by producing a range of modular components that can be manufactured in higher volumes rather than individually customised.

2) To sell the camper and boat trailers through new channels as well as from the existing sales outlets. Sales will be made direct to customers and also to large car hire outlets such as Avis, Budget and Thrifty. The possibility of franchising sales outlets has also been considered and this is likely to be pursued later.

3) To identify an advertising campaign to cater for this market that will need brochures and fliers. The consultants have suggested the use of the Internet as an option. This is likely to be used both to provide information about customised trailers and to sell direct from the website.

4) An IT strategy needs to be put in place and IT has to take on greater importance in TuffEnuff. It has been suggested that Jenny Smith should become the IT manager and apart from the Internet project she should be looking at:

• CAD systems for the sales offices and head office

• New accounting systems

• Manufacturing systems to support the new and old business

• Networking and communication systems between offices

• B2B systems for suppliers and B2C for customers

• Internal web services to better integrate company systems and processes

• Improving the customer information systems to get on-going sales from customers

• Making use of outsource companies as much as possible.

The business consultants have expressed some reservations about the ability of the current ISP WebCraft to support TuffEnuff’s Internet communication requirements in the future.

Bob Sedgewick the Managing Director and founder of TuffEnuff is keen to see the business expand and fully endorses the consultants’ suggestions.

Jenny Smith has an excellent grasp of computer applications and has been instrumental in setting up a website for her netball association using Dreamweaver. Jenny Smith is particularly eager to get a company website up and running with an online catalogue, ordering and payment facilities. She envisages performing routine updates of content by either herself or her prospective IT assistant. She is looking forward to the challenge.

TuffEnuff has decided that they may need to employ someone to support Jenny, especially in the networking and Internet areas, but they expect to be able to purchase most of the software as a package.

With the increased emphasis on new software the company is aware that it must make provision for staff training.

Funding is available and allocated to this project and every one is motivated and ready to go.



The Consultants - Profile

Don Bradshaw and Associates

Our focus is on working with smaller organisations which are lean, fast paced and flexible to the needs of their customers. They have the ability to react quickly to changes in the market and exploit these opportunities.

Using our consultants is a cost effective solution that allows you to implement change quickly. We are there when you need us to get the project done quickly. You don't need to invest in permanent staff when you can use us as your virtual staff. We understand your need to reduce costs and are there with ideas and business advice to help you make it happen.

Services range from startup plans to helping mature businesses prepare for their next growth phase. Some of the services that we offer are:

• Business process re-engineering

• Developing a marketing program

• Improving web site rankings

• Preparing a business plan

• Analysis of business operations

• Implementing Lean Manufacturing

• Developing product costing

• Preparing your company for ISO9000 registration

• Designing your production line.



The Website Developers

Ravi Singh

WebCraft Pty. Ltd. are website developers and provide ISP services such as web site hosting. Managing director Ravi Singh is a gifted programmer with nearly 10 years experience in web development. There are four other employees. A web designer, a programmer with Java, Perl and C skills, a network specialist, and a systems support/Webmaster. They have been contracted to develop a TuffEnuff Pty Ltd Website. Initially with the goal of providing customers with information on products and services, but in the longer term the site will be integrated with B2B and Web Services processes as they come on stream.

Diagram of WebCraft Pty. Ltd Network Infra-structure



They have a network infra structure with the following features:

• With 4 digital modems it is capable of supporting about 40 ISP client access services at 33Kbps.

• The servers run Linux/Apache Web Server.

• WebCraft technical staff have good UNIX skills and are familiar with Perl/CGI and mySQL database technology.

• Primarily a technical company they do not have a graphic artist, preferring to contract freelance graphic designers when required.

WebCraft have recently taken on a junior employee who is undergoing on the job training and is enrolled in the NSW TAFE Certificate IV Information Technology (Website Design). Ravi Singh has undertaken to supervise the trainee directly.

Web Hosting At this stage TuffEnuff have decided that hosting the website is beyond their experience and expertise and that WebCraft will provide the hosting and maintenance. However they are keen to ensure the website is dynamic and fresh and expect to develop new content and upload it to the website.

TuffEnuff’s Wish List During initial discussions with the WebCraft design team and the TuffEnuff management team, Bob Sedgewick mentions that he has been doing some browsing of online trailer suppliers and was impressed by an order form with animated graphics. From his description it sounds like a Flash animation. He says he would like some form of visually arresting animation effect with graphics or text for the TuffEnuff Website.

Angelo Cassati would like to use the TuffEnuff online presence as an opportunity for staff training, particularly in the area of sales techniques, and telephone skills. He has requested that sales staff have access to some online training on sales techniques.

James Blake feels it is important that if the company is to develop a website then they should ensure that they have a clear policy statement. He is a little unsure of moving to financial transactions over the net.

Jane Lee is concerned that if customers are going to supply information about themselves on the website there should be a privacy policy.

Wolfgang Weiss suggests that customers would be impressed with video footage of the manufacturing processes. He’d also like to get his hands on Autodesk.

Jenny Smith would like to see the company use eBay as an additional outlet for box trailers.

Accessibility Issues During the course of the management team’s meeting with WebCraft they are made aware that Bob Sedgewick has impaired vision and that web site accessibility is an important issue for the company and its customers.

TuffEnuff Pty Ltd Case study for reference throughout this qualification.



Appendix B – Bob Sedgewick’s Estimator Scenario

Bob Sedgewick had been watching his grand-daughter playing with a mix-n-match program in which you could add different features to a face outline. Red frizzy hair, glasses, long nose etc. This started Bob thinking about something on his new website to help customers select different options for a basic trailer.

He did some browsing and came up with:

http://www.uptoten.com/kids/boowakwala-world-hats-mixgame.html

http://www.bbc.co.uk/schools/citizenx/being/identity/activity.shtml

http://configurator.deere.com/servlet/com.deere.u90947.eproducts.view.servlets.EProductsHomeServlet?userAction=&lang=en&country=us&sbu=CCE

http://www.technicon.com/products_keytechnologies_cfg.html

http://www.sysonline.com/WebConfigurator/default.aspx

http://www.dell.com/

http://www.catalogdatasolutions.com/

Bob mentioned his idea to Jenny Smith who he knew was quite knowledgeable about anything to do with the web. She said “we could do something simple with HTML pages, check boxes and drop down menu and some pictures of our products, but something with flash might be better”. Jenny gives Bob some urls to check:

http://www.miniusa.com/crm/load_mini.jsp?link=buildyourown/minicooper/

http://www.yankeecandle.com/cgi-bin/ycbvp/cfg_corp.jsp



Appendix C – Design Brief

Corporate Profile

Current Situation

Business Objectives

Target Audience

Customer (User) Benefits

Creative Considerations

Single Most Important Point



Appendix D – Design Brief and After Design Brief and after .. advice for clients

1. Invest as much time in your answers as the questionnaire may require.

2. Don’t leave questions blank. Each of them has been included because they allow the designer to understand your needs and preferences. No matter how redundant something may appear to be, it’s important for the designer.

3. Don’t take anything for granted. Something that may be well known by you and the people who are related to your business, customer and market could not be known by the designer.

4. Colours, font styles, shapes and effects are important clues for the designer. Give your suggestions even If you are not sure about some features, because there is no better way to know if something works or not for you than including it on drafts. If the designer doesn't find any clue, he/she is forced to draw generic designs as he/she has no particular knowledge about your preferences.

5. Don’t expect to receive your final product at once. From initial drafts to the final product, there is a fine-tuning process, getting the draft closer to your expectations. Great initial drafts have been ruined by further revisions, and modest initial drafts turned out to be great final products. The quality of the information provided to the designer improves the quality of the product design.

6. Designers need to be guided to know your tastes, not to copy somebody else's.

7. Be sure your comments and suggestions are clear. Explain why you like things and why not, and give clues about how to refine the design. If you like a draft, you can still get a product closer to your expectations by guiding the designer to refine it.

8. If you provide accurate feedback during the design process, it is likely that you will get a design that satisfies you. When the design process is over, choose the draft that best meets your needs and "adopt" it.

9. Don’t only choose one design because you like it. Ask your customers, friends, workmates their opinions on it.



Appendix E – Quotes

Quote Who

“an online estimator would be nice” Bob Sedgewick

“I’d like to have smart phones for my sales staff”

Jason Potter

“I’m fed-up getting blamed for low quotes” Simon Styles estimator Sydney Office

“I’m sure welding stainless steel in an inclosed area is a health risk”

Welder Newcastle factory

“had to cancel the order, delivery took too long”

Salesman quoting a customer

“what we want is some snazzy graphics to catch their eye”

Bob Sedgewick

“those old PCs are a pain” Mr Fixit

“could we use MYOB or Quicken with manufacturing?”

James Blake

“ it takes ages for head office to confirm my estimates”

Estimator Brisbane office

“I don’t know why we order some parts from local sales offices. I cant see that it makes us more efficient”

Angelo Cassati

“we waste so much sheet metal” Sheetmetal worker Newcastle

“branch offices keep quoting too low” James Blake

“we should be selling surplus and remaindered custom jobs on ebay”

Jenny Smith

“a decent cad/cam system would really give us a boost”

Wolfgang Weiss

“I wish manufacturing would do something about their unreliable scheduling”

Angelo Cassati

“nice to have laptops” Angelo Cassati

“some of our customers could use some advice on basic trailer maintenance”

Wolfgang Weiss

“a good intranet would be great for the company. There’s so many initiatives we could explore”

Jenny Smith

“I’d like some software to help manage personnel info.”

Celia Norton

“this company needs to look seriously at integrating all its work flows and systems”

Don Bradshaw Consultant

TuffEnuff Case Study

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