"Our aim is to be Britain's most popular bookseller, stationer and newsagent."
The first news agent in the Smith family name opened in 1792, and the company, WHSmith, was created in 1828. WHSmith Plc is part of the FTSE mid 250 Index. (www.whsmith.co.uk)
WH Smith is one of the UK's largest retailers, with 543 high street stores and 203 retail units in 129 airports and train stations. Its stores are focused on the categories of Stationery, Books, Entertainment, News and Impulse purchases. Each year, the company's High Street Retail division procures around £1.5 billion in goods from more than 500 trading partners. (www.whsmith.com)
WHSmith offers customers over 2 million books, thousands of Stationery products, Magazines and Gift ideas and over 200 thousand entertainment products including DVDs, CDs, Games and Gaming consoles. WHSmith stores are frequently first choice for customers on the high street and are a trusted retailer for customers at travel locations. WHSmith's 31,000 employees serve the 70% of the UK's population who visit a WHSmith store each year. (www.mintel.com)
WHSmith have a huge business network due which some staff are responsible to report directly to executives, as shown in Fig 02. The administration department receives order from customers and passes them to the retail or wholesale department; administration is also responsible for ordering and maintaining stocks, and effective communication with customer and suppliers also includes in their responsibility.
As WHSmith is globalised organization, they emphasis in making new developments in technology and latest innovation, they believe that staying upto date in modern communication technology will helps them to achieve their goals and targets, and enable them to be competitive in increasing their market share in the local as well as in the global (international) market
"A problem well defined is a problem half solved." (Anonymous)
Davis (1994) defines a problem as "a difference between things as desired and things as perceived." The first step in solving the problem successfully is defining it in a way it can be solved.
According to BBC Online, once WHSmith was a principal outlet for books and records for a vast proportion of the public, now it has lost book sales to rivals like Waterstone's and Ottakar's, and to online sellers such as Amazon.
There are some under mentioned problems which are facing by WHsmith now days:
- Supply Problems:
Paul Smiddy, an analyst at RW Baird, told BBC News Online: "The problems at WH Smith go back quite a long way. I am afraid it is one of those retail names that, if it was not already around, you wonder if anyone would bother inventing it today?"
According to Robert Clark, research director at Retail Knowledge Bank, said: WHSmith depends very much on its Christmas sales, and there have been problems in the last couple of years with sales execution, and supply, Currently WHSmith do not make the most of their supplies to home office supplies educational and schools currently due to shortage of stock.
- Infrastructure Problems:
There has also been condemnation in store-layouts are found as it is not ideal, and that is overlooking possible areas of strong sales. (www.bbcnews.com)
Like many retailers, WH Smith introduced e-commerce because it helped increase the speed at which the business could operate, streamlining and enhancing services in a number of operational areas.
- Inventory Problem:
Most of the time WHSmith administration face problems of shortage of stock or lack of inventory management. As WHSmith promised its customers of providing 5 star services, it was seen most of the time stock/inventory problem becomes major hurdle in maintaining the required standard of customer services. Concern was also expressed by the warehouse staff with occasional inventory shortage. Most of the time stocks ordered from overseas suppliers face delays, wait to send with whole lot to take advantage of cheaper freight and other relevant charges. Most important inventory are some time delivered or ordered by air at a high cost for the sake to save time.
- Warehouse Space Problem:
Shortage of space is also highly facing by the WHSmith's management nowadays.
- Lack of Communication:
There is lack of communication also found between various departments. Admin department of WHSmith possesses key position in maintaining all supply chain processes. The main job of Admin department is to build a strong relation between key stakeholder in order to accomplish their task effective & efficiently. Efficient Communication is very important for administration as on day to day transaction they have to talk with retail department, and wholesale department, whenever the inventory for one of the products reached a fairly low level, WHSmith main Admin department ordered stocks.
- New Entrants:
Along with other, the main WHSmith's difficulties include the new entrant and how they respond. During this period, relatively new entrants to the market like dedicated stationery stores, specialist card shops and Internet retailing of books CDs/DVDs and computer-games were threatening core elements of WHSmith's business. Furthermore, supermarkets like Tescos were selling practically everything that WHSmith did.
"I keep six honest serving men (they taught me all i know); Their names are What and Why and When and How and Where and Who." (Rudyard Kipling)
No matter how large is the tip of the iceberg seems, 80% of the iceberg lies below the surface of the water.
The problem works as in a same manner as iceberg, no matter how serious or stressful is the problem; it is only a symptom of the underlying trouble. The major aim of this theory is to remind to have patience and understand problem clearly. There few major problems which are facing by WHSmith are as below
- Threats from internet comers
- Shortage of space (warehouse)
- Communication problems between department (retail & Wholesale)
- Shortage of Stocks
Identify of Best Suitable Solution
"For there are few things as useless if not as dangerous as the right answer to the wrong question," Peter E. Drucker, The practice of Management
Once the major problems are identified it helps then to look forward to find the best suitable solutions that how to eliminate the problems.
"Decision making is the activity that lies at the heart of the management". It is a process of selecting a logical choice from the available methodologies. Individual or an Organization, when tries to make a good decision, most of the time looks after the each positive and negative points of each option available, and consider all the alternatives. For effective decision making, organization forecast the affects of each option, and concludes option which is the best for that particular situation. Decisions are made in order so that organisation take advantage of opportunities and overcome the crises.
There are several tools for solving a decision problem. The selection of an appropriate tool is not an easy task and depends on the concrete decision problem, as well as on the objectives of the decision makers. Sometimes the simpler the method, the better, but complex decision problems may require complex methods, as well.
Soft System Methodology for WHSmith:
"I now believe i have found the true solution" Albert Einstein 1925
Among a lot of various methodologies one which suits WHSmith's for solving problem is Soft System Methodology (SSM).
According to Underwood (1996) soft systems methodology (SSM) was developed by Peter Checkland in the 1981 with the view of using it as a tool to solve business problems in lieu to eliminate the deficiencies that found in the system of the business. Forbes (1995), states that SSM is the procedure of making a successful strategic planning of an organization.
Finnegan (1995) explains that: The concepts (of SSM) is totally depends on the practical implementation and real experience that were found in the complicated managerial systems. The methodology is designed in order to solve the problems in such systems which are amorphous and poorly defined, to be incorporated into system design work.
According to Jenning et al (1994), SSM invented with the aim to work as a strategy for analysing the multifaceted problems situation. The main aim of methodology is to improve the system which is done my going through various stages which are shown in Fig 02.
Platt and Warwick (1995, p.19) explains that "SSM deals with problem formulation at the strategic level. It partly aims to structure previously unstructured situations, rather than to solve well-structured problems". Checkland and Scholes (1991) identify a seven stage process of inquiry.
Soft systems methodology is a innovative approach which help WHSmith solve its problems effectively, in a flexible and individualistic manner, to analyse the flow of communication internally and externally SSM works as milestone.
It is a useful process for analysing both quantitative and qualitative information an organisation. This methodology is outlined and then applied to WHSmith to analyse the use of technology and the flow of communication in the company.
We have completed the first and second step, very much in the real world, is to acknowledge, explore and define the situation of WHSmith in some way. Peter Checkland emphasises on "Solving problem efficiently" which can be solved by using SSM.
Implementation of SSM In WHSmith
"For now we see through a glass, darkly;" (1 Corinthians XIII v.11)
The efficient and effective flow of communication between stakeholders enables the firm to function more efficiently. It is a tool that helps the WHSmith to organise, manipulate and analyse information that can be used to improve business operations and decision making.
Stakeholder key Players) Of WHSmith:
A person or a group of people or organisation who have some interest in your organisation called as Stakeholders. Stakeholders have some expectations and can be internal or external to your organisation.These are those people whom without there support an organization unavailable to run successfully.
The identification & managing stakeholder's helps administration to understand current circumstances and which factors influence them and helps them to maximize the profit and minimize the inventory and other problems which are highly faced by the Company. One of the major aims of identification key stakeholder is to develop a relationship between the different stakeholders.
After the identification of the key player in decision making then the next step is to prioritize them according to their Power and interest, for which Power Interest grid is the best in practise for doing stockholder analysis.
Power- Interest Matrix:
Huxham (1996) has introduced a power-interest grid which categorizes all those people who may need to be taken into account in formulating or implementing strategy.
The analysis will helps WHSmith to understand the stakeholder power in shape of the ability to and how they use their abilities for their interest. Suppose if the corporation plans to change their store infrastructure, then what would probably try to influence this decision, and provide remarkable information how to deal with such stakeholder or group and which of them are important in making decision or for decision process. As shown in fig 3 in appendix 3.
Understanding your key stakeholders:
Power Interest grid helps organization to manage their stakeholders adequately according to their position and help to make such strategy which helps in, what motivate your stakeholders and how you need to win them around.
After understanding of WHSmith's key stakeholder afterwards the main target of the administration is that how to manage communication with your stakeholders so, that you can win them around to support your making various decisions.
After the analysing of key players the analysts' next important task is to 'express' the problem situation in form a rich picture. The term 'rich picture' as used in soft systems methodology made by Checkland (1972, 1981, 1990), it is one of the first stages that organization takes in order to analyse problem situation.
Rich pictures helps WHSmith in making the organisational structure, processes and issues of the organisation, which help in sorting out main causes of the problem.
RP give WHSmith opportunity to identify important characteristic of their work, missing elements and incorrect terminology (Darzentas, Darzentas & Spyrou (1994)). RP main emphasis on the flow of communication made between internal and external stakeholders and gives solution how to eliminate the communication barriers between different departments.
Issues of Concern
- threat from e-commerce
- shortage of warehouse space
- flow of communication between retail and wholesale
- stock shortages inventory problems(Retail & Wholsale)
- what strategies do competitors intend adopting?
External Flow of Communication
After the analysis of the above WHSMith's rich picture some of the important points that need consideration are as follow,
The clear reflection of growing annual profit of WHSmith shows that WHSmith develops good customer relations and provides excellent service, demonstrated in the strong communications links.
The competitors are looking for new ideas and marketing strategies to stay competitive with the firm. A broken communication flow indicates that WHSmith trying to remain update as much as possible on competitors' strategies, and do not tries to communicate with the competitors in the same market.
The company maintains strong communication links with suppliers by is aware of the threat of direct customer access to suppliers via the Internet. WSMith tries to maintain good communication with e commerce supplier; though there are some complications found between both suppliers and WHSmith in-term of JIT delivery therefore, WHSmith making new development in IT to order stock promptly as it reaches to lower level.
As we know that Govt. came's under low power and low interest stakeholder's category therefore, satisfactory communication is maintained with regulatory bodies.
Internal Flow of Communication
The CEO have high power and high interest in the company and is actively involved in all areas of the business and is well informed on concerns expressed by the different departments. The CEO's likes to participate in the day to day running in all areas of the business. The CEO of WHSmith believes in marinating strong communication between department increase the essence of there operations.
The administration is operating according to the current business's procedure. Concern is expressed by the both retail and wholesale departments regarding inventory levels.
Hicks (1991) define a root definition as "a concise verbal description of the system". According to Sasse (1996) root definition portrays four different systems which are,
- Issues based systems
- Non-service systems
WHSmith is a privately owned, which is one of the UK's largest retailers, with 543 high street stores and 203 retail units in 129 airports and train stations. Its stores are focused on the categories of Stationery, Books, Entertainment, News and Impulse purchases. Each year, the company's High Street Retail division procures around £1.5 billion in goods from more than 500 trading partners., they imports some of the books from there overseas supplier and sell them as wholesale or in retail basis through there retail stores or thorough online.