Reference no: EM132807887

CASE STUDY AND QUESTIONS:

• Company History. Wawa Wild Wings, (WWW) was formed in 1980 by 3 residents of the town of Wawa Ontario, located about 230 kilometres north of Sault Ste. Marie Ontario. The 3 equal partners are Cosmo Kraemer, George Costanza and Elaine Benes. All 3 of the owners were frustrated at the lack of availability of hot, ready to eat chicken wings in their small town, in particular during Hockey Night in Canada telecasts in the harsh winters when they found the local O'Tooles restaurant closed. As a result, the 3 started to make their own chicken wings having purchased the fresh uncooked wings from the local IDA grocery store and cooking them in Cosmo's garage in a large deep fryer. Soon word spread across town along with the smell of their Commando 450 Industrial sized deep fryer of their awesome wings and locals started arriving looking to buy some of these wings. Building on their local success, the owners incorporated Wawa Wild Wings Inc. in early 1981. Despite the overall economic recession in the early 1980's WWW expanded across northern Ontario into over 15 small towns by selling franchise opportunities with small seating areas for less than 15 customers and focussed on their less labour-intensive takeout and drive through sales.
•  There was no inside service, customers placed their order at the one point of sale terminal and then decided if they wanted to eat inside the location or take their food to go. Each location had a Commando 450 deep fryer which allowed for up to 450 wings to be cooked at once. The ready to cook chicken wings and other ingredients such as wing sauces and French fries were shipped to the location on a weekly basis, originating from the Wawa head office where the company had expanded and was the sole source of items sold at the franchise locations to ensure quality standards. In 1987 the franchises were required to provide delivery to customers. The delivery charge was $1.50 per order and was waived if the order was over $50. In 1988 WWW started to offer franchises in other provinces within Canada and several opened in BC, Alberta and Quebec.
•  By early 1990 additional locations opened in Nova Scotia and Manitoba. The increasing sales volumes at the locations across Canada lead to a common complaint from the franchise owners that they could not keep up with the phone orders and the walk in/drive through orders. As a result, WWW decided to centralize the phone order taking process by opening up a call centre in Wawa. A Canada wide toll free number of 1-800-WINGS4ME was established. Franchise owners experienced further growth and customer satisfaction. In the early 1990's WWW also expanded it's menu offerings by adding some more healthier choices such as salads as well as the ability to purchase one of their 17 flavours of chicken wing sauce by the bottle. With the increased menu and the volume of their sales, the owners of WWW realized they needed to make some changes in order to stay an industry leader as several US based chains such as "Wing It" and "Cluckers" had started to enter the Canadian market as well as a company named "Buffalo Wings" which ironically was based in Minnesota. The major changes were as follows.
• 1. Faced with increase inventory demands for the fresh uncooked chicken wings WWW opened a facility in Lucan Ontario near their major chicken wing supplier's farms. This allowed for reduced delivery time and allowed WWW to more closely monitor inventory levels at their warehouse. The new Lucan warehouse now contained all of the inventory products for the franchise owners.
•  2. Not wanting to lay off the employees who previously managed the inventory out of the Wawa location, the building was expanded for the centralized call center. All other business operations including H/R, purchasing, accounting, information technology and product development continued to be based in Wawa. WWW was one of the early adopters of the AS 400 system by IBM and the system is still in place. 3. In addition to telephone orders, WWW started to accept orders over the World Wide Web as they called it in the early 1990's. This required significant infrastructure in terms on internet access cabling at the Wawa location and the Bell Canada building next door for their dial up service.
• Present Day......... It is November 25th, 2019 one day after the Canadian Classic CFL championship game, the Grey Cup was held in Calgary Alberta. The Grey Cup is one of the busiest days of the year for most restaurants and this year was no different for the WWW franchise owners. Record sales were reported across Canada, but there was concern for the 3 owners at WWW. While the AS 400 system from IBM (now called System i) was able to process all of the requirements for their busiest day of the year, there was concern about the system for future planned expansion to the United States. WWW found that almost half of their sales were generated through their phone app "Wing Me" released in 2018 and which had a 30 second commercial during the Grey Cup game and recorded more downloads of the App on that day then it had in the previous year. The second busiest day of the year for WWW is New Year's Eve and this has prompted a meeting of the 3 owners. Elaine along with being an owner is in charge of the I/T system while Cosmo is responsible for the warehouse and delivery aspects. George is a natural salesman and as such is in charge of franchise relations and business development for WWW. George is concerned that the current IBM "System i" can no longer keep up with the "new way" that customers are placing their orders through the "Wing Me" app.
• While Elaine was in charge of the development of the "Wing Me" app, the majority of this work was sourced out to a software company in Guelph Ontario called "Apps R US". George told the group that he has heard that "the cloud" is the future and that WWW needs a system that can be located in the cloud to support current growth as well as an eventual move into the US market. George is concerned that the point of sale system and general ledger will not be able to keep up with the pace of the app users who are able to place their order in seconds while standing outside a location and then must wait for the order to be prepared along with the phone in, walk in, drive through and internet site orders. Cosmo is concerned on the ability of the Lucan warehouse to properly supply the existing locations with the increased sales and in regard to future possible expansion to the United States has determined that Logan Ohio is ideally situated as a base city for their first US warehouse. Elaine up to today had been comfortable with WWW's current accounting information system on the System i platform as it has provided accurate financial accounting information in a timely manner. With the growth in sales, the demands on their supply chain to the franchised locations and the increasing use of the "Wing Me" app that more detailed customer order information could assist in many areas and allow them to maintain their current competitive advantages. With the increasing fees charged by 3rd party delivery services, the owner's at WWW are also aware of the need for their sales system to provide a seamless transaction and would encourage customers to pick up their food at the WWW location or have it delivered by the employees of WWW.
• These increasing fees ranging from 25 to 35% of the order amount being charged to WWW are direct costs that are not recoverable and are paid on a 50/50 split between WWW and the franchise owner where the sale takes place. The 3 owners agree to meet again in 1 week's time to review their possible course of action. Additional information. Order placing options in place at WWW There are 4 ways in which an order can be placed at WWW for either take out, eat in or delivery. Walk in Order. These orders are taken by the franchise employees as the customer enters the location. Counter staff enter details of the order into the point of sale terminal at the front counter. Payment may be in the form of cash, debit or major credit card. Telephone Orders. The toll-free number 1-800-WINGS4ME is called by the customer and the call is answered in the central customer contact center in Wawa. This center is staffed to reflect the hours of franchise operation across Canada's time zones. The phone order is handled by a customer service representative who manually types in the order into the sales system while they are on the phone with the customer. The customer's phone number is used to identify the customer as each customer would have a unique phone number. Based on the customers postal code, they are directed to the nearest WWW location for pick up. If the order is for delivery, the customer is advised which location will be preparing their order. There is a verification process within the sales order system to verify that the address is correct and identifies the main intersection near the delivery location to assist the driver in delivering the order in a timely manner. The order is not processed until the total amount due has been charged to the customer's credit card and verification of this has been obtained by the customer service rep.
• Once payment has been confirmed, the order is sent through the system to the applicable WWW location where the food will be prepared. The information is sent both to the kitchen where the food is prepared and the front counter of the location where the order will be picked up, or form where delivery will start. Once the food has been prepared by the kitchen, it is brought to the front counter where it is matched up with the order and held for pick up either by the customer of the delivery person. The wait time to place a phone order has increased from 1 minute when the system started to almost 5 minutes in the current year. The percent of dropped calls where customers hang up before placing an order has also increased. Internet Orders. Customers must first register on the WWW website by providing their basic information such as name, address, and postal code along with their phone number which is the key identifier of the customer. Once a customer is registered, they do not need to re-enter this information. All they need to do is complete their food order information.
• The customer then selects the items for their order in the same manner as the telephone orders which is based on a series of drop-down menu options such as type, quantity, sauce, drinks, along with other menu items such as salads and most recently deep-fried pickles. The customer is required to answer each of the questions, even if they are not ordering a specific menu item by entering a "0" in the field. Each screen also has a "chat" option where they can engage in an electronic chat with a customer service representative based in Wawa to address any issues. These online orders require that the customer confirm the location for pickup or the delivery location if that option is chosen. As with the phone orders, payment is confirmed as well in advance of the order being accepted. There is a firewall in place to protect the customer information. Wing Me App. Based on the success that WWW had with the internet ordering system, this App was externally developed and has had significant growth in the number of users along with usage. The App can be downloaded free of charge for both Android and ios users. Once the app has been downloaded, the user is eligible for a 10% discount on their first order. Customers must input the same information as the Internet Order users and the phone number entered is used to identify customers. One significant improvement in the App over the Internet order system is that App users can review recent orders and simply click on a "re-order" icon to place an identical order. The order history period is the 8 most recent orders and is limited to the previous 6 months. The process for placing the order through the App also allows the customer to store a "preferred" location or find a location near them using the GPS feature of the App. The security features of the App are the same as the internet order process where a password is required when the App is opened. Internet Order/Wing Me App Issue: When the App was designed by the developer, an incorrect pricing feature was included. As a result, for a period of time customers using either the Internet Order or the App were able to purchase 2 orders of 25 wings for a total price that was less than the price for a single order of 50 wings.
•  A customer identified this, contacted WWW and the process was corrected, the customer received free wings for a year as a goodwill gesture by WWW. Sales Support: Staff at the Wawa customer service center are long serving employees with many of them having been at the center since start up. To support the fluctuating demands for customer service, WWW also employs a few hundred "work from home" (WFH) employees who work mostly on Thursday, Friday and Saturday nights as well as during major sporting events where WWW has peak demand. These WFH employees have a WWW supplied laptop that allow them to provide the same customer service experience as those located on site in Wawa. Supervisors at the Wawa center can listen in to all calls received either at the Wawa center or at the WFH sites. The System i at WWW is actively maintained and updated as Elaine takes great pride in this system which she first used when she attended Northern College in Sault Ste. Marie in the late 80's. The use of coupons and price changes in relation to supply costs and competition activities consume considerable time to ensure that the system functions as designed. Ever since the mistake in the order price of the 25 pack orders with the Wing Me App, additional resources have been devoted to the integrity of the system, but this did not prevent an error that affected all orders not placed in person. The system did not have in place a limit on the number of salad dressing packages that a customer could select with a salad without incurring an additional charge.
• The max amounts should have been 1, 2 or 3 depending on the size of the salad ordered. The sales tracking system is the basis for the replenishment of stock at the WWW locations across Canada. The sales information is processed by the accounting department in Wawa and is supervised by Elaine. Each location prepares a daily summary that must be forwarded to the Wawa office by end of day through the internet in order to ensure expedited delivery of inventory based on the days sales. The accounting staff manually input the sales information from the reports into the accounting information system. Daily reconciliations of sales by all means for each location are completed by the Wawa staff and once approved by the accounting manager are stored in an on-site server. The server storage is only utilized at 20 % as it was upgraded a few years ago to a much larger unit.

Problem 1: In regard to the internet order/Wing ME App order systems, what new risks do these present WWW and what risks should they have considered. How will the use of these 2 ordering systems affect the risk of going to the cloud-based system that George has suggested they look into?

Problem 2: Which steps should WWW take to help ensure that their Accounting Information and IT System are properly aligned with their business strategy? Which parts of the IT system if any can be moved to cloud computing.

Problem 3: If WWW decides to move to upgrading to an ERP system what would be the general advantages of doing so. If WWW decides on a modular ERP where only certain modules are purchased, which four or five modules would you place as a priority for them to purchase and why have you selected these modules?

The initial order taking processes were the in-store and telephone methods, followed by the internet and recently the App Wing Me. For each of these 4, state one internal control strength and one internal control weakness. Clearly state which item is the strength and which is the weaknes