It is prescribed for Moore to buy request administration module since Moore Medical Corporation is right now confronting the issue of the lack of stock when request surges for specific items. The actualities of the case display that the present stock acquirement arrangement of the organization is very simple in nature and its usefulness is just constrained to putting orders with the providers when stock level achieves least request amount. The present framework takes into record requesting cost, lead time and capacity costs, be that as it may, it is not able to do insightfully determining request in view of past trends.¬ Forecasting interest is a profoundly essential capacity in therapeutic industry where purchasers are probably going to confront major issues on the off chance that they can't acquire their necessities inside time limits.
The demand planning tool would give the company a boost to profitability, and customer satisfaction levels at a very reasonable price. The only detail left to consider is contracting with J.D. Edwards on this implementation.
Thus less customer service representatives would be required. All of that said, the obvious monetary justification for implementing this system is still lacking somewhat. These are all possibilities and with no succinct proof that the CRM system would bring about significant change to profitability, it is not a wise investment at this time. The company needs to get back in the black and revisit CRM later on in the future. The bolt-on modules for the ERP system are somewhat easier to analyze with respect to financial benefits to the company. The demand planning system will be analyzed first. Split shipments are the obvious example here as far as cost savings are concerned. According to the case study, it was estimated that a typical split shipment cost an additional $2.82 to ship and this incremental cost was completely absorbed by the company. Considering 17% of their orders were split shipment orders and there are approximately 2,000 total orders per day, approximately 340 orders per day were split shipment orders. Taking into account a normal workweek of 5 days per week this translates to 1,600 split shipment orders per week and 83,200 split shipments per year. In dollars lost this calculates to a savings of approximately $235,000 per year. Since the demand planning system promises to significantly cut down on split shipments, even if we assume a conservative estimate of 80% of the split shipments to be cut down, the investment offers quite a significant savings for the company since it will only cost a one-time investment of $300,000.
The module will more then pay for itself within two years. In addition, planners would be able to set service levels by product to ensure that top moving products would always be in stock, thus leading to reduced costs, increased revenue and better customer satisfaction. The warehouse transfer system module might save some money but since the company's inventory accuracy rates in all four DCs are at or very close to 100% there is very little money to be saved here. Basically, Moore already knows its inventory levels and there is little need to make this an IT function when the system is not broken in the first place. The deal management module would allow Moore to analyze any special offers they received from a supplier to determine if the costs and savings together in respect to the additional inventory would make financial sense. This system might be something to consider farther down the road once the company has become profitable again, but it would be a hard sell internally at this point. Spending $300,000 to determine if the company should pay to stock excess inventory just does not make financial sense at this juncture. This bolt-on, like the others, is priced at $300,000 a pricey investment for something that might not even be needed once the demand planning system is in place. Inventory levels should be projected more accurately going forward and the problem will be essentially solved.
2. (a) Why is Moore considering purchasing CRM? What are the various business needs they are hoping to address with this information technology? :
Future had begun to question whether Moore Medical's current system of completing customer orders was sufficient for the company to both win new customers and keep existing ones. She wondered whether a CRM system that offered an integrated record of all customer contacts through all channels, a salesperson "optimal" scheduling tool and an increased capacity for monitoring customer interaction consistency was worth the IT investment by the company.
Therefore Autore was seriously considering purchasing CRM. The company had been traditionally servicing customers accurately and in a timely manner and in fact this had not changed, but Autore had begun questioning whether this system was sufficient for the company to win new customers and retain the current ones.
The company was interested in a system that would make a significant increase in the levels of customer satisfaction and would help to further segment their customers. Historically customer segmentation had led to increased profitability.
1. Should Moore purchase the demand planning module and why or why not? Remember to apply and refer to case specifics and concepts learned in pre-reading.
2. What is your assessment of Exhibit 8: Report on Customer Relationship Management System, which presumably was the basis for a request forproposal to Clarify? Be specific and explain each point using case facts/specifics and pre-reading concepts.