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Moore Medical Corporation Case Solution
It is recommended for Moore to purchase demand management module since Moore Medical Corporation is currently facing the problem of the shortage of inventory when demand surges for particular products. The facts of the case exhibit that the current inventory procurement system of the company is quite rudimentary in nature and its functionality is only limited to placing orders with the suppliers when inventory level reaches minimum order quantity. The present system does take into account ordering cost, lead time and storage costs, however, it is not capable of intelligently forecasting demand based on previous trends.
Forecasting demand is a highly important function in medical industry where buyers are likely to face serious problems if they are unable to procure their requirements within time limits. For Moore Medical Corporation’s customers, stock-outs can potentially imply loss of patients’ lives. For this reason, it is essential for Moore Medical Corporation to replenish its inventory in anticipation and forecasting of demand, rather than acting reactively to sudden demand surges.
Following questions are answered in this case study solution:
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.
What is your assessment of Exhibit 8: Report on Customer Relationship Management System, which presumably was the basis for a request for proposal to Clarify?
Moore Medical Corporation Case Analysis
1. It is also important to consider that the product portfolio for Moore Medical Corporation does not comprise of a singular product which can rely on human intervention to anticipate increase in seasonal demand and trends for particular products. Rather, the products sold by Moore Medical Corporation ranges across a wide range of categories each with their own demand dynamics. Therefore, it is essential for the system to identify demand surges on its own based on previous trends so as to prevent shortages of inventory and placing order at appropriate times. This is a very large opportunity for Moore Medical Corporation to consolidate its competitive positioning in the market.
The cost of implementing a demand management system which is capable of the above mentioned functions is high. Yet, the benefit associated with implementation of the above mentioned system far outweighs the costs. The proposed system reduces cost of operations of procurements system and minimizes human intervention by utilizing previous history, as well as, future planned activity of the company. For instance, if Moore Medical Corporation intends to launch a promotion campaign, then specific items for the promotion will be increased in the stock. Even more important than reduction of procurement costs, Moore Medical Corporation will benefit from investing in demand management system by improving its customer service levels by quantum leaps and gaining customer loyalty. According to Harvard Management Update (2000), better customer satisfaction is linked directly with improved profitability of operations.
Lastly, the proposed demand management system fits in with the strategic intent of Moore Medical Corporation of creating a state-of-the-art IT infrastructure for the business. The demand management system is capable of integrating with other software modules which relate to other functional areas of business. For instance, the demand management system can integrate with warehouse management system and other information systems to create at the end, an integrated Customer Management System.
2. Exhibit 8 appears to be a comprehensive framework for evaluation of a CRM solution to be adopted by the company. The framework is useful because its lays down a set of objective criteria for assessment of the CRM system rather than placing the entire decision on the discretion of Moore. Even though, it is universally known that the purpose of a CRM is to enable a business to serve its customers better, to create new sources of business for the firm, and to empower employees of the company with the tools to handle an increasing number of customers by using IT tools. The one important element missing from Exhibit 8 are weightings which should have been assigned with each criteria. Rettig (2007) state not all criteria for evaluation of CRM systems are equal. Some of the criteria for evaluation of CRM systems are more important for the decision pertaining to acquisition as compared to others. As to which criteria is more important depends on the needs of the particular business (Rettig, 2007).
When a thorough exercise has been carried out by interviewing various members of Moore Medical Corporation, the researcher should have at least arranged the criteria in the order of importance (determined by the frequency of responses from the respondents or weighting assigned by the respondents), if not marked by a score for each point. For instance, in my opinion the criteria, “Increase accuracy and accessibility of information obtained from customers” is far more important than “Increase cross-sell and up-sell options for reps”, therefore, the former should be higher up in the list of criteria than the others.
The criteria about increasing effectiveness and efficiency of customer service representatives is the key because the whole point of spending large resources on implementing a CRM solution is to make up for this cost by reducing human resource cost of the business. CRM suite should increase the number of accounts which can be served by a customer service representative several folds (Harvard Management Update, 2000). This is because a CRM enables all information related to a customer easily accessible the customer service representative, who is assigned with the task of looking after a particular corporate customer.
Moore Medical Corporation’s customers are all b2b clients with whom the business shares a long-term relation (Mcafee, 2003). Institutional clients carry out repeat purchases and with each passing day, they become more an more important for the business. Hence, the information possessed about each customer by the business is huge (comprising of the frequency of order, the sizes of individual purchase orders, specific purchases during particular time of year, credit history, credit terms, etc.). Through a CRM application, a customer service representative is notified automatically when to expect a repurchase order from an assigned account, when to pursue for payment and which promotional incentive will be effective for a particular b2b client (and even tells whether extending promotion to a client is even beneficial or not). Not only a customer service representative can address greater number of account after gaining functionality of a CRM application but he/she can serve these accounts in a far better manner than it would have been done without a CRM application in place.
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