Moore Medical Corporation

Moore Medical Corporation

ISM II

Sec D Group 9
Name

Harshit Jaiswal Hemanta Pramanick Parag Poddar Rajarshi Biswas Vaibhav Jain Vignesh V

Roll Number 2012PGP130 2012PGP133 2012PGP245 2012PGP291 2012PGP417 2012PGP434

Introduction:
In 1947, H.L.Moore founded the H.L.Moore Drug Exchange and began selling brand name pharmaceuticals. Soon Moore expanded its original product line to provide drugstores across the country a wide selection of products. In 1970, the company was renamed Moore Medical Corporation. Then the company increased its base of pharmacy customers by adding professional practitioners to its customer base. Later the company experienced significant sales Growth and acquired other companies. In 1997, Moore exited the wholesale pharmaceutical business as it found that it could no longer distribute pharmaceuticals profitably to drugstores. The company turned its attention towards the practitioner business. The company grew from $40 million in 1990 to $125 million in 2000.

1. Which new information system, if any, should Moore purchase? How did you arrive at this decision? Justify your decision.
Issues to be resolved: Issues related to marketing It is difficult to understand why penetration rates and shares of wallet are different for different customers It was hard to find out which customers to target in direct marketing , as direct marketing improves the penetration levels Churn rate is 30%, when compared to the industry average of 25%. This churn rate is mainly due to price sensitive customers Narrow product line of Moore. Moore finds it difficult to become a one stop solution for its customers

Issues related to demand planning Split shipments extra cost incurred for split shipments. This cost is absorbed by Moore Drop shipping of products, directly from suppliers to customers resulted in high costs The percentage of perfect orders was only 68%

Issues with current ERP system Moore was not able to utilize the information retained in ERP system Cumbersome process to create Bids/Quotes

Lack of a total campaign solution to manage marketing efforts Order entry system is difficult to use Lengthy new account setup process

Solution The issues highlighted above show that Moore should purchase both CRM and the demand planning bolt-ons to the ERP system. By implementing a CRM system, Moore can Improve the penetration levels and share of wallet Increase rep effectiveness and efficiency Minimize the loss of customer interactions, which occurred earlier during rep transfers Increase cross sell and up sell option for reps Reduce inventory shelf time Make training process for reps easier Create a consolidated database of all customers

By implementing demand planning bolt-ons to the ERP system, Moore can Fully utilize the information retained in the ERP system Move from a reactive demand forecasting system to a proactive demand forecasting system Create purchase requirement based on previous history and future planned activity, like promotions Automate purchase order creation and execution Decrease inventory expense Ensure that top moving products are always in stock Implement a Warehouse transfer system that looks for excess inventory in Moores warehouses Implement a deal management system to analyse the special offers received from a supplier Attain the ability to do stock simulations

2. What are the pros and cons of Moore's move into ecommerce/online ordering? Do you agree that this was a good move for the company?
Moore Medical established an initial website in 1999 and its own ecommerce site in 2000 which fed orders directly into their ERP system. The company spent $1.5 million developing and implementing this site, despite of having less than 1 million dollars in cash on their balance sheet at the end of 1999.

PROS
New customers belonged to a new segment, attracted by the website and accounted for 13% of the online orders. The company projects this market to account for $500,000 within in the next year Less reliance on sales people in the future and the department may be downsized to save on labor costs Increase in the number of orders per month (from 1,423 to 2,218) leading to additional income Time saving for sales force as 87% of the customers ordering from the site were converted from other channels Printing cost savings due to addition of a full catalog to the website Customer convenience in the ability to shop at their leisure and compare and contrast products and costs on their own

CONS
Expensive investment at a time when the company did not have any extra funds for projects Updating website costs at $75,000 to $100,000 by hiring two or three additional programmers each to continue to update the site, can prove more expensive Customers may not find it value added due to impersonal nature of the tool leading to squeezing of revenues

The investment, in our view, was desired. Investing in technology is imperative to stay competitive, especially when competitors are leveraging this front to reach out to customers. To second this, online sales increased new customers "wins" by 13% and established a new target market for the company to pursue. This market is projected to account for approximately $500,000 in new business for the upcoming year. It did not require direct mail solicitation or outgoing phone calls from existing sales staff, making this a potentially very profitable market. Existing customers are also drawn to online ordering, as 10% of existing clients are expected to use this system instead of other channels in the coming year. The investment should pay off within the first year, assuming website incomes of $544,732 per month