Essay About Predictable Demand Customers And Unpredictable Demand Customers

Moore Medical Hbs Case Analysis
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Target CustomersNot targeting volume based/Low Margin/Predictable demand customers – DrugstoresTargeting Low Volume/High Margin/Unpredictable demand customers – PractitionersOnly 6 customer groupsOnly 2 major customer channels[pic 1]Key Customer Requirements/Market StrategyBroad product RangeQuick response to ordersHigh accuracy and reliability of deliveryDedication to serviceEase of orderingKnowledgeable and friendly operatorsMarketing through Direct Marketing materials such as catalogs, brochures and less direct selling through sales forceCustomers are unsopisticatedCurrent StatePortfolio of 8500 products which is only fraction of the total products available in medical supplies marketplaceWide variation in penetration rate among the six customer groupsThe company provides ‘one-stop shopping’ (i.e. all products than customer needs) more in some customer groups than othersShare of wallet also varied widely among the six customer groupsMost Imp customer group – Podiatrists with penetration of 75% and share of wallet 45% – Company would like to increase this gpFor Podiatrists the penetration was high as – Moore invested heavily in Marketing for this gp but wallet was low as – cannot offer all products required by this gp. (CRM needed to target marketing efforts to gps who can be served fully with product portfolio)Very High Churn rate – 30% (Industry avg. 25%) reason – 1) Limited promotion – special offers 2) Product Portfolio too narrowCompetitors – Large Distributors with high SKUs and Small distributors focusing on specific customer groupsMoore kept exactly same items in stock in each DC in order to ship complete orders from DC closest to customers – Wrong methodShips some orders direct from Mfg to avoid stocking low volumes and minimize handling of sensitive items. (CRM can enable demand prediction to favor this)Perfect order % – 68%; 32% were split shipments (87% opportunity is in demand planning)Many suppliers with variations in Lead time, plans to implement supplier rationalizationNow moving to internet enabled direct marketerCosts$7 million for ERP installationNew $300,000 for additional 4 ERP modulesProblems with ERP J.D. Edwards structureTo create a bid or quote for a customer or gp of customers was extremely cumbersome.It did not provide total campaign solution for managing marketing efforts. It was not conducive to Moore’s preferred method of pricing.Order entry was cumbersomeLengthy process of new customer account setup and increased duplicate recordsDidn’t have any demand forecastingCRM solutionCRM soln can provide a single enterprise view of customers to have an integrated network through all of their channels such as phone, E-mail, and web thus making processing of bids and quotes with customers easier. (Problems with ERP J.D. Edwards structure pt# 1) – Only solves Bid/Quotes ProblemCRM can identify most valuable customers and sales efforts can be focused on those increasing penetration rate for most valuable customers (Current State pt# 2,5) – Moore Only has a small customer baseSFA module in CRM can help assemble past order information about valuable customers so that ‘one-stop shopping’ can be provided to most valuable customers, increasing share of wallet for those. (Current State pt# 3-6) – Moore Only has a small customer base