Moore Medical

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MOORE MEDICAL CORPORATION

INFORMATION SYSTEMS FOR MANAGERS

GROUP-8
Anubhav Satapathy
Dhruv Roosia
Ketan Kachhadiya
Niyati Garg
Priya Arora
Sajal Gupta
Tushar Lokhande
COMPANY BACKGROUND

Increased
Significant
H.L. Moore 1950s pharmacy
Moore sales growth
Drug customers
1947 Exchange and expanded its 1970s and added 1980s and acquired
1960s product line other
was founded professional
companies
practitioners

Exited the Moore


Assembled a Began a
pharma launched its
1994 practitioner
friendly 1997 business and
focused on
1997 project to
implement an 2000 own e-
commerce
Buyer’s Guide ERP system
practitioners website
BUSINESS MODEL

 PRODUCT LINE – Moore provided more than 8500 products from half a million available medical supplies.
Eg.-cotton balls, latex gloves, stethoscopes, stretchers, etc.
 MARKETS – 6 customer groups:
 Physicians
 Podiatrists
 Emergency Medical Services
 Public sector
 Industrial
 Resellers
 VARIABLE PENETRATION RATES – 75% of podiatrists vs 5% of physicians
 VARIABLE “SHARE OF WALLET” – 45% for podiatry, 37% for EMS and much lower for other segments
OPERATIONS

 Distribution Centres and Shipment Policies


 Four Distribution centres (Connecticut, Florida, Illinois, California)
 87% of orders were delivered within two days & were mostly distributed from nearest DC
 Moore sought to keep same items in stock in each of its distribution centres
 Drop-shipping of some products to customers direct from manufacturers
 Moore handled the freight charges for orders over $100 and split-shipped orders
 Performance Measurement System (The Perfect Order)
 Perfect order included all items in stock, shipped on time and was end to end damage free shipment
 Currently around 68% of orders are qualified as perfect orders
SUPPLIER RELATIONS

More than 600


suppliers

Supplier Lead Time ~ 10


Shipment Cost
Negotiations
Rationalization days (few days
Efforts to 4 weeks)

Communication
via EDI, phone,
fax, email &
Postal Mail
COMPETITION

 Major Competitors : Schein and PS&S


 Many times larger as compared to that of Moore
 Served numerous other markets (as well as broad project range in terms of SKUs)
 Had advantage of ability to field large number of sales representatives than Moore
 Small Competitors:
 Competed with cluster of small companies
 The smaller companies included the companies with 5 to 30% of Moore’s size
INFORMATION TECHNOLOGY - ERP

 Moore implemented its ERP software from J.D. Edwards assisted by Arthur Anderson Consulting
 Total effort cost of implementing ERP was $7 million
 Moore was not able to fully utilize the information retained in the system
KEY ISSUES
 Bids and quotes- The quotes attached to customers, expired quotes, etc in the new mechanism were not
easily retrievable
 Marketing- The system did not provide a total campaign solution for managing marketing efforts
Its advanced pricing module did not align with Moore’s preferred method
 Order Entry- Representatives had to use many function keys and hence this system was difficult to use and
took longer time
 New Account Setup- The account setup process was lengthy and did not allow new accounts to be
reviewed against existing ones
INFORMATION TECHNOLOGY - WEBSITE

 Initially, storefront was opened on www.shopping.yahoo.com


 Company spent $1.5 million to develop the website – www.mooremedical.com
 Only 13% of the customers ordering from the website were new customers
 Promotions for website: Catalogues, coupons for discount, mailed instructions
Net Agents – To conduct text chats with online shoppers
 It acquired 2 specialty healthcare websites- www.podiatryonline.com , www.merginet.com
 Moore was considering adding 2 additional people to keep its website current which would cost it
$75,000 to $100,000 per person
KEY ISSUES IN MOORE

 REASONS FOR DIFFERENCE IN PENETRATION RATES AND SHARE OF WALLET


Penetration rate was high in podiatry because of investment in direct marketing to the customers
whereas share of wallet was low as it did not offer capital goods and offered only some categories of
medical supplies
 CHURN RATE was 30% as compared to industry average of 25%. Reasons:
 Customers who only cared about price left
 Narrower product portfolio as compared to competitors
 INADEQUATE DEMAND PLANNING - Only 68% of the orders were ‘Perfect Orders’.
Remaining orders included 17% of split shipments generating an extra cost of $2.82 per shipment, 5%
of late shipments and 10% back orders. 84% of these could be resolved by demand planning.
DEMAND PLANNING SYSTEM
 Moore was investigating a new demand planning system which would create purchasing requirements based on
history and future planned activities such as promotions.
 Benefits
 Improved customer service levels
 Decreased inventory expense
 Ensure top selling products to be in stock
 Decrease paperwork and manual tasks for buyers, increasing productivity
 Proposed additional modules

Warehouse
Deal Management Stock Simulation
Transfer System

 Cost of each module - $300k


ALTERNATIVE 1 – INVEST IN CRM SYSTEM

 Cost of implementation - $592k


 Benefits
 Easier bids and quotes processing
 Integrated network for all the communication channels such as telephone, fax, web etc.
 Facilitate interactions with sales prospects, customers, and clients
 Sales management to enable sales forecasting
 Cross-sell, up-sell to generate more business
ALTERNATIVE II – INSTALL BOLT ON MODULES

 Total cost – 4 X $300,000 = $1.2 million


 Benefits
 Module 1 - Purchase based on sales history and expected future activities
 Module 2 – check for excess inventories in all 4 distribution centres before placing an order
 Module 3 – Allowed buyers to analyse special offers they received
 Module 4 – Determine customer service levels that would result from different stock levels
ALTERNATIVE III & IV
Both CRM & Bolt-on modules:
 Cost= $592k + $300k X (number of additional modules installed)
 They can choose which additional modules to install as per their requirements
 Benefits: Achieving the benefits of CRM as well as required modules

Invest in neither
 It can invest in other avenues
QUANTITATIVE ANALYSIS

• Cost Savings by Accurate Demand Forecasting :

Savings in split shipments = 2.82 X 0.17 X 2000 X 365 = $334,962

Savings in back orders = 2.82 X 0.1 X 2000 X 365 = $ 205,860 (assumption : extra cost incurred for back orders
would be same as that for split shipping)

Total savings on split shipment as well as back orders = $ 540,822

• Overall Cost of CRM software = $ 592,500

• Overall Cost of Demand Planning System Software = 4 X $ 300,000 = $ 1,200,000 (4 modules)


RECOMMENDATIONS

• The basic evaluation criteria used are as follows:

 Cost of implementation and perceived benefits


 Compatibility with existing ERP system
 Adaptability in the workforce/employees
 Ability to resolve aforementioned Key issues

SHORT TERM RECOMMENDATION:


ERP-Integrate additional demand planning system modules
(Suggestion: Customize Material Requirement Planning module within ERP)

LONG TERM RECOMMENDATION:


If the CRM features are compatible in satisfying the Channel requirements and Environment issues (mainly Nortel, JD
Edwards/SQL server 7.0 interfaces) then Moore can go with CRM solution
THANK YOU

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