About Moore Medical Corporation

Practitioner's Business - Provider of general pharmaceuticals, medical and surgical supplies, fragrances, cosmetics Had a strong Tradition of accurately and quickly filling customer orders Differentiating features were dedication to service, ease of ordering and knowledgeable, friendly operators, as well as its ability to provide one-stop shopping

BUSINESS MODEL
Product Line- More than 8,500 products ranging from disposables to medical equipments Markets- 6 Customer Groups: Physicians, Podiatrists, Emergency Medical Services(EMS), Public sector, industrial and Resellers Competitors- Distributors like Schein and PS&S, which were many times larger and served numerous other markets Interaction with customers- 50% from Inbound phones and 25% from Outbound telemarketing and Field sales

Which new Information Systems, if any should Moore Purchase

Major problems faced by Moore Medical Corporation
Passive demand forecasting Higher churn rate (30-35%) as compared to industry average (25%) Customer acquisition and retention More penetration rate and less share of wallet in Podiatrist PMS indicated 68% perfect order

Add bolt-on Software to Exisitng ERP

Demand Planning System Forecasting on historical and future planned activity such as promotions Automate purchasing process Decrease Back orders and Split-shipments which might help to decrease churn rate h Warehouse transfer System Reduction in Split-shipment Deal Management System and Inventory Stock Simulation Optimize inventory levels and decrease Inventory Cost

CRM will help to achieve following Capabilities

Increase consistency of Moores interaction with customers Integrated record of customer contacts through all channels Decrease churn rate Increasing customer loyalty through better services Identifying customer preference such as price sensitivity and product unavailability Insights generated by CRM will reduce inventory cost, labor cost, increase customer services, cross-sell / up-sell capabilities

Proposed Solution
First priority should be to purchase Demand planning system worth $300,000 As Claritys CRM system is reasonably priced at $592,500 but it does not solve the major demand forecasting problem

What are Pros and Cons of Moores Move into ecommerce / online ordering
Pros
Customer Acquisition - New customers from a completely new segment attracted by website accounted for 13% of online orders and revenues of $500,000 with in the next year Customers were trained to navigate the site which can lead to less reliance on salespeople in the future thereby saving on labour costs The number of orders per month grew from 1,423 to 2,218, resulting in increase of over $220,000 per month of revenue 87% of the customers ordering from the site were converted from other channels (phone, fax) and thus saving time for salespeople The websites full catalogue saved printing costs Customer convenience increased by providing them option of comparing products and costs on their own and saved time

Cons
The investment was expensive and caused Moore to suffer operating losses in 2000. Further, it prevented Moore from investing in other projects Costs are expected to rise further if two or three additional programmers at $75,000 to $100,000 each are hired to keep the website updated It is an impersonal selling tool and some customers who prefer high-touch service may be dissatisfied due to lowering of perceived value. This could possibly result in increased churn rate

Do you agree that this was a good move for company

Yes, we believe this investment was a good move for the company because of the following reasons, as determined from the advantages of entering into an online ordering system: Financially, this was a good move for Moore. Online sales have increased new customers "wins" by 13% and established a new target market for the company to pursue, which is projected to account for approximately $500,000 in new business in the upcoming year

This consumer market did not require direct mail solicitation or outgoing phone calls from existing sales staff, thereby increasing profits from this segment
Existing customers are also drawn to online ordering and are expected to use this system instead of other channels in the next year

Despite initial extravagant costs due to the transformation from traditional catalogue to brickand-click model, the amount of business generated from the website, projected at $544,732 per month means that the rise in costs should be nullified by increase in sales.