Boca Electronics, a manufacturer of semiconductor components was established in Houston, Texas in 2002 after spinning off its parent company. Originally a branch of Vissay Inc., Boca Electronics had a solid customer base and strong sales with some major firms such as IBM, Compaq and Motorola. Semiconductors included a wide array of products that were broken down according to their application and material. Some of their main products include microprocessors, light-emitting diodes (LEDs), rectifiers, and suppressors. Boca Electronics operated on a mainframe system that it inherited from its parent company, and used additional stand-alone systems to perform many of its other business functions. For the last four years the company had performed well financially, so little concern had been given to the business operations. However, recent slowdowns in the economy and an increase in competition in the semiconductor industry had forced Boca Electronics to take another look at the way it operated its business.
Ron Butler, the purchasing manager at Boca Electronics, was responsible for ordering raw materials and ensuring that their delivery was on time and met production requirements. Ron used his own forecasting software to determine purchasing needs based on past sales. While this worked most of the time, Ron often found himself scrambling to meet large customer orders at the last minute and was forced to expedite a lot of orders to meet the production needs. Ron felt this was due largely to the lack of communication between his department and the sales force.
Although he received production forecasts and projected sales from the sales depart- ment, it occurred on an irregular basis, and the forecasts would often change by the time he had placed orders to the suppliers. In addition, Ron had a difficult time synchronizing with suppliers and determining factors such as lead times and product prices. He had previously recommended a new software system that would integrate with suppliers of key components but the proposal was turned down by senior management due to a ‘‘current lack of need for such investment.’’
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Boca Electronics also faced issues regarding its cash flows. It took several weeks for the accounting department to process invoices and usually had to e-mail back and forth with the sales manager to make multiple corrections. Since both departments used different systems to manage customer accounts, some of the data was redundant and inaccurate (customer accounts would be updated in the sales department, but not in accounting). Although this issue went largely unnoticed during thriving periods, the recent slowdown in the economy revealed potential repercussions of the current business operations, as Boca Electronics began to run short on its cash flows.
In the last month, one of Boca Electronics’ largest customers began requiring all its suppliers to integrate their manufacturing operations to improve the sharing of information and further improve its supply chain. This company had recently implemented an ERP system from a major provider and was encouraging its suppliers to do the same. Suppliers had the option of implementing middleware software to integrate operations. Whether suppliers chose to keep their current systems and implement middleware, or implement an ERP system that would integrate with the company, they had one year to make the changes in order to continue doing business with them.
Paul Andrews, the CIO at Boca Electronics, was well aware of the issues facing the company. He knew that something had to be done to improve communication and information sharing within the company, and the current mainframe system was outdated and inefficient. He was also aware of the constraints that Ron was facing in Purchasing and how much it was costing the company. With the new request from one of its largest customers for further integration, the idea of implementing an ERP system for Boca Electronics seemed like a viable solution to Paul. However, recent economic downturns and a limited amount of capital made such a large capital outlay a risky investment for the company.
CASE QUESTIONS
1. Determine the trade-offs of implementing an ERP system in the company versus buying best of breed software and using middleware to integrate.
2. What are the potential impacts of such implementation on the company’s suppliers and customers?
3. If the company chose to stay with the system it currently has, what are some potential consequences that can occur in the future?
4. Based on the business nature of the company, the industry, and the current environment, what would you recommend doing?
REFERENCES
Davenport, Thomas H., and Michael C. Beers. ‘‘Managing Information About Processes.’’Journal of Management Information Systems, 12(1), 1995.
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Hague, Philip Dickens (ed.). Rapid Manufacturing: An Industrial Revolution for the Digital Age. Hoboken, New Jersey: John Wiley & Sons, 2006.
Hammer, Michael. ‘‘The Superefficient Company.’’ Harvard Business Review, 79(8), 2001.
Hayes, R. H., G. Pisano, D. Upton, and S. C. Wheelwright.Operations Strategy and Technology: Pursuing the Competitive Edge. New York: John Wiley & Sons, 2005.
Hayes, R. H., and S. C. Wheelwright. ‘‘Link Manufacturing Process and Product Life Cycles.’’ Harvard Business Review, 57(January–February), 1979: 133–140.
Hayes, R. H., and S. C. Wheelwright. Restoring Our Competitive Edge: Competing Through Manufacturing. New York: John Wiley & Sons, 1984.
Lambert, Douglas M.SCM: Process, Partnership, Performance, 3rd edition. Sarasota, FL:
Supply Chain Management Institute, 2008.
Schmenner, Roger W. ‘‘How Can Service Businesses Survive and Prosper?’’ Sloan Management Review, 27(3), 1986: 21–32.
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Chapter 4
Marketing
& LEARNING OBJECTIVES
After completing this chapter, you should be able to:
1. Define marketing and explain its role in supply chain management.
2. Describe how market segmentation impacts supply chain design.
3. Describe the tools of customer relationship management (CRM).
4. Explain the voice of the customer (VOC) and quality function deployment (QFD).
5. Explain channels of distribution and their role in supply chain management.
6. Explain the impact of e-commerce on channels of distribution and the supply chain.
& Chapter Outline
& What Is Marketing?
The Marketing Function Evolution of Marketing Impact on the Organization Impact on the Supply Chain
& Customer-Driven Supply Chains
Who is the Customer?
Types of Customer Relationships Managing Customers Using CRM
& Delivering Value to Customers
Voice of the Customer (VOC) What is Customer Service?
Impact on the Supply Chain
Measuring Customer Service Global Customer Service Issues
& Channels of Distribution
What are Channels of Distribution?
Designing a Distribution Channel Distribution Versus Logistics Channel The Impact of E-Commerce
& Chapter Highlights
& Key Terms
& Discussion Questions
& Case Study: Gizmo
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Even before you enter an Abercrombie & Fitch store you can smell the characteristic woodsy aroma that is associated with the brand. A combination of citrus, fir-tree resin, and Brazilian rosewood extract,
‘‘Fierce’’ creates a sense of excitement and pleasure. Since its roll-out in stores across the country a few years ago, Abercrombie’s cologne, which also pervades sidewalks outside the clothier’s stores, has become an integral part of the shopping experience. A part of the ambience, the scent is designed to enhance the feel of being at the store, create brand association, and ultimately promote sales. Popular demand compelled the company to produce the trademark scent in bottle form. The brand association with the trademark scent has since become so strong that some customers even complain when store- bought T-shirts lose the smell after multiple washes.
Welcome to the new age of marketing—a form of sensory brand- ing known as ‘‘ambient scenting’’ or ‘‘scent marketing.’’ Scenting the entire building is the latest ambition for building brand association and promoting sales. No longer confined to lingerie and candy stores, ambient scenting is custom designed to create brand association and a particular outcome. For example, Westin Hotel & Resorts dis- perses white tea, to provide the ‘‘zen-retreat’’ experience. The Man- darin Oriental in Miami sprays ‘‘meeting scent’’ in conference rooms in an effort to enhance ‘‘productivity.’’ Omni Hotels uses the scent of sugar cookies in its coffee shops.
Scent branding is becoming just as prevalent in retail, as research- ers believe that ambient scenting allows consumers to make a deeper brand connection. Just recently Samsung had a scent designed for its stores with the intention to create an association between the brand and concepts of innovation and excellence. The creators even claim that customers—under the subtle influence—spend an average of 20%
to 30% more time mingling among the electronics.
This new approach to reach customers has also created a new supply chain. A growing industry of companies worldwide specializing in ambient scent-marketing and dispersion technology has emerged.
These enterprises typically pair with fragrance companies to design customized fragrances for businesses. There is also scenting equipment and technology for dispersion that must be designed, as well as equip- ment maintenance that can vary depending upon the size of the space to be scented. There are distributors, dealers, and agents that are added to the network.
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chains evolve. Marketing drives the development of the supply chain to meet what the customer wants.
Adapted from: ‘‘Etc. Branding.’’Bloomberg Businessweek, June 21, 2010.