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BCOR2500 Session A 2009 Exam 2 – 12 points

Use specific examples from the book store project to support your answers. Your answers must make business sense.

Using the symbols from our process mapping book wherever possible, draw a cross-functional process map depictingall of the following in-scope requirements: (4 pts)
Assume that the book store is using a two-way match.
Assume vendors are paid once monthly for all activity associated with general merchandise received.
Process starts when a vendor delivers general merchandise to the book store receiving dock.
Process ends when these goods are stored on the shelves in receiving and the receiving report is sent to accounts payable.
Book store buyer negotiates a contract with vendors to purchase general merchandise for the upcoming year.
Contract terms include:
Product delivered must match the SKU in the contract, otherwise the goods are rejected at the receiving dock.
Product delivery must be no later than the due date agreed in the contract.
Product quantity must be within +/- 10% of the ordered quantity.
Damaged items are not accepted at the receiving dock and the book store receives full credit from the vendor.
Vendors must meet all requirements on 98% of their shipments each quarter in order to receive a 2% bonus payment.
Vendors who do not achieve a 95% compliance rating are penalized 4% for the quarter they underperformed.
Sales clerks stock goods on store shelves within 2 hours of their receipt.
Vendors can only deliver on Mondays between 7 am and 9 am.

What would be two measures you could use as the store manager to assess whether this process is working well or not? (2 pts)

a.Number of errors by vendor by error type. For the book store, capturing damage and errors during the receiving process, is critical for analysis of the receiving process and vendor quality control. Vendors who do not meet these standards can either be penalized or replaced.

b.Cost to operate the receiving process. By understanding what it costs the book store to operate this process, there will be opportunities to identify improvements to reduce these costs that are a component of cost of goods sold.

Apply the importance criteria to the following brainstormed opportunities, using the format from our BI book and slides, in order to rank these ideas high, medium or low. (3 pts)
Which insignia items,by vendor and sale location, are generating the most gross margin?
The book store has had serious problems with customer service and wants to find out why they are getting more customer complaints about sales staff atthe football game tent than any other location?

Actionability / Materiality / Tactical or Strategic / Overall
Insignia Items Gross Margin by Vendor and Sales Location / High / High / Tactical / High
Customer Service Football Tent / Medium / Low / Tactical / Low

Insignia: Actionability – is high because this information can be used by the buyer to quickly shift to higher margin more popular items. In addition, the amount of floor space and location can be increased/improved for these items.

Materiality – without knowing what is generating the most gross margin, it would be extremely difficult for the book store to know where to focus their product/vendor product mix. This knowledge should allow the book store to materially increase their gross margin in the short-term.

Tactical – this information is key to making short-term buying decisions that will impact gross margin (which is a strategic objective). Only the buyer and the person doing store layouts of general merchandise are impacted by any changes as a result of this information.

Overall – this information has the potential for a high impact on gross margin which is one of our four KPIs.

Customer Service: Actionability – There are only six home football games each year and between three and four sales people in the tent at any game. This space is very small, so it will be relatively easy to observe and address these customer service problems.

Materiality – football games represent a significant portion of the book stores sales of insignia items. Although sales increase dramatically if the team wins, the placement of a tent near the stadium, and the quality of customer service may or may nothave an impact on sales volumes.

Tactical - this information would be used to improve the customer experience, but it’s unclear what impact this would have on any of our four KPIs. Only the sales people in the tent are impacted by any changes to the customer service process.

Overall – it’s not clear how much impact this information would have on sales, although initially it seems to be low.

Grade the opportunities in question 3using the difficulty criteria table from our BI book and slides? (3 pts)

Cross-Functional / Availability of Data / Complexity of Calculations / Overall
Insignia Items Gross Margin by Vendor and Sales Location / Medium / Medium / Tactical / Medium
Customer Service Football Tent / Low / Low / Tactical / Medium

Insignia:Cross-Functional–only the buyer and the person doing the floor layout (merchandising) are significantly impacted by this change. Since it’s two people in different departments, I indicated medium for this.

Availability of Data – floor location of items will also need to be collected going forward, otherwise all necessary data is already being collected.

Complexity of Calculations–other than the calculation of gross margin by location, this information is already available in a single system and should be easy to perform.

Overall – This would be of medium difficulty to implement in the book store based on the above analysis.

Customer Service: Cross-Functional – only the sales people in the football tent are impacted by this change. Since it’s just a few people from the same department, I indicated low for this.

Availability of Data – this information would be difficult to collect at the source using automated systems. It would probably require a person to observe sales people doing their jobs to collect this information.

Complexity of Calculations – no calculations would need to be made, simply an association of the service quality to a sales person.

Overall – This would be medium difficulty to implement in the football tent based on the above analysis.