It for management

SUBJECT: IT ForManagement Marks:100
CASE – 1 E-Commerce Supports Field Employees at
Maybelline.
The Business Problem
Maybelline is a leader in color cosmetics products (eye shadow, mascara,
etc.), selling them in more than 70 countries worldwide (maybelline.com).
The company uses hundreds of salespeople (field merchandising
representatives, or “reps”), who visit drugstores, discount stores,
supermarkets, and cosmetics specialty stores, in an attempt to close deals.
This method of selling has proved to be fairly effective, and it is used by
hundreds of other manufacturers such as Kodak, Nabisco, and Procter &
Gamble. Sales managers from any company need to know, as quickly as
possible, when a deal is closed or if there is any problem with the customer.
Information technology has been used extensively to supportsales reps
and their managers. Until 2000, Maybelline, as well as many other large
consumer productmanufacturers, equipped reps with an interactive voice
response(VR) system, by means of which they were to enter, every evening,
information about their daily activities. This solution required that the reps
collect data with paper-based surveys completed for every store they visited
each day. For example, the reps noted how each productwas displayed, how
much stockwas available, how items were promoted, etc. In addition to the
company’s products the reps surveyed the competitors’ products as well. In
the evening, the reps translated the data collected into answers to the voice
responsesystem which asked them routine questions. The reps answered by
pressing the appropriate telephone keys.
The IVR system was not the perfect way to transmit sales data. Forone
thing, the IVR system consolidated information, delivering it to top
management as a hard copy. However, unfortunately, these reports
sometimes reached top management days or weeks too late, missing
important changes in trends and the opportunities to act on them in time.
Frequently, the reps themselves were late in reporting, thus further delaying
the needed information.
Even if the reps did report on time, information was inflexible, since all
reports were menu-driven. With the voice system the reps answered only the
specific questions that applied to a situation. To do so, they had to wade
through over 50 questions, skipping the irrelevant ones. This was a waste of

time. In addition, some of the material that needed to be reported had no
matching menu questions. Considering a success in the 1990s, the system
was unable to meet the needs of the twenty-first century. It was cumbersome
to set up and operate and was also prone to input errors.
The Mobile Solution
Maybelline replaced the IVR by equipping its reps with a mobile system,
called Merchandising Sales Portfolio (MSP), from Thinque Corp.
(thinque.com, now part of meicpg.com). It runs on handheld, pen-based
PDAs, which have hand-writing recognition capability (from NEC),
powered by Microsoft’s CE operating system. The system enables reps to
enter their information by hand-writing their reports directly at the clients’
sites. From the handheld device, data can be uploaded to a Microsoft SQL
Server database at headquarters every evening. A secured Internet
connection links to the corporateintranet (a synchronization process). The
new system also enables district managers to electronically send daily
schedules and other important information to each rep.
The system also replaced some of the functions of the EDI (electronic
data interchange) system, the pride of the 1990s. For example, the reps’
report include inventory-scanned data from retail stores. These are processed
quickly by an order management system, and passed whenever needed to the
shipping department for inventory replenishment.
In addition to routine information, the new system is used for decision
support. It is not enough to speed information along the supply chain;
managers need to know the reasons why certain products are selling well, or
not so well, in every location. They need to know what the conditions are at
retail stores affecting the sales of each product, and they need to know it in a
timely manner. The new system offers those capabilities.
The Results
The system provided managers at Maybelline headquarters with an
interactive link with the mobile field force. Corporateplanners and decision
makers can now respond much more quickly to situations that need
attention. The solution is helping the company forge stronger ties with its
retailers, and it considerably reduces the amount of after-hours time that the
reps spend on data transfer to headquarters (from 30-50 minutes per day to
seconds).

The new system also performs market analysis that enables managers to
optimize merchandising and customer service efforts. It also enables
Maybelline to use a more sophisticated interactive voice responseunit—to
capture data for special situations. Moreover, it provides browser-based
reporting tools that enable managers, regardless of where they are, to view
retail information within hours of its capture. Using the error-checking and
validation feature in the MSP system, reps make significantly fewer data
entry errors.
Finally, the quality of life of Maybelline reps has been greatly
improved. Not only do they save 30 to 40 minutes per day, buy also their
stress level has been significantly reduced. As a result, employee turnover
has declined appreciably, saving money for the company.
Questions
1. IVR systems are still popular. What advantages do they have over
even older systems in which the reps mailed or faxed reports?
2. Summarize the advantages of the new system over the IVR one.
3. Draw the flow of information in the system.
4. The existing technology enables transmission of data any time an
employee can access the Internet with a wireline. Technically, the
system can be enhanced so that the data can be sent wirelessly from
any location as soonas they are entered. Would you recommend a
wireless system to Maybelline? Why or why not?

CASE – 2 Precision Buying, Merchandising, and Marketing
At Sears
The Problem
Sears, Roebuckand Company, the largest department store chain and the
third-largest retailer in the United States, was caught by surprise in the 1980s
as shoppers defected to specialty stores and discount mass merchandisers,
causing the firm to lose market share rapidly. In an attempt to change the
situation, Sears used several responsestrategies, ranging from introducing its
own specialty stores (such as Sears Hardware) to restructuring its mall-based
stores. Recently, Sears has moved to selling on the Web. It discontinued its
over 100-year old paper catalog. Accomplishing the transformation and
restructuring required the retooling of its information systems.
Sears had 18 data centers, one in each of 10 geographical regions as
well as one each for marketing, finance, and other departments. The first
problem was created when the reorganization effort produced only seven
geographical regions. Frequent mismatches between accounting and sales
figures and information scattered among numerous databases users to query
multiple systems, even when they needed an answer to a simple query.
Furthermore, users found that data that were already summarized made it
difficult to conductanalysis at the desired level of detail. Finally, errors were
virtually inevitable when calculations were based on data from several
sources.
The Solution
To solve these problems, Sears constructed a single sales information data
warehouse. The replaced the 18 old databases which were packed with
redundant, conflicting, and sometimes obsolete data. The new data
warehouse is a simple repository of relevant decision-making data such as
authoritative data for key performance indicators, sales inventories, and
profit margins. Sears, known for embracing IT on a dramatic scale,
completed the data warehouse and its IT reengineering efforts in under one
year—a perfect IT turnaround story.

Using an NCR enterprise server, the initial 1.7 terabyte (1.7 trillion
bytes) data warehouse is part of a project dubbed the Strategic Performance
Reporting System (SPRS). By 2003, the data warehouse had grown to over
70 terabytes. SPRS includes comprehensive sales data; information on
inventory in stores, in transit, and at distribution centers; and costper item.
This has enabled Sears to track sales by individual items (skus) in each of its
1,950 stores (including 810 mall-based stores)in the United States and 1,600
international stores and catalog outlets. Thus, daily margin by item per store
can be easily computed, for example. Furthermore, Sears now fine-tunes its
buying, merchandising, and marketing strategies with previously
unattainable precision.
SPRS is open to all authorized employees, who now can view each
day’s sales from a multidimensional perspective (by region, district, store,
productline, and individual item). Users can specify any starting and ending
dates for special sales reports, and all data can be accessed via a highly user-
friendly graphical interface. Sears managers can now monitor the precise
impact of advertising, weather, and other factors on sales of specific items.
This means that Sears merchandise buyers and other specialists can examine
and adjust, if needed inventory quantities, merchandising, and order
placement, along with myriad other variables, almost immediately, so they
can respond quickly to environmental changes. SPRS users can also group
together widely divergent kinds of products, forexample, tracking sales of
items marked as “gifts under $25.” Advertising staffers can follow so-called
“great items,” drawn from vastly different departments, that are splashed on
the covers of promotional circulars. SPRS enables extensive data mining,
but only on sku- and location-related analysis.
In 1998 Sears created a large customer database, dubbed LCI
(Leveraging Customer Information), which contained customer-related sale
information (which was not available on SPRS). The LCI enables hourly
records of transactions, for example, guiding hourly promotion (such as 15%
discounts for early-bird shoppers).
In the holiday season of 2001, Sears decided to replace its regular 10%
discount promotion by offering deep discountduring early shopping hours.
The new promotion, which was based on SPRS, failed, and only when LCI
was used was the problem corrected. This motivated Sears to combine LCI
and SPRS in a single platform, which enables sophisticated analysis (in
2002).
By 2001, Sears also had the following Web initiatives: an e-commerce
home improvement center, a B2B supply exchange for the retail industry, a
toy catalog (wishbook.com), an e-procurement system, and much more. All

of these Web-marketing initiatives feed data into the data warehouse, and
their planning and controlare based on accessing the data warehouse.
The Result
The ability to monitor sales by item per store enables Sears to create a sharp
local market focus. For example, Sears keeps different shades of paint colors
in different cities to meet local demands. Therefore, sales and market share
have improved. Also, Web-based data monitoring of sales at LCI helps Sears
to plan marketing and Web advertising.
At its inception, the data warehouse hand been used daily over 3,000
buyers, replenishers, marketers, strategic planner, logistics and finance
analysts, and store managers. By 2004, there were over 6,000 users, since
users found the system very beneficial. Responsetime to queries has
dropped from days to minutes for typical requests. Overall, the strategic
impact of the SPRS-LCIdata warehouse is that it offers Sears employees a
tool for making better decisions, and Sears retailing profits have climbed
more than 20 percent annually since SPRS was implemented.
Questions
1. What were the drivers of SPRS?
2. How did the data warehouse solve Sears’s problems?
3. Why was it beneficial to integrate the customers’ data-basewith
SPRS?
4. How could RFID change Sears’s operations?

CASE – 3 Dollar General Uses Integrated Software
Dollar General (dollargeneral.com) operates more than 6,000 general stores
in the United States, fiercely competing with Wal-Mart, Target, and
thousands of other stores in the sale of food, apparel, home-cleaning
products, health and beauty aids, and more. The chain doubled in size
between 1996 and 2002 and has had some problems in addition to the stiff
competition, due to its rapid expansion. Forexample, moving into new states
means different sales taxes, and these need to be closely monitored for
changes. Personal management also became more difficult with the
organization’s growth. an increased number of purchasing orders
exacerbated problems in the accounts payable department, which was using
manual matching of purchasing orders, invoices, and what was actually
received in the “receiving” department before bills were paid.
The IT department was flooded with request to generate long reports on
topics ranging from asset management to general ledgers. It became clear
that a better information system was needed. Dollar General started by
evaluating information requirements that would be able to solve the above
and other problems that cut into the company’s profit.
A major factor in deciding which software to buy was the integration
requirement among the existing information systems of the various
functional areas, especially the financial applications. This led to the
selection of the Financials suite (from Lawson Software). The company
started to implement applications one at the time. Before 1998, the company
installed the suite’s asset management, payroll, and some HR applications
which allow the tens of thousands of employees to monitor and self-update
their benefits, 401k contributions, and personal data (resulting in big savings
to the HR department). After 1998, the accounts payable and general ledger
modules of Lawson Software were activated. The accounting modules allow
employees to route, extract, and analyze data in the accounting/finance area
with little reliance on IT personnel. During 2001-2003, Dollar General
moved into the sales and procurement areas, thus adding the marketing and
operation activities to the integrated system.
Here are a few examples of how various parts of the new system work:
All sales data from the point-of-sale scanners of some 6,000 stores are pulled

each night, together with financial data, discounts, etc., into the business
intelligence application for financial and marketing analysis. Employee
payroll data, from each store, are pulled once a week. This provides synergy
with the sales audit system (from STS Software). All sales data are
processed nightly by the STS System, broken into hourly journal entries,
processed and summarized, and then entered into the Lawson’s general
ledger module.
The original infrastructure was mainframe based (IBM AS 400). By
2002, the 800 largest suppliers of Dollar General were submitting their bills
on the EDI. This allowed instantaneous processing in the accounts payable
module. By 2003, service providers, such as utilities, were added to the
system. To do all this the system was migrated in 2001 from the old legacy
system to the Unix operating system, and then to a Web-based infrastructure,
mainly in order to add Web-based functionalities and tools.
A development tool embedded in Lawson’s Financials allowed users to
customize applications without touching the computer programming code.
This included applications that are not contained in the Lawson system. For
example, an employee-bonus applications was not available at Lawson, but
was added to Financial’s payroll module to accommodate Dollar General’s
bonus system. A customized application that allowed additions and changes
in dozens of geographical areas also solved the organization’s state sales-tax
collection and reporting problem.
The system is very scalable, so there is not problem in adding stores,
vendors, applications, or functionalities. In 2003, the system was completely
converted to Web-based, enabling authorized vendors, for example, to log
on the Internet and view the status of their invoices by themselves. Also the
Internet/EDI enables small vendors to use the system. (An EDI is too
expensive for small vendors, but the EDI/Internet is affordable.) Also, the
employment can update personal data from any Web-enabled desktop in the
store or at home. Future plans call for adding an e-purchasing (procurement)
module using a desktop purchasing model.
Questions
1. Explain why the old, nonintegrated functional system created
problems for the company. Be specific.
2. The new system costseveral millions dollars. Why, in your opinion,
was it necessary to install it?

3. Lawson Software Smart Notification Software (lawson.com) is being
considered by Dollar General. Find information about the software
and write an opinion for adopting or rejection.
4. Another new productof Lawson is Service Automation. Would you
recommend it to Dollar General? Why or why not?
CASE – 4 Singapore and Malaysia Airlines Intelligent
System
The problem
Airlines fly around the globe, mostly with their native crew. Singapore
Airlines and Malaysia Airlines are relatively small airlines, but they serve
dozens of different countries. If a crewmember is ill on route, there is a
problem of quickly finding a replacement. This is just one example why
crew scheduling may be complex, especially when it is subject to regulatory
constraints, contract agreements and crew preferences. Disturbances such as
weather conditions, maintenance problems, etc, also make crew management
difficult.
The Solution
Singapore Airlines uses Web-based intelligent systems including expert
systems and neural computing to manage the company’s flight crew
scheduling and handle disruptions to the crew rosters. The Integrated Crew
Management System (ICMS) project, implemented in Singapore since 1997,
consists of three modules: one roster assignment module for cockpitcrew,
one for the cabin crew, and a crew tracking module. The first two modules
automate the tracking and scheduling of the flight crew’s timetable. The
second module tracks the positions of the crew and includes an intelligent
system that handles crew patterns disruptions.
For example, crews are rearranged if one member falls ill while in a
foreign port; the system will find a backup in order to prevent understaffing
on the scheduled flight. The intelligent system then determines the bestway
to reschedule the different crew members’ rosters to accommodatethe sick
person. When a potentially disruptive situation occurs, the intelligent system
automatically draws upon the knowledge stored in the database and advises
the best course of action. This might mean repositioning the crew or calling

in backup staff. The crew tracking system includes a crew disruption
handling module that provides decision supportcapabilities in real time.
A similar Web-based system is used by Malaysia Airlines, as of
summer 2003, to optimize flight crew utilization. Also called ICMS, it
leverages optimization software from ilog.com. Its Crew Pairing
Optimization (CPO) module utilizes Ilog Cplex and Ilog Solver optimization
components to ensure compliance with airline regulations, trade union
agreements, and company policies, to minimize the costs associated with
crew accommodations and transportation and to efficiently plan and
optimize staff utilization and activities associated with long-term planning
and daily operations. The Crew Duty Assignment (CDA) module provides
automatic assignment of duties to all flight crews. The system considers
work rules, regulatory requirements, and crew requests to producean
optimal monthly crew roster.
The Results
Despite the difficult economic times, both airless are competing
successfully in the region, and their balance sheets are better than most other
airlines.
Questions
1. Why do airlines need optimization systems for crew scheduling?
2. What role can experts’ knowledge play in this case?
3. What are the similarities between the systems in Singapore and
Malaysia?
4. The airlines use ADSs for their pricing strategy (pricing and yield
optimization). Can they use an ADS for crew management? Why or
why not?

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