assignment 3

Industrial Equipment Inc.

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Prepared by Dawn Rovers

Created Sept 11, 2015

Revised June 21, 2017

NOTE: All organizations, individuals and relationships are fictional for teaching purposes.

The date is February 2, 2013. Bob Cummings has a big problem. Despite his best efforts as CEO, Industrial

Equipment Inc. is in trouble. In the 12 years since he became CEO, sales have generally plateaued and

expenses are rising at an alarming rate. If something doesn’t change, the company will be facing bankruptcy

by the end of 2013. This is hard to believe considering the company had a record year of near $7M in

revenue just last year. Bob needs to act, and act fast!

Industrial Equipment Inc.

Industrial Equipment Inc. is a family business, started by Bob’s father Winston way back in 1967. Bob’s dad

worked night and day to create a strong company serving small and large contractors, builders and

government departments. Bob’s father also built up a strong base of loyal customers. Almost singlehandedly,

Winston Cummings, built the company to an average annual revenue of $5 million dollars, before passing the

firm over to Bob in 2000. Bob is doing everything he can to follow in his father’s footsteps, but it doesn’t seem

to be paying off. The company now has 3,500 customers - twice the customers his father had on books when

the company was passed on to him. The company now has 2 locations, one less than in his father’s day.

Head office is located in Oakville, close to Bob’s home. The product line consists of a broad line of items for

the industrial and commercial building industry. Industrial Equipment Inc. (IEI) currently has a product line of

over 200 product groups. IEI is a reseller, with multiple suppliers.

Current Situation

Since taking over in 2001, Bob has made the following changes:

1. Based on recommendations from the sales reps and instore Customer Service Representatives,

Bob has increased the breadth and depth of product line from 100 to 200 product groups.

2. After a couple of years of trying to manage all the accounts himself, with only administrative staff to

assist, Bob decided to hand off some of the accounts so he could spend more time managing the

company. He hired 4 Sales Reps, 3 of whom worked out okay so far. They are all very well

compensated (base salary

$60,000, company car, plus annual bonuses)

3. Although each of the 4 locations of IEI are essentially sales offices, there was often no one on site to

answer phones and handle walk-in prospects or clients. Hence, in 2006, Bob hired three Customer

Industrial Equipment Inc.

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Service Reps.

4. In 2007, a POS system was installed in each of the sales offices in order to attract the small

independent contractors and make order entry quicker for the Customer Service Reps. Prior to

that, all orders were entered into the Order Entry System, an old ERP software solution that works

very well for the purposes of warehousing, inventory control and purchasing functions.

5. Because of chronic low sales, Bob was forced to close the Peterborough location in May of 2011.

6. In 2007, Bob noticed that the business had become much more complex than in his father’s day.

He had retail locations now to attract small contractors. He had way more systems. He had much

more personnel than his father ever had. So, in January of 2008, Bob hired a Business

Administrator. Barb Grear has been doing an excellent job for the past 5 years. She is really Bob’s

right hand man. She manages the CSRs, warehouse staff, the POS system, and coordinates

activities with the purchasing agents and sales staff. She keeps amazing records of everything!

She’s also very proactive and keen about data analysis. Using a Business Intelligence tool she

downloaded for free, she extracts information from the POS system, Order Entry System and

Purchasing system using Excel, then combines them to create insightful metrics. Bob now wishes

he’s paid more attention to Barb’s charts and graphs.

In the meantime, Bob works night and day to keep this company afloat. He splits his time between 2

locations and serves most of his company’s top tier clients. These clients are demanding but they are the

real bread and butter for this firm. Bob is so busy with these clients that he finds it hard to pay attention to

the finances of his company. When the Firm’s Accountant sat him down last week and showed him the

numbers, he was shocked! The accountant provided him with some compelling and shocking reports, but

Bob needed more. He needed to know why this was happening, so he turned to his Business Administrator,

Barb and asked her to create as full a picture as she could of what’s happening at IEI. Within 48 hours, Barb

came back to Bob with a comprehensive review. For the first time ever, Bob was forced to look at his

business and his clients using the numbers instead of his “gut feel”. Barb had gone above and beyond to

create some revealing metrics. The ones in the Appendices below most interested Bob.

Will he have to give up the firm his father so lovingly created or is there anything he can do to improve upon

the situation? If you were a consultant hired to consider some CRM focused actions which maximize the

value exchange, what would you suggest?

1. Critical, actionable and immediate next steps to drive revenue 2. Critical, actionable and immediate next steps to reduce expenses

3. Critical, actionable and immediate next steps to improve efficiency (hence cut costs) 4. Metrics that will help drive this business to focus on the value exchange more closely

Appendices 1-9 will be critical in your analysis.

Industrial Equipment Inc.

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Appendix 1:

Appendix 2:

Industrial Equipment Inc.

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Appendix 3:

Appendix 4:

Industrial Equipment Inc.

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Appendix 5:

Appendix 6:

Appendix 7:

Annual Sales by Location

Location Year 2009 2010 2011 2012 Total

Dummy Location - Exchanges & R $21,881. ($14,263.) ($5,669.) $20,074. $22,022.

Georgetown $1,960,586. $1,816,002. $1,991,756. $1,554,071. $7,322,415. Oakville $3,658,553. $3,912,802. $4,864,877. $4,880,163. $17,316,395. Peterborough $317,553. $290,707. $35,463. - $643,723. Total $5,958,574. $6,005,247. $6,886,427. $6,454,308. $25,304,556.

Industrial Equipment Inc.

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Appendix 8:

Annual Sales by Sales Rep SalesRepID Rep # 2009 2010 2011 2012 Total

CEO 1 $3,357,548. $3,632,490. $4,102,320. $3,520,555. $14,612,913.

Rogers, M 2 $514,610. $433,398. $538,294. $554,389. $2,040,690.

Smith, B 3 $471,516. $675,836. $704,492. $893,970. $2,745,814.

House Act. Georgetown 4 $1,024,108. $738,762. $1,000,241. $917,395. $3,680,506.

Jones, R 5 $566,539. $504,361. $504,224. $547,809. $2,122,933.

Logan, B 6 $24,255. $30,973. $32,771. $15,242. $103,240.

McDougall, A. 8 - $58. - - $58.

House Account - London 9 - ($10,631.) $2,826. $4,948. ($2,857.)

House Account - Misc. 10 - - $1,260. - $1,260.

Total $5,958,574. $6,005,247. $6,886,427. $6,454,308. $25,304,556.

Appendix 9:

RFM SCORES - TOP 100 Clients ONLY (based on Calendar year 2012)

Customer ID Sales 2012 Most Recent Purchase

# purchases in 2012

Recency Score

Frequency Score

Monetary Value Score

100794 1,022,981.18 12-Jan-12 1 1 1 5

106612 853,799.10 24-Mar-12 1 3 1 5

101186 442,763.87 30-Nov-12 6 5 4 5

107333 436,221.17 31-Jan-12 3 1 3 5

104388 214,823.09 15-Mar-12 3 2 3 5

101813 175,354.62 21-Mar-12 1 3 1 5

106781 135,557.08 3-Feb-12 9 1 5 5

100991 126,923.45 15-Jul-12 20 3 5 5

101257 95,606.98 14-Oct-12 18 4 5 5

107237 95,526.88 22-Jan-12 4 1 4 5

107971 95,179.66 1-Dec-12 1 5 1 5

101175 87,864.70 5-Feb-12 7 1 4 5

108623 80,098.06 14-Dec-12 2 5 3 5

107770 77,013.64 22-Jan-12 15 1 5 5

101295 74,493.03 24-Jan-12 4 1 4 5

106567 65,832.94 1-Nov-12 25 4 5 5

101406 62,685.69 20-Dec-12 12 5 5 5

100542 59,935.84 15-Feb-12 14 1 5 5

107857 56,169.49 1-Oct-12 6 3 4 5

100860 54,846.23 2-Mar-12 2 2 2 5

100366 54,539.45 4-Dec-12 8 5 5 5

100029 37,594.44 16-Feb-12 5 1 4 4

100338 35,931.97 3-Mar-12 3 2 3 4

100664 35,396.70 3-Oct-12 9 3 5 4

Industrial Equipment Inc.

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107448 33,419.70 7-Dec-12 12 5 5 4

108379 33,053.63 10-Dec-12 21 5 5 4

101601 32,336.22 18-Feb-12 3 1 3 4

107348 32,196.34 19-Feb-12 7 1 4 4

101150 30,656.61 4-Mar-12 5 2 4 4

101557 29,887.75 5-Oct-12 2 3 2 4

100423 29,557.87 20-Nov-12 9 4 5 4

101646 28,245.63 11-Mar-12 11 2 5 4

100015 27,366.36 5-Apr-12 5 3 4 4

101938 26,456.42 2-May-12 5 3 4 4

100752 26,290.07 4-Jun-12 6 3 4 4

100486 25,458.82 12-Apr-12 9 3 5 4

109082 24,219.00 21-Feb-12 2 1 2 4

101241 23,101.32 5-Mar-12 3 2 3 4

102026 20,979.39 6-Oct-12 3 3 3 4

101724 19,172.95 2-Jan-12 2 2 3

100318 18,760.49 31-Oct-12 5 4 4 3

100095 18,266.57 30-Mar-12 1 3 1 3

107014 18,041.03 12-Dec-12 1 5 1 3

101911 17,176.05 1-Dec-12 4 5 4 3

101712 16,857.55 19-May-12 6 3 4 3

100208 16,506.97 15-Mar-12 8 2 5 3

100115 14,887.15 25-Feb-12 15 2 5 3

102169 14,774.92 7-Mar-12 11 2 5 3

101454 14,620.55 8-Oct-12 7 3 4 3

100530 14,526.54 13-Dec-12 4 5 4 3

108878 14,199.09 4-Mar-12 8 2 5 3

106894 14,151.67 28-Feb-12 4 2 4 3

100792 13,940.55 7-Mar-12 5 2 4 3

107973 13,654.66 10-Oct-12 2 3 2 3

108694 13,562.27 14-Dec-12 1 5 1 3

100527 12,879.70 3-Dec-12 1 5 1 3

100282 11,986.74 1-Mar-12 7 2 4 3

101183 11,366.54 15-Dec-12 1 5 1 3

100300 11,182.18 14-Oct-12 3 4 3 3

100519 10,346.11 8-Mar-12 12 2 5 2

102074 10,121.20 3-Dec-12 1 5 1 2

107399 9,897.53 8-May-12 1 3 1 2

108354 9,897.06 22-Dec-12 1 5 1 2

107822 9,678.63 21-Feb-12 1 2 1 2

107402 9,649.88 10-Mar-12 5 2 4 2

100397 9,374.05 15-Oct-12 3 4 3 2

100738 9,123.90 15-Nov-12 1 4 1 2

107902 8,742.40 5-Mar-12 2 2 2 2

100327 8,668.73 2-Mar-12 3 2 3 2

Industrial Equipment Inc.

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100800 8,586.41 8-Nov-12 1 4 1 2

101195 8,584.49 16-Oct-12 2 4 2 2

100983 8,537.40 15-Mar-12 4 2 4 2

100855 8,506.54 3-Mar-12 4 2 4 2

100215 8,261.03 27-Nov-12 1 5 1 2

108008 8,180.20 15-Jan-12 1 1 1 2

108085 7,998.94 18-Oct-12 3 4 3 2

106879 7,947.22 19-Apr-12 1 3 1 2

100839 7,866.83 5-Mar-12 1 2 1 2

100588 7,697.59 17-Oct-12 1 4 1 2

108632 7,534.01 19-Oct-12 2 4 3 2

101992 7,527.20 22-Mar-12 1 3 1 2

101850 7,503.99 22-Oct-12 2 4 3 2

107300 7,502.53 4-Feb-12 5 1 4 2

107834 7,349.51 24-Feb-12 1 2 1 2

106814 7,065.18 1-Feb-12 1 1 1 1

101363 7,017.14 25-Oct-12 3 4 3 1

101759 6,951.12 23-Mar-12 1 3 1 1

108027 6,851.74 24-Dec-12 1 5 1 1

107885 6,809.05 24-Dec-12 1 5 1 1

101609 6,771.60 3-Jan-12 1 1 1 1

101525 6,745.17 24-Mar-12 2 3 2 1

101714 6,714.63 26-Oct-12 2 4 3 1

101905 6,692.58 24-Dec-12 1 5 1 1

101047 6,670.73 24-Dec-12 1 5 1 1

101953 6,602.08 3-Jan-12 1 1 1 1

100138 6,569.31 7-Feb-12 1 1 1 1

100632 6,515.80 14-Jan-12 1 1 1 1

107080 6,419.04 27-Oct-12 2 4 3 1

100402 6,385.62 31-Jan-12 2 1 2 1

Others 937,565.18