MARK JEFFERY AND JOSEPH F. NORTON
MDCM, Inc. (A):
IT Strategy Synchronization
MDCM, Inc., one of the world’s largest contract manufacturers for medical devices, had just announced its fifth consecutive quarterly loss. The firm posted revenues of $1.12 billion with net losses of $33 million for the second quarter of 2002. For Max McMullen, this was yet another agonizing episode since he took over as CEO two years earlier. Despite major company reorganizations, his promises to the shareholders for operational and cost improvements had not been realized. Given the company’s lackluster record, the next twelve months were critical in proving that these promises could indeed be kept. Concerned, McMullen called a meeting of MDCM’s senior executives to discuss the situation. “Our jobs depend on what happens the next few quarters. I know we have a good strategy, but we need to get our implementation right,” he explained. CFO Sharon Leis responded, “Well, our margins have been shrinking for eight consecutive quarters. We’ve got too much in working capital, not to mention one of the least efficient cost structures in the industry. I can’t fix any of these things, though, because by the time I get any information, it’s often more than forty-five days old! In my mind, we need to continue to cut costs.” Pat Perry, the vice president of marketing and sales, argued, “Our marketing and sales staff is actually really productive, maybe the best in the industry. But we spend a lot of time on tasks that could be done by customers using some type of self-service technology. I’m talking about online ordering and account management. It also kills me that the pilot customer relationship management system in France hasn’t done much for me. My people can be twice as productive if they’re getting information when they need it, not a week later.” COO Michael Shed jumped in. “Our forecasts are terrible. We’re spending almost three times as much as we need on materials because we’re always expediting orders from our suppliers. When we do have the supplies, I can’t schedule my production properly because I’m rushing orders through to get customers what they want in time. I really don’t see how we can deal with an enterprise resource planning implementation this year in conjunction with the mess that I’m trying to fix. And don’t even get me started on our logistics outsourcer.” ©2006 by the Kellogg School of Management, Northwestern University. This case was prepared by Professor Mark Jeffery and Derek Yung ’03, in collaboration with Joseph F. Norton, Senior Fellow, Center for Research on Technology and Innovation, Kellogg School of Management, and Principal, SOCHIN Consulting Group. Cases are developed solely as the basis for class discussion. Some facts within the case have been altered for confidentiality reasons. Cases are not intended to serve as endorsements, sources of primary data, or illustrations of effective or ineffective management. To order copies or request permission to reproduce materials, call 800-5457685 (or 617-783-7600 outside the United States or Canada) or e-mail firstname.lastname@example.org. No part of this publication may be reproduced, stored in a retrieval system, used in a spreadsheet, or transmitted in any form or by any means—electronic, mechanical, photocopying, recording, or otherwise—without the permission of the Kellogg School of Management.
This document is authorized for use only by Xing Liu in IT Strategy and Policy (Spring 2013) taught by Eleanor Loiacono from January 2013 to July 2013.
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MDCM, INC. (A): IT STRATEGY SYNCHRONIZATION KEL170
At this point, everyone was looking at Shawn Atkins, the newly hired CIO. Atkins, a graduate of the Kellogg School of Management, realized the importance of including the top executives in the information technology (IT) strategy and planning. With a mildly exasperated tone, he...