and related health products, is experiencing sharp growing
pains. Healthlite’s sales have tripled over the past five years. However, new local competitors, offering fast delivery from
local production centers and lower prices, are challenging
Healthlite for retail shelf space with a bevy of new products. Healthlite needs to justify its share of shelf space to grocers and is seeking additional shelf space for its new yogurt-based products such as frozen desserts and low-fat salad dressings. Yogurt has a very short shelf life measured in days, and must be moved very quickly.
Healthlite’s corporate headquarters is in Danbury,
Connecticut. Corporate headquarters has a central mainframe computer that maintains most of the major business databases. All production takes place in processing plants
that are located in New Jersey, Massachusetts, Tennessee,
Illinois, Colorado, Washington, and California. Each processing plant has its own minicomputer, which is connected to the corporate mainframe. Customer credit verification is
maintained at corporate headquarters, where customer master files are maintained and order verification or rejection is determined. Once processed centrally, order data are then
fed to the appropriate local processing plant minicomputer.
Healthlite has 20 sales regions, each with approximately 30
sales representatives and a regional sales manager. Healthlite has a 12-person marketing group at corporate headquarters.
Each salesperson is able to store and retrieve data for assigned customer accounts using a terminal in the regional office
linked to the corporate mainframe. Reports for individual
salespeople (printouts of orders, rejection notices, customer account inquiries, etc.) and for sales offices are printed in the regional offices and mailed to them.
Sometimes, the only way to obtain up-to-date sales data is
for managers to make telephone calls to subordinates and then piece the information together. Data about sales and advertising expenses, promotional campaigns, and customer shelf space devoted to Healthlite products are maintained manually at the regional offices. The central computer contains only consolidated, company-wide files for customer account data and order and billing data.
The existing order processing system requires sales representatives to write up hard-copy tickets to place orders through the mail or by fax. Each ticket lists the amount and kind of product ordered by the customer account. Approximately 20 workers at Healthlite corporate headquarters open, sort, and enter 500,000 order tickets per week into the system. Frequently orders are delayed when the fax machines
break down. This order information is transmitted every
evening from the mainframe to a minicomputer at each of
Healthlite’s processing sites. This daily order specifies the total yogurt and yogurt product demand for each processing
center. The processing center then produces the amount and
type of yogurt and yogurt-related products ordered and
ships the orders out. Shipping managers at the processing
centers assign the shipments to various transportation carriers, who deliver the product to receiving warehouses located in the regions.
A year ago, growth in new products and sales had reached a
point where the firm was choking on paper. For each order, a salesperson filled out at least two forms per account. Some
sales representatives have more than 80 customers. As it
became bogged down in paper, Healthlite saw increased delays in the processing of its orders. Since yogurt is a fresh food product, it could not be held long in inventory. Yet Healthlite had trouble shipping the right goods to the right places in
time. It was taking between 4 and 14 days to process and ship out an order, depending on mail delivery times. Healthlite also found accounting...