Solution to Allied Office Product
Decision at Applied Office Product
Company 's Background
In 1992, Allied Office Products was a corporation with annual sales of $900 million. It deals with manufacturing of following forms : * Business Forms * Specialty paper product such as writing paper, envelopes, note cards, and greeting cards
In 1988, as form manufacturing business matures, Allied Office Product had expanded into business form inventory management system and put a step ahead to attain a competitive advantage by embarking on a campaign that enrolled its corporate clients in program called "Total forms Control".
Starting with the mission of - "We know what you need…the right product at the right place at the right time”, Allied emphasis on the importance of a well run warehousing & distribution network.
The Business forms inventory management services – Total Forms Control (TFC) includes following * Warehousing * Inventory financing * Forms usage reporting * Inventory control * Distribution (pick pack and desk top delivery)
TFC, with annual sales of about $60 million, have 10 distribution centers. The value chain concept of TFC is as follows
Trees
Pulp
Paper
Forms
Mfg.
Forms
Sales
TFC
Customer
Purchasing
Manager
Customer
Receiving
Forms
User
Storage &
Inventory
Financing
Requisitioning
Stock
Selection &
Pick Pack
Order
Entry &
Billing
Desk Top
Delivery
Freight
The TFC Chain
The Industry Chain
Current Pricing Model: Clients were charged flat fee on product cost, plus 32.2% which covers warehousing, distribution, cost of capital for inventory, and freight expense (as stated in Exhibit 2). On top of that, Sales force charges average of 20% of product and services where individual accounts can vary from standard formula.
The problem TFC currently facing is its projected ROI that went down to 6% in 1992, from 20% in1988. So to rectify this problem, General Manager, Jon Malone suggested that the charges for
Company 's Background
In 1992, Allied Office Products was a corporation with annual sales of $900 million. It deals with manufacturing of following forms : * Business Forms * Specialty paper product such as writing paper, envelopes, note cards, and greeting cards
In 1988, as form manufacturing business matures, Allied Office Product had expanded into business form inventory management system and put a step ahead to attain a competitive advantage by embarking on a campaign that enrolled its corporate clients in program called "Total forms Control".
Starting with the mission of - "We know what you need…the right product at the right place at the right time”, Allied emphasis on the importance of a well run warehousing & distribution network.
The Business forms inventory management services – Total Forms Control (TFC) includes following * Warehousing * Inventory financing * Forms usage reporting * Inventory control * Distribution (pick pack and desk top delivery)
TFC, with annual sales of about $60 million, have 10 distribution centers. The value chain concept of TFC is as follows
Trees
Pulp
Paper
Forms
Mfg.
Forms
Sales
TFC
Customer
Purchasing
Manager
Customer
Receiving
Forms
User
Storage &
Inventory
Financing
Requisitioning
Stock
Selection &
Pick Pack
Order
Entry &
Billing
Desk Top
Delivery
Freight
The TFC Chain
The Industry Chain
Current Pricing Model: Clients were charged flat fee on product cost, plus 32.2% which covers warehousing, distribution, cost of capital for inventory, and freight expense (as stated in Exhibit 2). On top of that, Sales force charges average of 20% of product and services where individual accounts can vary from standard formula.
The problem TFC currently facing is its projected ROI that went down to 6% in 1992, from 20% in1988. So to rectify this problem, General Manager, Jon Malone suggested that the charges for