Foxmeyer, a Failure Implementation
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ONLINE FILE W8.4
FOXMEYER CASE: A FAILURE IMPLEMENTATION
1.
1.1
OF
LARGE ERP
BACKGROUND
BUSINESS
OF
FOXMEYER
FoxMeyer was the fifth largest drug wholesaler in the United States (1995) with annual sales of about 5 billion US$ and daily shipments of over 500,000 items. The business of the company was principally in healthcare services, which included the followings: 1. Distribute a full line of pharmaceutical products and health and beauty aids to chain stores, independent drug stores, hospitals, and other health care facilities. In other words, FoxMeyer’s customers were retailers and dispensers. 2. Provide managed care and information-based services to health care facilities, pharmacies and physicians. 3. Conduct business in franchising variety stores and the franchising and operation of crafts stores, and wholesale distribution of products to those stores.
1.2
DISTRIBUTION
The company had 25 distribution centres located throughout USA. It conducted business mainly through two operating units: FoxMeyer Corp. and Ben Franklin Retail Stores, Inc. The latter was engaged in franchising and wholesaling to the franchised stores; while the former was engaged in the distribution to the individual units and chain stores and in the provision of managed care and information-based services.
1.3
BUSINESS STRATEGY
FoxMeyer business strategy was a mix of ‘Cost Leadership’ and ‘Differentiation’. a. Cost efficient operations e.g. automating the physical warehouses b. Efficient inventory management and implementation of cost cutting program. c. Effective Information System Management, e.g. providing customers with electronic data entry. a. Provide innovative services, mostly computer based. b. Focus on quality. c. Complement distribution activities with marketing programs and computer-based services. d. Maintain local responsiveness and national coverage.
Cost Leadership
Differentiation
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e. Strengthen sales and marketing
ONLINE FILE W8.4
FOXMEYER CASE: A FAILURE IMPLEMENTATION
1.
1.1
OF
LARGE ERP
BACKGROUND
BUSINESS
OF
FOXMEYER
FoxMeyer was the fifth largest drug wholesaler in the United States (1995) with annual sales of about 5 billion US$ and daily shipments of over 500,000 items. The business of the company was principally in healthcare services, which included the followings: 1. Distribute a full line of pharmaceutical products and health and beauty aids to chain stores, independent drug stores, hospitals, and other health care facilities. In other words, FoxMeyer’s customers were retailers and dispensers. 2. Provide managed care and information-based services to health care facilities, pharmacies and physicians. 3. Conduct business in franchising variety stores and the franchising and operation of crafts stores, and wholesale distribution of products to those stores.
1.2
DISTRIBUTION
The company had 25 distribution centres located throughout USA. It conducted business mainly through two operating units: FoxMeyer Corp. and Ben Franklin Retail Stores, Inc. The latter was engaged in franchising and wholesaling to the franchised stores; while the former was engaged in the distribution to the individual units and chain stores and in the provision of managed care and information-based services.
1.3
BUSINESS STRATEGY
FoxMeyer business strategy was a mix of ‘Cost Leadership’ and ‘Differentiation’. a. Cost efficient operations e.g. automating the physical warehouses b. Efficient inventory management and implementation of cost cutting program. c. Effective Information System Management, e.g. providing customers with electronic data entry. a. Provide innovative services, mostly computer based. b. Focus on quality. c. Complement distribution activities with marketing programs and computer-based services. d. Maintain local responsiveness and national coverage.
Cost Leadership
Differentiation
W139
e. Strengthen sales and marketing
References: AND BIBLIOGRAPHY “Journey without End”, at www.crendons.co.nz/articles/journey.htm Datamation at www.datamation.com/entap/0letmc2.htm “Measuring Up”, CIO Magazine, Sept 15, 1999. “Takeoff”, CIO Magazine, May 15, 1999. “Flipping the Switch” CIO Magazine, June 15, 1996. “The Most Important Team in History”, CIO Magazine, Oct 15, 1999. “Making ERP Succeed: Turning Fear Into Promise”, www.strategybusiness.com/technology, 2nd Quarter 1999. “FoxMeyer Bankruptcy Trustee to Sue Andersen Consulting”, Fax watch, July 6, 1998. “SAP America hit with a $500M suit”, Philadelphia Business Journal, November 2, 1998. “SAP Sued Over R/3”, Information Week Online, August 31, 1998. “Are you gambling on a magic bullet”, Computer World, October 20, 1997. Annual Report on American Industry, Forbes, Jan 1997. United States District Court For the District of Columbia— Memorandum Opinion FTC vs Cardinal Health, Inc., July 1998. “FoxMeyer collapse Linked here”, Business Courier, Sept 9, 1996. “SAP denies R/3 caused firm’s collapse”, Network World Fusion, Aug 28, 1998. “Holistic Management of Megapackage Change: the case of SAP”, Thomas H. Davenport, University of Texas at Austin. (Unpublished paper)