Dakota Office Products Analysis 
Dakota Office
Products
Background
• Regional distributor of office supplies to institutions sand commercial businesses
• Comprehensive product line
• Excellent reputation
• Several distribution centers
Process
• Old:
• After customer orders received, orders were accumulated within the warehouses and prepared for shipment
• Used commercial truckers to deliver
• New Option:
• “Desk Top Deliveries”
• Delivered products directly to locations
• Small fleet of trucks
• 2% upcharge on products
Pricing of Products
• Markup purchased cost by 15%
• Then add markup to cover cost for selling expenses, and allowance for profit
• Determined at start of each year based on prior year expenses and competition
• Actual prices to customers depended on long-term relationships and competitive situations
Systems
• Electronic Data Interchange (EDI) 2 years prior, new internet site in 2000
• Allowed customers to order online – clerks wouldn’t have to manually enter in.
• Many customers took advantage because of convenience
Issue
• Year 2000: operated at a loss
• Even though increase in sales, there was a loss
• First time in history
• Costs continued to rise even after introducing new innovations – online ordering and Desktop Delivery
• Start: Look at distribution centers and understand the process and what goes on
Warehouse Activities
• 4 primary activities
1.
Process cartons in and out of facility
• Dependent on number of cartons that go in and out of the facility
2.
Desktop Delivery Service
• Pain for warehouse – have had to add extra people to handle
3.
4.
Order handling
Data Entry
• Manual: Validate customer and then key in line by line
• Time depends on how many items ordered
• Electronic: just a validity check
• Time is same for every order
2000 Stats:
• 80,000 cartons shipped
• 75,000 commercial freight
• 5,000 Desktop Delivery
• 2,000 deliveries
• Personnel at capacity
• Data Entry:
• 16,000 manual orders
• 150,000 total line items
• 8,000 EDI (online)
Products
Background
• Regional distributor of office supplies to institutions sand commercial businesses
• Comprehensive product line
• Excellent reputation
• Several distribution centers
Process
• Old:
• After customer orders received, orders were accumulated within the warehouses and prepared for shipment
• Used commercial truckers to deliver
• New Option:
• “Desk Top Deliveries”
• Delivered products directly to locations
• Small fleet of trucks
• 2% upcharge on products
Pricing of Products
• Markup purchased cost by 15%
• Then add markup to cover cost for selling expenses, and allowance for profit
• Determined at start of each year based on prior year expenses and competition
• Actual prices to customers depended on long-term relationships and competitive situations
Systems
• Electronic Data Interchange (EDI) 2 years prior, new internet site in 2000
• Allowed customers to order online – clerks wouldn’t have to manually enter in.
• Many customers took advantage because of convenience
Issue
• Year 2000: operated at a loss
• Even though increase in sales, there was a loss
• First time in history
• Costs continued to rise even after introducing new innovations – online ordering and Desktop Delivery
• Start: Look at distribution centers and understand the process and what goes on
Warehouse Activities
• 4 primary activities
1.
Process cartons in and out of facility
• Dependent on number of cartons that go in and out of the facility
2.
Desktop Delivery Service
• Pain for warehouse – have had to add extra people to handle
3.
4.
Order handling
Data Entry
• Manual: Validate customer and then key in line by line
• Time depends on how many items ordered
• Electronic: just a validity check
• Time is same for every order
2000 Stats:
• 80,000 cartons shipped
• 75,000 commercial freight
• 5,000 Desktop Delivery
• 2,000 deliveries
• Personnel at capacity
• Data Entry:
• 16,000 manual orders
• 150,000 total line items
• 8,000 EDI (online)