Mdcm, Inc. (a): It Strategy Synchronization
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KEL170
MARK JEFFERY AND JOSEPH F. NORTON
MDCM, Inc. (A):
IT Strategy Synchronization
Introduction
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
KEL170
MARK JEFFERY AND JOSEPH F. NORTON
MDCM, Inc. (A):
IT Strategy Synchronization
Introduction
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