Allied Office Products (AOP) is a company in business forms and specialty paper products. In 1988, the company expanded into a mature business forms inventory management services; an area where Allied believe could offer value-added services that differentiates them from their competitors. All of Allied's competitors were seeking ways to generate sales growth, including Allied themselves. Allied introduced a program to enroll its corporate clients in, called "Total Forms Control" (TFC). The services provided under TFC included warehousing and distribution of forms, inventory control and forms usage reporting. A part of the distribution services, Allied offered "pick pack" service where the exact number of forms requested by the clients would be delivered. Additional services such as "desk top delivery", where Allied personnel would distribute the forms to individual offices, were made available to clients. Allied operated its forms manufacturing and TFC activities as separate profit centers, transferring at fair market value with the opportunity to outsource products of necessary.
The value chain of TFC consists of storage and inventory financing, requisitioning, stock selection and pick-pack, order entry (billing), desk top delivery and freight.
Problem:All the activities the TFC are performing are not necessarily adding value. AOP are lacking a strategic plan and a long term direction that ensures they are competitive and allows them to innovate. As a result, the processes and employees are not performing efficiently in the short and long term. In addition, the customer service approach is negatively affecting their profitability. AOP are not optimizing the return that they can get from their highest annual sales account (48% of TFC Net Sales - Exhibit 6) because they attempt to provide the same level of service to all of its clients.
Analysis:Since AOP is competing in a mature market, the company goes out of its way...