MSFS 670 - The Ramsey Company Case

The Company

Ramsey, Inc. formed in 2001, is a wholesale distribution company that buys from various manufacturers and resells the items to retailers. The retailers in turn, sell to the public end user. In its role as a distributor, Ramsey acts as the sales and service representative for its various manufacturers/suppliers and generally earns its revenues through markups on products sold to retailers.The company has contractual relationships with each of its manufacturers/suppliers that vary in terms of discounts, distribution territories/rights and service responsibilities. It works diligently to maintain an active network of retailers who buy the products of the manufacturers that Ramsey represents.

As a link between manufacturer and retailer, Ramsey serves a vital role in the product distribution channel and the flow of goods from initial production to the final customer, as shown in the illustration.Ramsey holds inventory, markets manufacturers' products, ships manufacturer goods, and provides credit to

retailers.Ramsey houses products in distribution centers at

its three principle locations and ships them on-demand to its retailers, eliminating the need for manufacturers to maintain their own distribution centers, shipping and credit facilities.

Ramsey employs inside and outside sales representatives who contact retailers, convince them to carry products form Ramsey manufacturers and manage the ongoing relationships. The outside sales reps find new clients, while the inside reps call on existing clients and renew orders.

Like many wholesalers, Ramsey stocks a range of products from several manufacturers, focusing on the following business segments: Computing and Office Supplies, Medical

Supplies, Sporting Goods and Beverage Distribution. Its manufacturer/suppliers include companies like Hewlett Packard, Canon, National Instrument, Herman Miller, Glaxco, Bayer, Natures Own, Riddle Sports and Alexander Vineyards. Its retailers include office supply and furniture depots, computer and software chains, drug stores, sporting goods shops, and beverage retailers.

The company is a member of National Association of Wholesales: http://www.naw.org/

The company is privately held with 68 employees with plans to increase to 125 over 5 years. Ramsey headquarters are located in San Mateo, California (San Francisco Bay Area), but it also has locations in Boston and Los Angeles. 40 employees work in the headquarters, 14 in Los Angeles, and 14 in Boston. Each division office has 4 Sales Representatives, with Boston based reps covering the Eastern sales territory. San Francisco reps focus on the Western sales territory, while reps based in LA work both the E ast and West. The company operates in the US, Canada and Europe. The company's organizational chart appears in Attachment B.

The Ramsey Mission

The following is the company's mission as contained in its Annual Report:

"Our mission is to distribute branded retail merchandise and provide superior customer service to our loyal customers. We will strive to exceed the expectations of our stakeholders and build long-term relationships with our customers, suppliers and employees."

The Products and Services

The company maintains an inventory of a wide variety of products from office, sports and medical supplies, to computers, peripherals, and software and business furniture. The company houses inventory in its three principle locations and employs a perpetual inventory system. Some inventory, such as computers require assembly or customization. To stay ahead of this competitors, Ramsey must provide exceptional customers service. It needs to offer prompt and reliable delivery, offer a process for returns and handling damaged goods and provide credit on sales. In addition, Ramsey's sales and customer sales representatives have to understand the products of the manufacturers that the company represents as well as the needs of the retail businesse s to whom they sell.

Financial Information

Ramsey is classified under SIC Code519908, General Merchandise-Wholesale and NAICS Code 424990, Other Non-Durable Goods Merchant Whls in industry reports. As a privately held company, it is owned by 6 investors. The company pays periodic dividends from profits, but has not done so for the last two years as they reinvest in operations. A buyout agreement is in place that lays out the steps that the company must follow should a shareholder leave the company and sets the sales price per share based on a pre- determined formula of 3x sales.

The Competition

As general merchandise distributor in the small to mid-range of the wholesaler segment, Ramsey competes most frequently with the following companies:

Company

Products

General Merchandise Distrs. Inc.

Atlanta, GA

Private company categorized under Wholesale Giftwares. Our records show it was

established in 1985 and incorporated in Georgia. Current estimates show this company has an annual revenue of $1 to 2.5 million.

Umya Wholesale Merchandise

Macon, GA

Private company categorized under Wholesale General Merchandise. Current

estimates show this company has an annual revenue of $2.5 to 5 million.

United Wholesale

Fresno, CA

Private company categorized under Wholesale General Merchandise. Our records

show it was established in 2009 and incorporated in California. Current estimates show this company has annual revenue of $5,000,000.

Source:

http://www.manta.com

One advantage that Ramsey has over its competitors is that it has developed a website to advertise to new potential retail customers. The site also allows current retail customers to order online via its membership and customer support area.

The current CEO strives to model Ramsey's website presence after Price Master Corp (http://www.pricemaster.com/), a national distributor of convenience and dollar store products located in Queens, New York. The company carries 3000+ item product line that includes products from leading brands such as Duracell, Tylenol, Colgate, Bic, Chapstick, Kodak, and hundreds more. Price Master offers competitive pricing, wide product variety, and outstanding service with stock availability of over 95% and most orders are shipped within 1 business day.

Existing Financial Information System and Technology Structures

The company currently has several units: Accounting, Partner Support, E-commerce/Web, Employee Support, Sales, Executive Team, Marketing, Shipping, Customer Support and Vendor Support.

The company has several non-integrated systems. It uses Great Plains for its accounting software, Timesheets for its time and billing software, and Goldmine for sales prospecting and tracking. Payroll and benefits are outsourced to ADP (Automated Data Processing). As an established wholesaler, Ramsey spends most of its time tracking shipments and managing orders, and much of this process is done manually. The non-integrated systems are difficult and costly to maintain and result in unproductive efforts to perform tasks that are dependent on financial, material, and asset management information located in disparate sources. The company's CEO has asked the CFO to put together a team to investigate an integrated Enterprise Resource Planning (ERP) solution.

The company's business functions are summarized in the following

Great Plains

Function

Accounting, including inventory control, AR, AP, GL, and asset management. Payroll is outsourced

to ADP.

Authorized

Users

CFO/Controller- access to all. Accounting Staff per their function. CEO, emergency, all access.

Current

Processes

Payroll file prepared by ADP, all other entries from other systems, manually prepared. The

controller prepares financial statements in accounting system and exports them to Excel and emails them to the CFO for review.

Timesheets

Function

Time entry and reporting for payroll. Labor hours on assembly are NOT tracked by project. A

standard hourly overhead rate is captured in product pricing.

Authorized

Users

The Controller and the payroll coordinator have full access to the software. All company employees enter their time directly into the system. Managers have approval level access for review and changes.

Current

Processes

Accounting manually aggregates payroll reporting to ADP via ADPs's online system. ADP creates a

GL entry file for the Great Plains system. Project managers review time spent on

projects and make adjustments as necessary. Draft invoices from Timesheets software are manually entered into Great Plains system and sent as final. GL entries are manually made for revenue recognition adjustments (work completed, but not yet billable per contract).

Goldmine

Function

The sales force enters leads, customer prospects and sales orders into the system. The sales

director manages the sales funnel from these reports and sales orders are used to pull and/or purchase inventory upon signed order.

Authorized

Users

Sales Manager and Sales Force. Only the Sales Manager and President have full access to the software.

Current

Processes

Sales orders are photocopied and placed in a customer file, which follows the sales through picking

and shipment (the fulfillment process). The sales order must be re-entered into the Great Plains accounting system by the purchasing agent, and manually moved to invoice status when sale is ready to invoice.

Sales reports must be run in Goldmine and emailed to interested users.

The company has not had to rely on custom software to meet its needs, but it does have some specific growth requirements that are motivating its interest in enhancing its information systems.

It recently engaged a consultant that tested the company's physical network wiring and infrastructure to make sure that it could withstand additional daily network usage and traffic. All data cabling and hubs to wireless access points, switches and rout ers were tested. It tested the company's LAN and supporting Windows and SQL server software. An inventory of the applications that the company can support in addition to expanded accounting and finance ERP, include:

Network file and remote printing services

User directory and authentication services

E-mail and collaboration software

Content management software

Web applications

Network security and anti-virus

Network fax

Accounting systems

Database applications

Remote access software

Network backup

Though the company appears to have the capability to support an integrated ERP, it is open to recommendations and will budget for additional infrastructure.

Job Classifications

The company currently has the following job classifications in place.

Accounting Manager/Controller

Admin - CSR

Customer Service Rep

Customer Service Manager

New Business Developer

Payroll Specialist

Admin - New Bus Dev

Admin - Sales

AP Clerk AR Clerk CEO/President

Chief Financial Officer

Chief Operating Officer

Driver

Graphic Artist HR/Office Manager Implementation Specialist IT Manager

IT Support

New Bus Development Mgr

Receiving Clerk

Sales Director

Sales Representative

Shipping Clerk

VP Sales

Warehouse Manager

Warehouse Worker

Driven by Sales and Customer Service

Ramsey's success is driven by sales and customers service. New business development (3 employees located in San Mateo) concentrate on lining up manufacturers to represent, while the 12 sales people (4 at each location) concentrate on targeting new and calling on existing retailers (Ramsey's customers). Customer Service Representatives (CSRs) with 4 located in Boston, 4 in San Mateo, and 1 in Los Angeles focus on supporting the existing retailer network. San Mateo and Los Angeles locations concentr ate on sales and service in the Western Region, including Alaska and Western Canada. Boston handles the Eastern Region, including Eastern Canada and Europe.

Ramsey Sales and Customer Service Map

The company maintains CSR Desks at the three locations that operate 7AM EST to 8PM PST. The COO would like to be able to easily access information that shows how much time the support team spends servicing each customer and how many on-site visits are required, in order to gather information for product costing. He is also interested in maintaining high service standards to ensure customer retention. Having excellent sales and service organizations are essential to the company's profitability. The sales people are trained by experienced mentors.

The CEO would like to be able to view key information about the company from his desktop. He was golfing with the CEO of Davis Wholesale and heard all about the company's use of performance dashboards. He's not sure if he got all the facts, but is sure this feature would benefit his company. He wants to learn more about them.

The company has decided to look at an information system that would combine transaction processing, decision -support, management information, and executive support in one enterprise-wide integrated ERP solution.

Your Role as the CFO & ERP Implementation Team

This semester you will play the role of a member of the internal consulting team that the Controller/CFO has put together of Ramsey's top CFO/CIO people, who will handle the evaluation, selection, acquisition, implementation, and management through cut-over of the new ERP. The phases of the project are outlined in the following table:

Beginning in Session 2, your team will begin working on the Ramsey ERP project that runs throughout the semester and serves as one activity to guide our learning about the role of information systems in financial management. Most of the information th at you need for the project is contained in this case summary. Any additional information will be provided during weekly sessions. Post any questions about the tasks/homework in the sessions "Questions for this Week" conference. Since this is a hypothetical case, there is some "role-playing" involved, in that the activities are intended to allow you to demonstrate how you would handle an ERP implementation and certain financial management activities in the real world. The activities require you to draw from all of your prior learning in financial management and information systems and may require that you look back to your prior studies to complete the tasks. This is done intentionally so that you have an opportunity to review many of the important concepts and skills you've learned.

When completing your tasks, there will probably be some information gaps about Ramsey's operations that you'll have to address. You'll have to make some assumptions that as a wholesaler the company functions in a certain way. The key here is that you s imply state all assumptions in your work. These assumptions have to REASONABLE, however, meaning they have to be founded on accepted business and financial management principles, and demonstrate your understanding of such principles.

Your work related to the ERP project will be graded on the following dimensions 1) the reasonableness, accuracy, and completeness of the content of presentations, 2) writing (communication) skills, 3) supplemental research , 4) understanding of the subject matter, 5) integration of current and/or prior learning and knowledge (not materials - no recycling of prior homework or projects!), and when applicable, 6) quality of group participation, as seen in group conferences.

Session

Task

2

Team Task #1 - Ramsey Case Vision, Business Case, & Candidates

3

Team Task #2 - Request for Proposal

4

Team Task #4 - Ramsey Implementation Plan with Social Media Site

Attachment A

Ramsey Inc. Organizational Chart

Pres/CEO

Dale Williams

Chief Operating

Officer

Mark Jones

CIO & Web Services

Brenda Wilsom

Chief Financial Officer

Randy Unger

VP of Sales

Mark Bidwell

Customer Service -

East

David Garcia

Customer Service -

West

Brenda Jones

Warehouse/Shipping

Mgr

Tom Kess

Accounting Manager

Aiden Somerhalder

HR Department

Carmen Mathews

Director - East

George Phelps

Director - West

Miles Grey

New Sales

Brad Sparling

Accounting & Payroll

Clerks

Based on your reading of the Ramsey company information, each group should prepare theVision and Business Casefor the company's new ERP implementation project that would be for all levels of employees working in the organization.So, this is essentially, a launch announcement.

Execute your task as follows.Gain guidance from the textbooks and lectures

1. Create the vision:State the overarching objectives for the implementation.Objectives may include targeting the extent of ERP implementation, budget, timeline, and motivational and best practice goals.

2. Build a business case:Offer a preliminary business case by summarizing your initial needs assessment and provide a business justification for the system based on upon the difference between the existing system and your vision (proposed) system.This can involve creating a preliminary plan that maps the company's current processes to desired software features and best practices.This is like a road map from 'where we are' to 'where we want to be'.In addition to your narrative, support your final vision with a high-level system flowchart that shows the functionality (modules) you want in your system and how they should connect.At this point you don't know if the software candidates will have all the features you want, or if you will have to re-engineer any of your internal processes. This is your 'wish list' and we will crunch the numbers on ROI shortly.

3. Investigate some Candidates:Using the Internet explorethreepotential ERP software candidates for the Ramsey implementation,one of which MUST BE NetSuite(search on NetSuite.com).Others may include such leaders such as PeopleSoft, SAP, Oracle, Microsoft, Glovia International, IFS, Infor, Intentia, Lawson, QAD, or any listed in theTop 20 ERPreading, located in our class Conference.

For each vendor, list the general size of the company, the industry they target, and list the features and claims that make them a candidate. Instead of "talking to existing buyers", simply selectively list any testimonials or installed customers that they may list on their site. If you can gain pricing information, list it. For now, assume that large companies will accept small clients like Ramsey.