Arrow Inc. was founded in the 1930’s as a private company in New York. It was mainly involved in the business of supplying electronics in the United States. In the early 1960’s, the status of the company was changed to public. Consequently, the company rose to become the eleventh major distributor of electronic modules in the United States. At this time, most of the company’s activities revolved around New York and parts of New England. The success was projected exponentially and by the year 1980, the company occupied the position of the second biggest electronic parts distributor in the United States. By this year, the company had expanded its operations out of New York and New England to claim a nationwide presence. Following the impressive success, the company embarked on a strategy that was aimed at maintaining relevance in the industry by acquiring all the competing companies in their regions of operation. In addition to this, the company launched additional sales terminals in cities with intense industrial activity especially in North America(Andrew 2002).
The second level of the company’s worker was comprised of the sales and marketing representatives. These employees were based in the branch terminal offices, and their prime responsibility was to handle the multitude of calls coming in from the customers daily. They responded to enquiries concerning daily pricing information, availability of delivery channels, receiving the orders from the clients and monitoring the progress of the deliveries. Each sales and marketing representative had a computer terminal at his or her workstation that was connected to a real-time mainframe infrastructure that was developed by arrow Inc. The system monitored the current prices and the progress of all items in the inventory of the company at any time. The average value of the orders handled from each customer was $900. Just like the field sales representatives, these workers were paid on commission with the most hardworking workers raking in $100,000(Andrew 2002).
The third level of the company’s workers consisted of the product managers. These had an oversight role over the field sales representatives and the sales and marketing representatives. Their main role was to ensure that the sales and marketing workforce was armed with the latest facts about the electronic products that they dealt with every day. This was to ascertain that the clients’ expectations were sufficiently dealt with and that the workforce that they were in charge of was efficient. The annual salary of this level was $75,000 and an additional 25% based on the success in terms of sales of the product lines that they represented(Andrew 2002).
The fourth level of employees was made up of the field application engineers. Their main role is to provide technical backup to the sales force in the event when the client requires a comprehensive analysis and troubleshooting. They respond to issues related to design of the electronic products that they represent. The employees in this level are mainly electric and electronic engineers by profession. Their annual salary was$70,000 dollars depending on the professional expertise. They were also eligible to receive hefty bonuses if they aided the arrow Inc. company to secure major contracts with any of the major electronic products suppliers (Andrew 2002).
The fifth level of the workforce at arrow Inc. was composed of the office clerks and administrative assistant officers. Their main role was data entry and general paperwork in the office. Their annual salary was approximately $25,000. Finally, the sixth and last level was composed of the general managers. They were responsible for the administrative functions of the office in each branch. This included roles such as supervising other workers, acquiring labor and formulating operational budgets of the branches under their watch. Another role was to maintain constant contact with the clients; both the existing and potential ones. Their total annual salary was approximately $150,000 and an additional 35% based on the performance of their sales division(Andrew 2002).
The process of handling orders from clients commenced with the call to make an order and ended with the processing of the billing documents. Through the progressive use of novel technology, the speed and efficiency of the order system have been enhanced with time. By 1980, most of the order processing was fairly automated. In the pre-180 era, the order taking process was largely manual (Andrew 2002). The sales and marketing representatives would take an order on phone from the customer then jot it down on a paper. They would quote the price of the electronic product ordered and respond on the availability of the product. The order, written on paper, was then taken to the general manager’s office and placed in a wire in-tray. The general manager was supposed to approve or disapprove the order. It is only after approval that the order would be entered in the online system where it was assimilated and directed to the appropriate product warehouse(Andrew 2002).
Following the automation of the system i.e. the post-1980 era, the order system now allowed the sales and marketing representatives to enter the orders themselves into the online computer system. This was necessitated by the influx of many orders. This new system was referred to as the Direct Order Entry system (DOE) (Arrow,2013). This meant that the details of the order would be input online as the client was on phone with the sales and marketing representative.
The performance of the delivery speed and efficiency was also hampered by the challenges posed by the automated system to the workers. The adoption of the new system necessitated the training of the workforce to handle the system that they were not familiar with. It also required an attitude shift on the part of the employees concerning the division of labor that was encompassed in the order fulfillment process. At the same time, in order to deal with competition from other freight services providers, arrow Inc. stretched the time limit for making an order for same day shipment. Initially, all orders made before 4:00 pm were eligible for same day shipment. Following the increasing competition, this time limit was extended to 5:00 pm. Despite the shift in the time limits, the pick-up times did not change. This meant that the managers had less time to prepare the orders that came in late in the day for shipping. It was impossible to prepare all orders and as a result, the shipping of most orders made late in the day had to be pushed to the next day. This led to the company incurring additional costs and also upset the customers who had been promised a same day shipment(Andrew 2002).
Solutions and recommendations
Following the committee diagnostic meetings, it was noticed that many customers always made their order late I the day because they spent most of the day shopping for the best prices among the electronic components suppliers(Andrew 2002). Centralizing the order processing system was identified as a major huddle to timely shipment. In order to deal with the late in the day orders, the company decided to acquire part-time shift workers who would handle the order surge. In addition to this, the company also acquired additional stand-by employees who would be called in at the hectic days(Andrew 2002).
A strategy that could be applied to solve this problem was bargaining with the carriers to extend their pick up time. This would give the company more time to prepare all orders made late in the day for same day shipment. By proposing to pay an additional fee to the carrier companies, the arrow Inc. company would save a lot on the additional cost incurred from late shipping. This is because, according to the company’s policy, if an order was shipped same day the customer would meet the freight charges. However, if the shipment was delivered late, the company would incur the freight charges (Andrew 2002). The company could also have invested in additional direct labor personnel to handle the inspection, storage picking and packing of the electronic components to be shipped. All these solutions could synergistically brought back the performance of the company to 95% or higher.
Andrew M., Francis X. (2002). Delivery Problems at Arrow Electronics, Inc. (A). Harvard business school.
Arrow. (2013). Arrow factsheet. Arrow Inc.