25 year old profitable national wholesale distributor B u s i n e s s F i n a n c e

Question 1

Nova Parts Limited (NPL) is a large, 25 year old profitable national wholesale distributor of automotive parts. NPL is privately owned and has 12 distribution depots across Canada. They have 40 sales persons and 4 regional sales mangers. NPL sells to approximately 2,500 customers (primarily small garages and auto centres) across Canada.

NPL is considering the acquisition and implementation of a CRM (Customer Relationship Management) system to improve its marketing and sales activities. Sales and profit growth rates have not met targets over the last three years as competition has increased. The proposed new CRM would be acquired from a leading software vendor. Total estimated costs for this project are $260,000.

NPL currently has a three-year-old Accounting Information System (AIS) that was developed internally using an IBM relational database management system (DB2) on NPL’s IBM mainframe computer and operates over a wide area network (WAN). NPL has recently completed a “sales automation project” (providing notebooks in the field to all sales persons) to facilitate order taking. All office and sales staff are connected to the corporate network via local area networks (LAN) at each regional office. NPL has a staff of 10 IT professionals who have been overworked maintaining their IBM system and the sales automation project.

Tom OneUp, the Director of Data Processing is championing the CRM project, as he believes that this technology is needed for NPL to become a technology leader in their industry. Janice Smith, the Marketing and Sales VP, is less supportive as she feels that her sales force is just getting used to the sales automation project which took a year longer than anticipated to implement and too many of their sales staff are resisting the use of technology. Sales staff are slowly beginning to use the query and report generation features of the system. Tom Collins, the VP of Finance, believes that the CRM project is affordable.

ACME Parts (NPL’s largest customer) has asked NPL for continuous access to NPL’s inventory levels so it can better manage its shipping and warehouse costs. NPL has not provided this as of yet. NPL has more than 300 suppliers who provide more than 12,000 different car and truck parts.

NPL currently has a website