Cango Week 3&4

2766 Words May 27th, 2011 12 Pages
Weeks 3 & 4 Video Case Analysis

REPORT INTENT:

This report has been created to advise CanGo’s management as to appropriate courses of action needed to address various challenges facing the firm. This is the second report in a series of reports. This will cover the strategic planning for the operations and the financial planning for implementing new technologies. As well as a flow chart that will improve the telephonic procedures of customer service. This report will also review other issues that we have seen that can use some restructuring.

Current Procedures:

1. Customers place their order on-line, and when they press the "submit" button, it signals the order fulfillment software to swing into action. Coding of book
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The present system that is done with manual pickers runs at a rate of 360 books an hour ( 8 pickers spread over two shifts) at the new rate of 720 books an hour the system could run 24hrs a day and handle the projected work load of 14400 books per day. The storage capacity is more than adequate for the new system. To handle the new work load manually Cango would have to employ 16 pickers across three shifts to accommodate the increase in demand. There would need to be extra terminals added.

Though the projections for the fall quarter look promising the resurge us of books and CD’s is unlikely. Recent reports have sales of books falling as much as 34% over last year and the increase of eBooks over 300%. (Wolman, 2011) It also has CD sales being cut in half over the past decade. The rise of people buying digital music and streaming music is significant.
Without question the new technology can be paid for by this fall’s increase in revenues alone. At 1.5 million per system, it takes 3 million to install the systems. Our revenues projected for the fall is 31 million with net income being approximately 10% of sales revenue the investment will be paid back almost immediately. The question still remains if it makes sense long term.

If traditional book sales continue to fall at their present rate of 34% annually we will be out of the traditional books selling in three years. The CD sales are declining at a similar rate.

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