Northwind Traders is a distributor of fine grocery products and serves over 200 high-end grocery store customers along the west coast of the United States. Northwind’s products include cheeses, local fresh fruits and vegetables, coffee, teas, imported beer and wine, and fine ethnic food products. Northwind’s sales revenue exceeded U.S. $20 million in 2008- a 10 percent increase over the previous year. However, due to competitive price pressures and operational inefficiencies, net income only increased by 2 percent.
Northwind’s Chief Operating Officer sought to determine the sources of Northwind’s operational inefficiencies. In the previous year, the company hired a full-time business analyst to analyze and improve Northwind’s operations.
The business analyst raised three issues:
Northwind’s Order Management System was antiquated, and required a great deal of manual labor from the sales staff to process and fill orders.
The cycle time required to fill an order occasionally caused order backlogs, which led to customer satisfaction issues and lost sales.
Northwind was losing approximately $500,000 annually (2.5 percent of annual sales revenue) in write-offs of expired perishable products.
The COO decided to form a Center of Excellence (COE) team to carry out Business Process Management (BPM) tasks. The COO assigned the COE the task of quantifying the business outcomes of the issues that the business analyst had raised. The team consisted of the business analyst, several managers, and other company staff from different workgroups who worked on the project between their normally assigned tasks.
For the project, the team decided to use Microsoft® Visio® 2007 to perform the required process analysis and modeling tasks.
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