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Case 2 assignment is do HERE

 
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Prof Michael Crain



Joined: 04 Sep 2012
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Location: Midland, TX

PostPosted: Wed Oct 10, 2012 8:06 pm    Post subject: Case 2 assignment is do HERE Reply with quote

Put you assignment here...below!
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David Stacy



Joined: 05 Sep 2012
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Location: Midland, TX

PostPosted: Wed Oct 10, 2012 8:10 pm    Post subject: Team 9 Case #2 Reply with quote

Team 9 / Case #2

What is a data warehouse and why is REI building one?
Data warehouse is a large database system containing detailed company data on sales transactions that are analyzed to assist in improving the marketing and financial performance of companies. REI has an interest in building one because it will allow them to identify and organize all of the ways that each customer interacts with the company. They are able to do this through customer purchases online and in the retail stores and by finding out and tracking out door hobbies and sports that people are interested in. It will aid in strategic planning to deliver on REI’s vision to be more relevant through website recognition of members that will better serve them with content that is relevant and beneficial to user such as offering information to customers and the public about their personal interests in local places and organizations they may join or participate in.

Why do you think REI chose to work with IBM's data warehouse technology?
IBM’s DB2-9 system will allow Recreation Equipment Inc. (REI) to know its customers better. The data that is gained from IBM will help REI service their customer better because they will know what the specific customer likes and dislikes are via the historical intelligence provided by DB2-9. Also, with REI knowing what customers likes and dislikes are they can inform them of sales, recalls and upcoming special events in the customer’s area of interest. After enough data is gathered on a REI customer the data base will be able to instantly direct the website to what the customer likes when he or she logs in. This type of technology that IBM provides will help REI gain a competitive advantage against its competitors. IBM’s product will also reduce cost associated with database management due to features such as: faster data redistribution, automated tuning capabilities and automated upgrades. This product also helps to monitor and manage business intelligence applications. Business intelligence is simply the technology used to help REI make better business decisions. Lastly the DB2-9 comes with a workload management function which allows REI to manage workloads based on priority, prevent runaway queries and provide real-time performance monitoring. With this cutting edge technology REI will be a front runner in the next stage of customer service evolution.
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Amber Garlock



Joined: 28 Aug 2012
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PostPosted: Thu Oct 11, 2012 9:04 am    Post subject: Case Study 2 Answer for Team 1 & 3! Reply with quote

Team 1 & 3!

What were the business challenges facing Maruti Suzuki management prior to adopting the Oracle suite?


The problem started due to India’s passenger automobile industry facing an unprecedented growth for passenger automobiles. Demand for passenger automobiles in India increased by 15% per year over a five year period. This led it to become the fastest growing car market in the world. Maruti Suzuki, one of India’s largest passenger car manufacturers, alone networks with over 400 dealers just within the country of India.
Maruti Suzuki's company faced quite a few challenges in using their original basic business practices because of the unprecedented growth. They lacked the actual skills for the organization to obtain inventory and also lacked the accounting for each of the organizational holdings located across the enterprise. The company needed an IT system that could be simple and flexible to manage all of the divisions, departments, and sectors.
Due to Maruti Suzuki's market leadership in India, and how its products and services demand has grown in such a short time, without proper IT equipment and programs it would have fallen short of its goals. Maruti Suzuki is not only an automobile manufacturer. It is also a single source vendor for both new and used car sales and also offers other services to customers such as leasing, financing, and insurance coverage. The enterprise has to cover a lot of bases to make sure it runs properly. With the wide and diverse range of data the company has to manage, a new IT infrastructure would improve their business operations. As it grew and became more diversified, it was clear to them that they would need to revamp its systems to have greater control.
Oracle has become a cornerstone for Maruti Suzuki’s IT infrastructure. It brought immediate benefits by introducing standardized practices across all of their enterprise and making data available immediately online as well as offering management flexibilities. Oracle E-Business suite was chosen by Maruti Suzuki to simplify transactions and help streamline their growth. Oracle also sent consultants to Maruti Suzuki to speed up the integration of the E-Business suite. The Oracle Suite Software Maruti Suzuki invested in helped the enterprise by offering different programs to improve their business practices. Maruti Suzuki built its Enterprise Resource Planning (ERP) system on Oracle E-Business Suite and added Hyperion Enterprise for the financial part of business. The Oracle Real Application Clusters, also known as Oracle RAC, supports the extending of a database across many servers throughout the firm. It provides fault tolerance, performance, and scalability with no application changes necessary. As for Oracle Fusion Middleware, enables multiple applications in a firm to work together by sharing information called "middleware". It allows multiple processes to run across a network. This software also enables Suzuki to retain older legacy systems and put them to use in today's modernized world. Hyperion, business intelligence software, works with the Oracle software and provides real-time data and periodic MIS reports. It also supports management dashboards.
In conclusion, Maruti Suzuki was growing at such a quick rate it could no longer use the same business practices and IT software that it used to. The biggest business challenge it faced was that it did not have an IT infrastructure that would give them the control they really needed to continue as the leader in the passenger car market. It needed a new IT infrastructure to support its fast growth and the large enterprise it was becoming therefore they invested in Oracle software.
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Michael Duran



Joined: 28 Aug 2012
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Location: Midland, TX

PostPosted: Sun Oct 14, 2012 10:21 am    Post subject: Case Study 2 Reply with quote

Team 12 Case Study 2

What are some of the disadvantages of consumer cooperatives compared to traditional firms? Consumer Cooperatives have a huge disadvantage in cash flow coming through their day to day operations. Co-Ops are owned by the customer or member. Most of the members are middle class consumer who can only afford Co-Ops products and items because they are at a cheaper price than most competitors. Co-Ops that try to borrow money from their members are at a huge disadvantage. A Co-Op needs a huge amount of members to sustain themselves. Luckily REI does. The other disadvantage is a traditional firm can borrow money from everyone and anyone in the middle class and upper class because they have stock and dividends. People are more willing to invest more money in a traditional firm. A traditional will have more money to work with unlike a Co-Op. One other disadvantage is marketing power. Co-Ops can easily lose their unique branding for business. Marketing purchases include advertising for all members of the co-op and you might get lumped with competitors or businesses you don’t want to be associated within your consumer’s perceptions. Traditional firms have a more financial stability to go global. There are other co-ops in the world who do awesome like REI but only in their country. If a co-op tried to go global selling the same merchandise as a co-op already established in that country the competition would be fierce. If a Co-op doesn’t have enough financial stability it could crumble against another co-op. Traditional firms can make faster decisions in crucial times compared to co-ops which have to listen to the consumer and go through committees before a decision can be made.
What are some of the risks or concerns surrounding the creation of a data warehouse? A data warehouse stores important historical and current data information which can later be used to help the company make important future decisions. One of the most important risk factors is high security for a data warehouse. If a company’s security failed in protecting the important documents, a company could take huge losses and damages. One other concern is not having a strong sponsor or sponsors at a high enough level to get people motivated in a company. It costs millions of dollars to create a data warehouse. REI is lucky enough to have IBM help them in those areas with the data warehouse, but at a costly figure. A huge risk can also be that a company has never created or used a data warehouse so they will at least go through one failure because they have to learn how different a data warehouse is from regular transaction processing system or data marts. The last concern that surrounds the creation of a data warehouse is not having a project management team that has never built a data warehouse. REI definitely does not have one so they had to get IBM to create it for them. REI will have to learn how to use the data warehouse and so will all companies that eventually create a data warehouse. It is very costly for companies to learn how to use all tools and run a data warehouse. Professionals will most likely have to train and teach employees to do this.
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Kacey Larson



Joined: 29 Aug 2012
Posts: 59

PostPosted: Sun Oct 14, 2012 12:24 pm    Post subject: Reply with quote

Team 6 & 8- CS3

What were the important business factors which management used to evaluate Oracle’s database offerings?

Maruti Suzuki is an auto manufacturer and a single source vendor for new and used car sales and service. However, they not only specialize in car manufacturing and sales, but also provide leasing, financing, and insurance as well. They have more than 400 dealers and 21 subsidiaries to connect together. Suzuki was looking for an application that was simple and scalable, and could be used with their legacy systems. Their objectives of implementation were to have better controls, better turnaround time, and provide consolidation.

Maruti Suzuki implemented a full stack of Oracle business products to manage their growth. Oracle specializes in developing and marketing enterprise software products, particularly database management systems. With the adoption of Real Application Clusters, Fusion Middleware Application Server, and Weblogic, Maruti Suzuki was able to build a large-scale, real-time, dealer-management system.

Above all, Oracle allowed Maruti Suzuki to expand its business and speed up their processes altogether. The turnaround time went from 7 days to 24 hours. Having such a quick turnaround time gives Suzuki an advantage over their competitors because they can react to any situation that might arise in a more timely manner. In 2002, Suzuki decided to add leasing, financing and insurance to their routine business functions and was able to transition into this fairly easily with Oracle's help. The Oracle E-business Suite brought many benefits to the company such as introducing standardized practices across the enterprise and allowing Suzuki to better manage large scale projects. It also enabled them to connect with their dealers and headquarters and to send and receive information between them. Maruti Suzuki also brought in Oracle Consulting which helped to provide understanding of the new products and only took 8 months flat to go “live” with the new system. Oracle took over what consisted of mismatched IT programs and created a strong, centralized program that could handle the process in a speedy manner.
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Karley Kiphart



Joined: 28 Aug 2012
Posts: 27
Location: Odessa, TX

PostPosted: Sun Oct 14, 2012 3:15 pm    Post subject: Reply with quote

Case Study 2: Team 4&2

What advantages does Maritzu Suzuki derive from working with a single vendor, Oracle?

Suzuki has been working with Oracle since 1995. The reality of working with a single vendor has helped drive Suzuki’s business successfully. It has helped them grow to be a more advanced company and allowed them to enter into a more competitive market in the automobile industry. The advantages of working with a single vendor range from the compatibility and consistency of the system to creating stronger business relationships.

•Compatibility and Consistency
Since the system software is created and designed by the same provider it allows for a more synergetic flow of production information and all around company-wide compatibility. This also allows for the results of information to be more consistent.
•Convenience for Troubleshooting
You only have to call one entity when you use a single provider. This can be seen as not just convenient, but a major benefit when all of your service or IT issues can be solved in one place. The alternative would be calling several different vendors if something happens to your software, which can be both time consuming and costly.
•Managing Complex Information Sources
When you work with a single vendor you have one source, a central database to some extent. All of the information you need is right there, you do not have to go and pull information from other sources to get the answers you need.
•Discounted Bundles
Working with one supplier might give the company an opportunity of some sort of discount. For example, if you were to go to the supplier in need of several different software items they might be able to group them together for a cheaper discounted price, instead of you having to pay for each single item at retail. This would cut back on your costs and allow the company to put that money towards other needs.
•Business Relationships
Working with a single vendor allows for you to have a better relationship with the company. This helps because it builds a trust between the seller and buyer. If the company is continuously buying from a single provider and in contact with that provider on a pretty regular basis the provider might feel the need to help the company faster if they are having some sort of issues with the software and are in need to reach a deadline. Giving the company an advantage in their market.

What are the possible risks of working with a single vendor?

Although there are many advantages of working with a single vendor there are some disadvantages as well. Including:

•Dependency off of a single source system
By running off one system all of the components of that system depend on each other. If one component fails everything fails and it could put a halt to your production until the problem is resolved.
•Cost Restriction
If you are solely dependent upon one company for all of your software, that company has the knowledge that you are restricted to their price. With their knowledge that you rely so much on their company, they could set their prices higher knowing that you will purchase the software from them.
•Prevented From Upgrading Software
If your competitors are working with other vendors those companies may be coming out with more advanced software giving other companies, within your market, a competitive advantage in their production. It is usually difficult to keep up with your competitors if they do in fact hold any kind of advantage that would set you behind, risking a possible loss of business and market share.
•Forced to Upgrade
If your provider is producing new technologies that do not run well with their old software you could be forced to upgrade to new software. Also, if you are currently happy with the system you are using there could be a conflict with the change, forcing your employees to learn how to operate a new system. This could create unnecessary financial and time costs.
•Hacking
If your company is limited to one system and that system is hacked you have no extra backup or safeguards to prevent a system wide breach of company information.
•Managing Relationships With Other Vendors
By limiting yourself to one provider you limit the amount of business relationships that you have. Although the relationship with your current provider will be strong, if something were to happen to that relationship you would have nowhere to turn and it would place you back at square one.

Sources:

www.oracle.com

m.techrepublic.com/forum/discussions/7-147223

CSV-3 on the forum
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Cori Branscum



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PostPosted: Sun Oct 14, 2012 3:28 pm    Post subject: Team 5 & 7 Reply with quote

Maruti Suzuki is in a very unique situation because they have chosen to use one company for all their software needs. When they decided to use Oracle they assumed inherit risks and rewards; using Oracle as a one-stop shop makes computing and analyzing data easier. Additionally, customer service is quicker and more efficient; price is an advantage since Oracle is likely to give Maruti Suzuki a good deal since they are using Oracle software exclusively. The ease of use of the system would be more intuitive for all departments and Oracle would probably be more willing to assist and customize the product because of how much the car company has invested in Oracle software. Real time capabilities makes oracle more desirable since up to date resources is a large part of making a business effective and efficient. Once again when you combine all your systems into one collaborative operating tool, you reduce complications with multiple vendors i.e. bill paying, customer support, shoe leather costs, and slow vendor hold ups.

When a company decides to combine all business processes and create one comprehensive operating system they become subject to certain risks that should make companies think twice before going through with such a venture. One of the more dangerous aspects of using a single vendor is the possibility of a crash or a system failure; if this happens then the whole company is effectively shut down since all processes of the business are linked into the main operating system. For instance, if a virus infects any part of the system it can quickly and easily spread to the whole operating system and crash the entire company. To combat this threat you have to make extensive security and virus protective adaptations to ensure system safety. Another risk involved with single vendor operation is the mini-monopoly that can be easily created when competition is evaded. When you opt for single vendor operation you forego the opportunity to match prices and shop around for better deals, this aspect is a major disadvantage and the company is now at the mercy of the system creator. Cost and the customer-operator relationship now become more dynamic and are more important than ever. When a company merges systems and is under the umbrella software company you have to almost walk on egg shells to make sure you aren’t stepping on any toes. Though you may pay more initially for the system when you bundle it may be more beneficial in the end as far as price goes. Working with a single vendor has certain risks and benefits and we feel that we have researched and represented said aspects of single vendor operation very well.
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Thomas Pitt



Joined: 28 Aug 2012
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PostPosted: Sun Oct 14, 2012 3:55 pm    Post subject: Team 10 Reply with quote

CS-4
TEAM 10
What are some of the disadvantages of consumer cooperatives compared to ‘traditional’ firms? What are some of the risks or concerns surrounding the creation of a data warehouse?

REI (Recreational Equipment Inc.) is the largest consumer co-op in the business of recreational gear. Throughout the year REI sells seasonal gear for skiing, kayaking, running, biking, etc. Currently the REI system is able to track the customer through its website, catalogue, store purchases, and workshops. They want to be able to reach further, look deeper, and act faster all for their customer. However, being a consumer co-op presents the company with its fair share of disadvantages and concerns, especially when creating a database management system (DBMS).
Some disadvantages are that co-ops tend to run in a democratic fashion and may lack direction, leadership, or vision. It is easy to keep running, but without people who are driven for success rather than just profits it’s easy for co-ops to start failing. Another disadvantage is finding investors whose priority isn’t the return of investing capital. Money hungry investors and members could hurt the co-op instead of letting it succeed. Most co-ops are designed to benefit the customers, so it could take longer for important business decisions to process. Co-ops rely heavily, if not completely, on customer loyalty and participation. If the customers are not happy, or loyal, the co-op will lose revenue and perhaps the co-op itself. With fluctuating membership it is hard to maintain consistent growth. Unlike a traditional firm that would simply issue stock, co-ops as big as REI need to have a DBMS warehouse big enough to keep all the record keeping. Record keeping maintains the member-customer satisfaction. Without record keeping, REI would waste more time trying to remember who likes kayaking, and who might be interested in going to a kayak workshop at a certain store. Difficulty raising funds can be hard for a co-op. Raising adequate funds for growth is a necessity. Adequate funds for growth can be hard to come by because they rely on money raised from members. Another disadvantage can be loyalty issues of the members.
Along with disadvantages, creating DBMS comes with risks or concerns for any company not just co-op organizations. The first risk, concern is that the DBMS could become too big to the point that the customer or member’s expectations cannot be met. Lack of sponsorship for REI could create lack of motivation and interest in membership to the co-op. Designing a DBMS without creating the system for the best interest of the client (like REI), or having the system not set-up or managed properly could be trouble for the end user. For example, if the system is too redundant in its definitions and authorizations then the end user could have trouble. Customers and members would have to wait in long lines at check out because the cashier is entering too many commands for the system to check one person out. This illustrates to the importance of having the community (customer/members) involved in the requirement and development process so it lessens the concern of improper DBMS occurring. Perhaps, the biggest concern is poor project management in the creation of the DBMS system, to where not all the requirements are met, creating a less than optimal system for REI or any other organization.
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Lacy Sky



Joined: 29 Aug 2012
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Location: Odessa, TX

PostPosted: Sun Oct 14, 2012 5:25 pm    Post subject: Team 13 Case Study-REI Reply with quote

What is a data warehouse and why is REI building one?

A data warehouse is very large database system. The data warehouse has detailed account of sales transactions. From there, the database warehouse can be used to compile and analyze the information and be used for other parts of the company. It allows the company to keep track of present sales, past sales, and customer information. This information can be compiled in different way and help connect the information together to help the user get more useful information in an easier way. REI would be interested in a data warehouse because it keeps track of detailed purchase history. Keeping this information will provide more knowledge on what REI customer’s interests. This vital information will help REI sell more by having more of what the consumer wants. The system REI choose to go with was DB-2 so they could provide their customers with great service. This system goes beyond just calculating what the customer bought it will also will provide an idea what the customer would also be interested in buying and comes up with sales events that the customer would be interested in and puts in what they don’t like. The system, when integrated into REI website, will be able to tell when a customer logs on or off why also sending sale items that the customer would actually want. Another great thing about the dB-2 system is that it allows a workload management function. This means that you can set your workloads from most important to least important. This will also show real time monitoring on those projects that have been assigned and allows them to check to see if there on time to meet deadlines. This system will allow a competitive advantage over competitors.



Why do you think REI chose to work with IBM's data warehouse technology?


To better understand why REI decided to work with IMB’s data warehouse technology, I think we need to understand what exactly IBM’s DB2 9 (data base 2 and also known as “Viper”) does with its software. IBM’s DB2 9 software can be utilized through Linux, UNIX (AIX, Solaris, and HP-UX), Windows, Mac OS, i5/OS, and z/OS. It is an enterprise –class data server that delivers hybrid data management for XML data and relational data in the same data base. It offers state of the art security as well. Viper brings huge advancements in the mainframe that allows queries at a rapid speed and provides consumers access to information without constraints. This allows a less need for system administration saving money in the future. Ambuj Goyal (GM of IBM of Information Management stated, “DB2 9 Viper for z/OS marks a significant milestone in the database software industry and has changed the rules of competition. Viper provides increased performance, deep compression capabilities along with scalability and availability that are unmatched anywhere in the industry." REI services over three million co-op members who live in different states who like different activities and purchase different equipment. These co-op members pay memberships and receive a percentage from REI. DB2 9 is vital in REI’s success because IBM’s DB2 9 allows better intimacy with its customer’s. This software recognizes a log in and where they are located and can not only suggest equipment they may like but also activities that are in their area that the consumer may enjoy. The technology allows REI to understand a customer better and allows them to service products and services and equipment faster and more accurately. This is a win-win situation. REI provides goods that better service the customer and promotes sales which in turn provide the co-op member better customization and a cut of the sales that they spend on product that they want. IBM’s technology allows customer relations management possible with a better understanding of who their customer is and what they want or need. REI is an enterprise with millions of customers and that amount of customers likes and dislikes need to be stored and IBM’s DB2 9 allows a compressed storage, advanced security, less need for system administration, allows global interaction, speed, and customer intimacy. So in conclusion, data warehousing has the ability to save and utilize truly massive amounts of data, this is helpful for REI because they are going to need to process tons and tons of data with their goal of tracking sales both online and retail, returns and even class taken by their customer so that they can better serve them. REI could simply not accomplish these goals without the ability of the warehouse system to store data from multiple inputs such as sales, marketing and train systems all of which could be a different type of data. It provides a central place to store all of this information to work from. The data warehouse will give the REI CRM team better control over all of the information stored in the data warehouse. It is going to allow REI's CRM team to better manage all of the information from customer buying patterns to how much they spend with REI. It will also track how often the customer visits the website and what they are interested in, by tracking what items the customers are looking at. This will allow REI to better serve their customers. REI will be able to show the customers what they want to see and learn about whether it is the merchandise or training classes on the hobbies the customer’s interests.
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Kayla Richardson



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PostPosted: Sun Oct 14, 2012 8:03 pm    Post subject: Team 11 & 14 Reply with quote

1. Recreational Equipment, Inc. or REI, is a consumer co-op that aims to sell high quality outdoor recreational equipment at competitive prices. REI’s co-operative business structure allows the company to maintain a high level of product quality while offering those products at the most competitive price possible. REI operates close to 90 stores nationwide and is expanding its storefront operations at a rate of six to eight new stores each year. Along with their brick and mortar operations, REI also uses direct marketing tools, i.e. catalogs, mailers, and e-commerce platforms, i.e. their company website www.REI.com.

In order to better reach and understand its customer’s wants and needs, REI has partnered with IBM to create a specialized data warehouse program. According to the text, a Warehouse Management System (WMS) tracks and controls the flow of goods from distribution centers to customers. Using customers’ orders, the WMS can direct the movement of goods based on immediate conditions for space, equipment, inventory, and personnel. For REI it can improve operational performance and decision making (Laudon, 2011, page 280). The WMS is part of REI’s Supply Chain Execution System, which manages the flow of products through distribution centers and warehouses to ensure that products are delivered to the right locations in the most efficient manner (Laudon, 2011, page 280). By using this data warehouse system, REI can offer a tailored experience to each customer or member that shop at any one of its retail outlets. Data warehousing technology is essential to REI’s success in today’s market climate.

REI’s success within the market is dependent upon its marketing strategy to obtain new and retain existing members. A firm’s marketing strategy, or marketing mix, is the unique combination of product, place, price, and promotion. Promotion is divided further into four categories, mainly advertising, direct selling, public relations, and sales promotion. Utilizing their extensive data warehouse, REI can efficiently allocate its resources in each area of it marketing mix.

PRODUCT: REI has a Demand Planning System in place. Demand Planning is part of a Supply Chain Management System, which enables REI to model its existing supply chain, generate demand forecasts for products, and develop optimal sourcing and manufacturing plans. This help REI make better decisions such as determining how much of a specific product to manufacture in a given time period; establishing inventory levels for raw materials, intermediate products, and finished goods; determining where to store finished goods; and identifying the transportation mode to use for product delivery (Laudon, 2011, page 279). The Demand Planning System helps REI determine the product capacity at each location that will satisfy all of its customers’ demands (Laudon, 2011, page 279). The Demand System that REI has in place is a web-based tool for collaborative planning, forecasting and replenishment (CPFR) for sharing and combining its sales forecasts with those of its major sales partners (Laudon, 2011, page 279-280). This assists REI in realizing and predicting which brands and types of products are selling or not selling. For REI this can increase the availability of products in stock when customers need them, while reducing the number of excess finished goods in inventory and forecasting errors (Laudon, 2011, page 279-280). Also because REI uses intranets and extranets, all members of the supply chain are instantly able to communicate with each other, using up-to-date information to adjust purchasing, logistics, manufacturing, packaging, and schedules. A manager can use a Web interface to tap into suppliers’ systems to determine whether inventory and production capabilities match demand for the firms’ products (Laudon, 2011, page 280). For these reasons, REI has the ability to offer a wide range of products to its members. REI is able to track a member’s purchases by type and brand. By storing members’ purchasing history, REI can remind members which products they have purchased in the past and suggest new products they may be interested in.

PLACE: Expanding into new markets is critical for REI’s continued success. Each time a member makes a purchase at REI, their member profile is accessed for a variety of information. Their address and location are noted and REI compiles this information into a database. Overtime, REI’s operational managers are able to notice trends in geographic regions. For example, a customer from Midland must travel five hours to Dallas in order to shop at the closest REI store. If REI notices that sales at a particular store are rising due to many members from the same geographic region, they might start looking into the logistics of expanding by placing a store closer to the Permian Basin. Many companies currently request zip code information at the time of sale to acquire this information. REI has automated this by requiring members to create profiles and online accounts.

PRICE: Pricing is very important and often the most difficult to manage. Many forces can affect the price of a product: regulation, competition, and supply chain to name just a few. REI is a member co-operative, meaning that REI is owned by its members. The primary goal of a co-op is to offer top quality merchandise at the lowest possible cost to its members. REI uses its data warehousing to ensure it keeps buying products that are selling and divesting product lines that are not selling. By focusing on buying product lines that the customer is interested in, REI can buy larger quantities and usually offer them at a lower cost. This also increases REI’s bottom line since REI is spending less on overhead prices and increasing its profit margin.

PROMOTION: Promotion is possibly the largest area that REI can utilize its data warehousing technology. In gathering member purchase history, REI is better able to allocate its resources into several different categories. REI’s advertising can be greatly impacted by having its member data available. It does so through a Customer Relationship Management system. With this system, REI can directly serve its customers, providing REI opportunities to increase customer retention by singling out profitable long-term customers for preferable treatment. Software such as this can assign each customer a score based on that person’s value and loyalty to REI and provide that information to employees who can best handle that customer’s needs (Laudon, 2011, page 289-290). Direct selling also would benefit from the ability to access member data. Store associates are able to better help a member in store when they know which brands they prefer or type of equipment they usually purchase. The associate can also offer like-products and new products with greater success by understanding their customers better.

In addition, REI uses its website to market to its customers. Using the internet to market allows for brand development, product promotion, and sales. This includes an understanding of design factors to ensure that REI is able to market their products, develop reports on product performance, retrieve feedback from customers, and manage product development. It also allows an understanding of how enterprise wide-systems for product management, sales force management, and customer relationship management are used to develop products that consumers want, to manage the customer relationship, and to manage an increasingly mobile sales force (Laudon, 2011, page 26).

Through these systems, REI should be able to expand its advertising, based upon member data, to target specific member niches. Much like other retailers do, REI could offer specialized catalogs sent to members with specialized interests, using behavioral targeting methods. One behavioral targeting method in which REI uses is tracking the history of its customers on its website; REI tracks the clicking behavior of individuals for the purpose of understanding their interests and intentions, and exposing them to advertisements which are uniquely suited to their behavior. Ultimately, this more precise understanding of the customer leads to more efficient marketing (the firm pays for ads only to those shoppers who are most interested in their products) and larger sales revenues (Laudon, 2011, page 322). This is not only used in REI’s website, but in the store and with printing promotions as well. For example, members with an affinity for hiking or camping would receive the REI Mountaineer catalog, while members usually purchasing water related products would receive the REI Just Add Water catalog. Both sets could still receive the main catalog, but REI could address each of their main member categories.

Using the warehousing technology, REI could develop a mobile app for its members and make it accessible to services such as Apple, Inc.’s Passbook. With Passbook, REI’s app would alert members of current store promotions once the member is within proximity to the store. These promotions would be based upon the members purchase history and profile. REI could use this to better target and suggest products to its members in a visual and tactile interface; much like it already does on its website.

In conclusion, REI wants their services/products to be relevant to their coop members. According to Julie Derry, Director of Online Programs, they attempt to “reach farther, look deeper, and act faster” through tracking their customers. REI tracks the way in which the customer interacts with the store, and then uses that information to better serve the customer: assists the customer with finding products, recommending clinics, providing product information such as product recalls, and tracking of dividends. Essentially, REI uses their Warehousing Management System to market to their customers through the internet, customer relationship management, behavioral targeting, and a supply chain planning and execution system using demand planning. This provides relevant content recommendations for each customer. As Ms. Derry stated, “[REI] is blending the best technology with the best outdoor stewardship.”

2. REI was in a strong position before they worked with IBM. REI specializes in the niche market of outdoor sports and activities. The co-op is owned by its customers, so it is safe to assume that the customers share or have similar views than that of the company. With the data warehouse program they are able to improve upon the marketing strategies they already had implemented within their company. They are now able to gather data and tailor it to specially fit individual customers. REI is now able to keep track of exactly what each customer ordered and what outdoor events they showed interest in.

From a supply chain management stand point, the more knowledge a business has about its customer base at a store level, the better one can supply each individual location. Knowing exactly what products are needed for specific locations will increase efficiency and decrease waste. In this specific area REI’s bottom line will improve from the joint venture with IBM.

From a stand point of stewardship knowing exactly how many people rock climb, kayak, hike, fish or mountain bike will allow REI to be able to put together stewardship programs that will yield the most participation because they can be geared to the specific interest groups. This will maximize the REI’s efforts to better suit their customers’ interest. Before the data warehouse program REI could base their customers’ needs off of their geographic area but, without knowing the actual interest level of their customers in these activities, they were not nearly as effective as they are now.


Laudon, K. C. (2011). Essentials of Management Information Systems. Upper Saddle River, New Jersey: Pearson Education, Inc. publishing as Prentice Hall.
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