Business analysis of TAM: Introduction, The TAM customers, Conclusion - Case Study Example

?Introduction: TAM was the brainchild of 3 sisters and the venture was small until one of the sister died due to cancer. Quickly a friend d Jack Reynolds made most of the opportunity and joined in as the 3rd partner. Knowing the potential the company had he bought out the other two shares after successful years the company went through. Quickly Jack aimed for expansion and took company to heights which couldn’t have been initially predicted even by its founders. But with the heavy expansion, new hiring’s, new alliances and collaborations for raw materials and expanding customer base and territory to cover TAM was swinging out of balance as the facts and figures show steady decline putting pressure on Jack who had run the company successfully for many years. Jack wanted answers to the upcoming problems, unsatisfied customers, opportunities missed, delay in product shipments and delivery, higher cost and for that he had called a really important meeting. 1. What can we do about lost sales due to poor customer service by outside “contract” sales staff? The main problem that is being faced by TAM is due to loss of motivation and no such attachment of the Contract sales staff with the company as a result of which they have reduced their efforts in making sales and approaching new clients. Contract sales staff put forward a lot of reasons for reduced motivation levels and performance degradation from their side. They claim that initially the transportation and fuel cost were affordable and they managed but the price hikes in fuel cost have really burdened them. This hike costs them a lot and is expensive for them even to visit not so distant customers and clients. Also what bother them is that the online orders placed through their efforts and persuasion’ they are not rewarded for them as there is lack of communication. To solve these problems and issues being raised by the Contract staff TAM should take measure as this is causing them to lose a lot of valuable customers and also the fact that they cannot avail on opportunities to capture new interested clients who complain that no approach has still been made to them. Solutions for these issues will look relatively costly upfront but in the longer run will be beneficial aswell as financially profitable for TAM. TAM should firstly introduce certain benchmark which each employee is expected to achieve. Any contractual staff that achieves that benchmark shall be rewarded with a bonus which shall be monetary and shall be given a morale lift as he’ll be appreciated by senior management staff personally. Also for staff which is performing well and achieving his goals, an opportunity for being permanent would be created which shall motivate every contract staff as this opportunity promises job security and a higher pay scale. Taking all these measure insures that such a sales force is created which shall work for the benefit of company as the company gives importance to them and appreciates their good work by rewarding them and aswell as providing them with opportunities promising a secure future. 2. How can we restore the attractiveness and power of the TAM brand for major customers so they aren’t lured away by low-cost, low-quality competitors? TAM is known for its quality and it has established itself as the provider and producer of blends which are of highest quality and have exotic taste. Keeping this persona that TAM brand has maintained over the years it should keep its emphasis on quality rather than reduced price while retaining its loyal customer base. To do firstly a need for market research has to be conducted to obtain figures showing a comparison between the prices and quality of tea. If the result show a direct proportional relationship between the price and quality than a need for marketing campaign arises which proves superiority of TAM flavors and blends over other lower priced and lower quality competitors in the market. As a result the actual customer having a taste and crave for quality tea would become aware of our brand as the best tea provider and demand for the brand from retailers, cafes and restaurants. This will create a pull effect instead causing retailers and other customers to demand our tea. Also incentives should be given out to our loyal customers so that a direct relationship is formed between TAM and its customers. So by having a direct relationship a customer will think twice before moving towards a lower quality and low priced brand as they have direct contact with TAM. Also offers should be introduced which will benefit the retailers as well like on ordering of 10 cartons of flavor X get 1 carton free. 3. How can we minimize “stock outages” and other inventory problems caused by unpredictable customer ordering patterns and the continuing difficulty of getting faster production and delivery from EML in London? The problem of stock outages is quite normal for manual sales entry and no one keeps inventory count until it’s quite near to stock out or completely stocked out. To deal with this problem a direct connection is needed to be established with the customers i.e. the retailers, restaurant owners, cafes etc. As in 20th century a boom of technological advancement came which modernized nearly all of the fields mankind knows including the field of logistics and supply chain management. Many such vendors are present which sell information systems which keep automated track of inventory levels over the seasons and predict a trend in ordering process through balance of inventory level in stock. One option is to shift to these automated systems which keep exact track of inventory additions and reduction in the warehouse. Also they prompt when the inventory is reaching a critical level. The level can be changed as per need. This is a costly option but has proven quite critical in the success of many companies. Investing this much upfront will cost TAM a lot but it is the exact solution for the problem company is facing. Also a proper MRP should be done keeping bare minimum lead times in mind for each product. The customers should be informed beforehand that certain blends are in demand and hence they’ll sell quicker than others so he should place a balance order else they’ll face an inventory stock out causing them to reorder which TAM cannot cater to that quickly as lead time is for over 3 months if the particular blend is not in stock at the production facility in Cleveland. Hence informing them beforehand of the scenario will create awareness of the situation that develops and a stable order amount will be received hence minimizing risk of irregular order pattern from the customer end. 4. How can we reduce collection time from 54 days to less than 40 days without alienating the very customer base TAM is trying to attract and retain? The sales staff should in friendly term convey the message to the loyal customers about the condition company currently is facing due to excessive collection time of the due receivable which is costing company dearly. The company should reduce the collection time in such a manner that it shouldn’t come as a sudden news to the customer so the collection time should be slowly reduced which shall help the customer cope up with the new schedule showing that even though the receivables are due but the company doesn’t want to burden its customer by putting a cut on collection time which shall bother them. Also the customers which are either big clients or are old and trustable can be given addition collection time but new customers will be given only first payment collection period of more than 40 days so that he can try our products easily and check the results but he’ll be told before hand of the new policy and they will be expected to follow it strictly so that they don’t lazy in the future in terms of payment of dues. By informing the customers beforehand indicates that company wants to set the terms with the new customer fairly and does not want to give a false impression of easy payment terms and then suddenly put load of payment collection in 40 days. 5. What decisions should we make regarding experimentation with new tea varieties, such as the “Christmas Mint” tea that fell flat last season? Can we afford to continue such experiments? Can TAM afford to stick only to its basic teas and not compete in the “new and improved” tea market so heavily advertised by competitors? The company should conduct a small survey on two levels : Customers of TAM i.e. Retailers, Restaurants, Cafes etc. End Customers i.e. the actual Tea consumers. The TAM customers survey will provide a feedback that how much interested are the retailers in selling of a specialty or a seasonal flavor to its customer. This will indicate that if TAM introduces a new flavor like Christmas Mint during Christmas season than how much will the retailers pursue the end customer or suggest the new flavor during the season. By gaining insight of the actual end customer will provide us with the knowledge that whether introduction of a new flavor will be acceptable and tried by actual end customers or not and how much willing will they be shift to a new flavor. Also an insight of what they want and expect will be gained aswell. But TAM should be more focused on it traditional and original flavors as they are mostly in demand and regularly orders are placed for additional inventory indicating that there is a strong loyal base of end customers who have become followers of the traditional flavors and prefer them over and other low priced and low quality tea. 6. What haven’t we thought of? Where else can financial advantages and process efficiencies be achieved? TAM should open up a retail outlet at a prominent location in LOS ANGELES which shall only be dedicated to tea lovers offering the most exotic and rear blends of tea which shall not be locally available for distribution and purchase except for the retail outlet. The blends shall be given executive and sophisticated name which shall add value to the Tea and More brand name. Also the outlet will a cafe theme offering seating facilities to its customer so they can try unique blends only available at the outlet. A small library featuring bestselling novels and books from the best publishers shall be kept indicating that the Best in the Market prefers the best. The main advantage of opening this outlet is that it will directly penetrate the brand name within the actual customers and give them the impression of the sophisticated brand persona and create a high quality brand image. Also at the same time proving as a vital marketing resource for offers, introductions, schemes etc. This shall give the multimillion dollar brand an edge over its lower priced and low quality brand as they don’t have enough resources yet nor the name to start something this big in comparison to TAM. This will be quite a strategically important move which shall give TAM a leap over the new competitors which were trying to gain customers that TAM has. Conclusion Following these strategies and plans highlighted Jack can easily turn around the declining graph of TAM and make it once again a profit maker with happy and satisfied customers. Also the intra organization employee morale will be uplifted as their company will again be making progress due to their efforts. The employees in return should be rewarded with certain incentives aswell so that they don’t feel neglected in the overall process. TAM still has a long way to go and has the potential to expand across America by strengthening its Supply Chain and sales force through inclusion of employees are experienced and well versed with the industry and understand troubling scenarios. It has reached revenue amounting to $25 million making it standout amongst many businesses giving it further opportunity to expand. Read More