Intro The business environment is very competitive. Consequently, companies need to offer customers efficient and reliable service. If they do not, customers will switch to more consumer efficient companies. Furthermore, as companies grow in size, it becomes harder to keep track of the growing amount of customer information. If a company does a poor job of organizing and maintaining customer records and data, it can result in problems for both the company and the consumer. This paper will focus on the Minnesota Mining and Manufacturing Company, more commonly known as 3M, and how it improved its customer service and reduced cost by improving its management information system. Sources consulted included business journals and websites with facts and case studies on 3M.
II. Company Description 3M, internationally established in 1951, is a $16 billion multinational company with its headquarters in Minnesota, U.S.A., with operations in more than 60 countries, and products sold in nearly 200 countries. (About 3M and MIS Quarterly) 3M offers products and services to the transportation, graphics and safety, healthcare, industrial, consumer and office, electro and communications, and specialty markets. (IBM Case Study on 3M) 3M, a company known for its innovation, constantly encourages employees to create new products. Thirty percent of sales must come, each year, from products less than 4 years old and scientists must spend 15% of their time trying to develop new ideas of their own. In 2001, 3M spent over $1 billion dollars alone on research and development (3M 2001 annual report).
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3M’s corporate culture revolves around creativity, initiative, innovation, and entrepreneurship. This unique and innovative culture is largely responsible for 3M’s success. (MIS Quarterly) In accordance with having a strong need to stimulate innovation and creativity, 3M has a very decentralized corporate structure. It maintains over 40 business units that develop and market various 3M products and services. Each department operates as an individual company with its own processes systems and brands. This structure has afforded the different divisions the autonomy to conduct jobs in their own way using their initiative in a responsible manner. (Harvard Business Review and MIS Quarterly) III. The Problem Although 3Ms decentralized structure was good for innovation, it was an obstacle for the customers. Customers were seeing the 3M business units as a set of individual business instead of one unified company. Each business unit recorded its sales and product and customer information in its own database. There was no system in place among the business units to access each other’s databases. As a result, 3M did not know how much business it did with a specific customer.
Therefore, 3M could not take advantage of cross selling opportunities through “comparing same-customer purchase information” or “analysing buying patterns across product categories”. (IBM Case Study) The importance of each customer, to the entire company, could not be evaluated. Furthermore, each unit was responsible for maintaining and updating its customer database, which was a large, costly and duplicative task, as well as highly prone to error. Invalid customer databases existed in 40% of some U.S branch databases. (MIS Quarterly) The problem with the decentralized databases was projected onto the Internet. Customers had to visit a different website for each division, registering with each division and obtaining a separate password to get information on related products. Also, each division’s website had its own design and navigation requiring customers to have to familiarise themselves with the features of each website. (Harvard Business Review) Another problem with the 3M information system was that an archival system was being used to store information on customers as well as other business documents. As a result, retrieval of customer information took a very long time, inconveniencing both customers and employees.
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IV. Solution In order to fix the problem of each division having its own database, 3M spent $20 million to create a “global data warehouse”. This is an integrated database, which stores information on customers, products, sales, inventory, and finance from all divisions and geographies. Access can be gained to the database through a user-friendly website which requires a one-time registration and password for customers. Strong search and product recommendation engines characterize the site along with ten customer centers, which bring together related products and services from across the entire 3M organization. Employees and partners can access current information on product prices, availability, specifications and summaries of customer accounts. The profitability of customers and products and the performance of partners can now be analyzed across the entire company allowing better allocation of company resources. This allows 3M to take advantage of market opportunities and cross-selling opportunities and at the same time meet and customize the needs of customer segments. (Harvard Business Review) V. Software and Hardware Description In order to fix the problem of customer information retrieval taking a long time, 3M implemented new software and hardware from IBM, which allows accurate information to be provided in a timely manner. For software, 3M chose IBM’s EDMSuite OnDemand for Windows NT (now referred to as IBM Content Manager OnDemand for Windows NT).
3M chose OnDemand because it is optimized to manage very large collections of smaller objects such as statements and reports and checks. To accompany OnDemand, 3M also chose to use the IBM’s popular DB2 database management software. DB2 is the first multimedia, web-friendly database management software and it is used by over 400,000 companies across the world. Additionally, for backup and security purposes, 3M chose IBM’s Tivoli Management Software for Windows NT. In terms of hardware, 3M opted for the IBM 3995 Optical Library, a high-speed storage system that makes use of optical disks and all of the latest available technology.
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VI. MIS Strengths and Weaknesses Before implementing the new software and hardware, customer service representatives had to go through 3 systems, including a microfiche system, in order to obtain the required customer information. Under the new system customer information and invoices can be quickly accessed by simply entering the number of the invoice, customer account or purchase order. Errors on invoices can be changed without having to retype the whole document. Under the old system, in order to correct a small error or annotate a single entry, a whole new document had to be created to replace the old one. Now, text files can be created from the documents and edited using a word-processor. The new system of software and hardware has allowed 3M customer representatives to save a lot of time, which may be used in handling more complicated customer issues. Customer service has been tremendously improved since customers seeking information on their transactions no longer have to be inconvenienced by waiting long hours. Instead, customer information is available in real-time, at the moment the customer service representative needs it, a feat made possible by OnDemand. In addition, the implementation of the 3995 Optical Library 3M saves about US$100,000 annually on microfiche costs (IBM Case Study on 3M).
It has also allowed 3M to cut costs because it has removable cartridges. This means that as the company accumulates data that eventually becomes obsolete or is rarely accessed, they can simply remove the cartridges that the information is stored on and replace it with a blank one. This allows additional storage capacity at a very low incremental cost. Furthermore, the use of DB2 makes it possible to integrate information as web services. Without DB2 it would be very difficult to integrate all of the customer information to a web based form or make it accessible on the company’s intranet.
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In terms of weaknesses, it is hard to identify any limitations to 3M’s management information system. It would seem that the company is using the most advanced and reliable software and hardware available on the market, as is evidenced by the wide use of all of IBM’s products and services by companies around the world. Furthermore, it is difficult to find any public information that would point out shortcomings or flaws in IBM’s products, let alone 3M’s management information system.
VII. Competitive Advantage of 3M’s MIS As previously stated, 3M is involved in a wide range of markets and the range of products and services they provide is unparalleled by any other company. In short, there is no other company in the world that competes on the same level as 3M. Rather, there appears to be several competitors in each sector or industry in which 3M offers its products and services. Since their competitors are so much smaller, they don’t require the same degree or level of information systems that 3M has and it is therefore hard to make a comparison. What 3M’s information system does do for the company is allow it to be more flexible and swift than it was previously. Frequently, as companies grow, they tend to become more bureaucratic and less able to adapt to changes in the market or industry. 3M’s new “global data warehouse,” and the quick and easy access to it made possible by the company’s information system allow 3M to combat this problem.